Who Must File Income Taxes?

Who Must File Income Taxes?
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If you're wondering about completing your 2020 federal income tax return, you might discover you fall into one of the tax situations that includes individuals who don't need to worry about filing. The IRS sets income thresholds based on age and filing status that can help you determine whether you need to file your taxes.

However, some exceptions apply to certain types of income, credits and taxes owed as well as your dependency status, and some situations might warrant filing a tax return even if you're excluded otherwise. Use this guide to determine your filing requirements and better understand why you might want to file, even if it's not required for your situation.

Basics of Tax Filing

The IRS includes its rules on who is subject to federal income tax return filing in IRS Publication 501. This document explains how a taxpayer's filing status, age, gross income and other factors help determine if they need to file a return for the tax year, and it also mentions various exceptions.

The filing statuses used include single, qualifying widow/widower, head of household, married filing separately and married filing jointly. The filing status you choose depends on your marital status, dependents and/or living situation at the end of the tax year. Age groups factored in include those ​under 65​ and ​over 65​, and keep in mind the IRS sets higher income thresholds limits for the elderly.

When determining whether you need to file taxes, the IRS looks at your gross taxable income, so you should know what counts. Income subject to taxes includes your wages from jobs and/or self-employment, canceled debt, interest income, unemployment income, gambling winnings, pensions, retirement plan distributions and capital gains. However, gross income excludes some other types of income like child support payments, Social Security payments, certain disability benefits, life insurance proceeds and gains from primary home sales (up to a limit).

General Filing Requirements and Thresholds

The general criteria used to assess whether most taxpayers need to file a tax return for the year based on age, filing status and gross income are based on the IRS standard deduction amounts for 2020 and include the following:

  • Single taxpayers​: Those ​younger than 65​ need to file when they have a gross income of ​$12,400​, while this goes up to ​$14,050​ for people ​65 and older​.
  • Qualifying widows and widowers​: Taxpayers who've lost their spouse and have dependents must file a federal return once they have a gross income of ​$24,800​ if ​younger than 65​ and ​$26,100​ if ​older than 65​.
  • Heads of household​: An unmarried taxpayer who supports dependents and ends up paying over half the associated costs needs to file a tax return if they have a gross income of ​$18,650​ if ​under 65​ and ​$20,300​ if ​older than 65​.
  • Married couples filing separately​: The minimum gross income for filers in this group is only ​$5​ regardless of age.
  • Married couples filing jointly​: A married couple with both spouses ​under age 65​ need to file once they reach a gross income of ​$24,800​. If both are ​over 65​, this goes up to ​$27,400,​ and it is ​$26,100​ when just one spouse is ​over 65​.

Keep in mind this information is a good starting point for determining whether you need to file, but there are many exceptions for filers to check before proceeding.

Special Filing Requirements for Social Security

If you only receive Social Security income, usually the funds won't count toward your gross income or trigger a filing requirement. However, this changes if you receive other types of taxable income like interest, pensions, job wages or self-employment income. In that situation, the IRS requires you to add half your Social Security benefits (plus half of any spouse's) to that other income and use some different thresholds to determine whether you may have to pay taxes on your benefits.

For unmarried individuals and those married filing separately, the threshold to pay taxes on up to half your benefits is ​$25,000​, while it's ​$32,000​ for those married filing jointly. You could pay taxes on ​up to 85 percent​ with an income over ​$34,000​ for unmarried individuals and those married filing separately and living apart or over ​$44,000​ for married individuals filing jointly. Married people living together and filing separately must pay taxes on ​85 percent​ of benefits in any case.

Filing Requirements for Disability Benefits

Whether your income from disability benefits counts as gross income toward the filing requirements depends on the source of the benefits. If they came from the Social Security or Railroad Retirement programs, then you use the income tests previously discussed if you received another type of income alongside those benefits.

However, if you receive disability benefits from an insurance plan to which your employer had contributed all or part, then the money counts and is added to your gross income to determine your filing threshold.

Filing Requirements for the Self-Employed

If you do work as an independent contractor – meaning you likely receive a 1099 form – or you're otherwise a business owner or partner, the IRS sets a much lower threshold for when you need to file a tax return. Regardless of your filing status or age, you have to file a return if your net self-employment income was at least ​$400​. This means you need to take your gross earnings and subtract qualified business expenses during the year to come to your net profit or loss.

Filing Requirements for Dependents

If you're a dependent because someone claims you on their tax return, then the IRS has other guidelines that take into account earned versus unearned income alongside which filing status you use, how old you are, whether you're blind and what your gross income is. It's important to know that earned income includes what you make from work you perform or certain grants and scholarships you receive, while unearned income includes things like Social Security benefits, trust distributions, interest and pensions.

Single Dependents - Not Blind or 65+

You need to file if any of these fit your income situation:

  • Earned income ​over $12,400;
  • Unearned income ​over $1,100;
  • Gross income exceeds whichever of these is higher: ​$1,100​ or the sum of ​$350​ and a maximum earned income of ​$12,050.

Single Dependents - Blind and/or 65+

If any of these income limits apply, then you need to file:

  • Earned income over ​$14,050​ (or ​$15,700​ if you're both blind and ​65+​);
  • Unearned income over ​$2,750​ (or ​$4,400​ if you're both blind and ​65+​);
  • Gross income exceeds whichever is higher: ​$2,750​ (​$4,400​ if you're both ​65+​ and blind) or the sum of ​$2,000​ (​$3,650​ if both blind and ​65+​) and a maximum earned income of ​$12,050.

Married Dependents - Not Blind or 65+

You need to file a tax return if you have income based on this criteria:

  • Earned income over ​$12,400;
  • Unearned income over ​$1,100;
  • Gross income of ​$5​ or more for married couples filing separately and itemizing;
  • For other filing statuses, gross income exceeds whichever is higher: ​$1,100​ or the sum of ​$350​ and a maximum earned income of ​$12,050.

Married Dependents - Blind and/or 65+

If any of these apply to your income, you have to file:

  • Earned income over ​$13,700​ (​$15,000​ if you're both blind and ​65+​);
  • Unearned income over ​$2,400​ (​$3,700​ if you're both blind and ​65+​);
  • Gross income of ​$5​ or more if you're married and filing separately plus itemizing;
  • For other filing statuses, gross income exceeds whichever of these is higher: ​$2,400​ (​$3,700​ if you're both ​65+​ and blind) or the sum of ​$1,650​ (​$2,950​ if both blind and ​65+​) and a maximum earned income of ​$12,050.

Filing Requirements for Nonresident Aliens

While the general filing rules apply to U.S. citizens and permanent residents, the IRS lists stricter requirements in Publication 519 that a nonresident alien must use to determine whether they have to file a tax return. For example, you have to file a tax return if you're involved in a U.S. business at all, even if the income is otherwise exempt or didn't come from the U.S. You also need to file if you'd owe taxes in the U.S. even if you don't earn an income in the country.

There are some exceptions, such as those for students, educators and single or qualifying widow(er) taxpayers not exceeding the filing thresholds based on standard deduction amounts.

Other Income Tax Filing Exceptions

Along with the special rules for self-employment and Social Security income, the IRS mentions that you may be subject to filing a tax return if you receive certain types of wages or distributions. For example, if you work for a church where your employer doesn't pay Medicare tax or Social Security tax, then you need to file if you made at least ​$108.28​ during the year.

If your employer didn't withhold the appropriate taxes on tips earned at your job, then you also need to file. The same applies if you had distributions from certain types of health and medical spending accounts as well as retirement accounts for which you might owe taxes.

Filing Requirements for Specific Taxes

Since you need to pay any taxes owed, you can find yourself in some situations where you have to file even if you fall in one of the exclusion categories otherwise.

Take a look at a few of the common scenarios:

  • You're subject to recapture taxes.
  • You fall under the criteria for the alternative minimum tax.
  • You owe household employment taxes (although you can just use Schedule H).
  • You have write-in taxes to pay, such as those for Medicare and Social Security.
  • You face additional taxes on qualified retirement or health savings plans.

Tax Filing Requirements for Credits

To benefit from any tax credits for which you're eligible, you need to file a tax return, and in cases where you've gotten advance payments, filing will be a requirement. The IRS explains that people who used the Health Insurance Marketplace to get insurance and received subsidies will need to report the information on their tax returns for the premium tax credit and possibly pay back some of the money. The same applies if you received advanced payments to help cover expenses for health insurance through the health coverage tax credit.

Other tax credits you need to file to receive include: the earned income tax credit, child tax credit, adoption credit, saver's credit, child and dependent care credit, various credits for college and tuition expenses and credits for solar energy improvements. The IRS offers an online list of the various credits that individuals can take along with amounts and qualifications.

Using the IRS Interview Tool

You can take the guesswork out of determining if you need to file a tax return if you use the IRS tool that takes your income and tax information and gives you an answer in ​less than 15 minutes​. To qualify for using this tool, both you and any spouse on the return need to be U.S. residents or citizens.

The interview tool asks about your filing status, types and amounts of income received, dependency and disability statuses and advanced tax credit for health insurance coverage. Once you complete the questionnaire, the IRS makes a recommendation and links you to different resources to learn more about tax rules.

Considering Reasons to File Anyway

Even if you don't qualify for credits and the IRS tool verifies that you don't need to file a tax return, keep in mind that you can miss out if you don't. For example, taxes might have been taken out of your wages or other income during the year, and if you don't file a return, you won't get the money back as a tax refund. Filing a tax return can also be the safer option if you want to avoid audits or penalties for not filing your taxes, especially if you weren't fully sure of your exemption from filing.

Keep in mind that even if you're excluded from filing a federal return, states can have their own filing thresholds and rules that differ from the federal ones. So, you might still end up needing to file some type of return anyway as part of your state tax filing.