Tuesday Tax Tip: Do I need to file a federal tax return if I’m not a dependent on other taxpayers’ returns?
Terms:
- Gross income
- Age
- Filing Status
Frequently people ask if they need to file a federal tax return. I tend to cringe at general type questions because our tax code is complex and sometimes people have interesting situations.
Usually I say, “Generally a tax return should be filed when gross income is equal to or greater than the total of your standard deduction and personal exemption amount.” Then I follow-up with two main questions:
- Did you have income tax withheld from any source of income? If they answer is yes, then I suggest they file a tax return.
- Can you be claimed as a dependent on another person’s tax return? If I get a blank stare, then I set-up an appointment to dig deeper because determining dependency is not always clear.
Filing Requirement for Nondependent Taxpayers
Filing Status: Your filing status is one of 5 choices – single, married filing jointly, married filing separately, head of household and qualifying widower. Determining filing status is not always easy but most people figure this based upon their marital status at the end of the tax year.
Example: Jack and Jill are in love and married on December 31, 2010. They are considered married for the entire 2010 tax year.
Example: Jack and Jill can’t stand each other so they went their separate ways and finalized their divorce on March 30, 2011 If they did not remarry anyone, they are considered unmarried for the entire 2011 tax year.
Age: If you are age 65 or older on the last day of the tax year, you are allowed a higher amount of gross income than other taxpayers before you are required to file a return. Generally, your age is determined on the last day of the year or the day before your birthday.
Example: If you turn 65 on January 1, 2012, you are considered to be age 65 at the end of 2011.
Gross Income: Includes all income that is taxable. As we discussed earlier, all income from money, products, and services is taxable, unless specifically exempt or excluded by the law.
Example: Taxable Income – Wages, Tips, Business Income, Farming Income, Commissions, etc. Income exempt from taxation include workers’ compensation, credit card rewards, rebates, interest income from direct government obligations, etc
Guideline For Federal Tax Filing
| Filing Status | Age at End of Year | File if Gross Income is Minimum of: |
|---|---|---|
| Single | Under 65 65 or Older | $9,500 $10,950 |
| Married Filing Jointly | Under 65 (both spouses) 65 or Older (one spouse) 65 or Older (both spouses) | $19,000 $20,150 $21,300 |
| Qualifying Widow(er) with Dependent Child | Under 65 65 or Older | $15,300 $16,450 |
| Head of Household | Under 65 65 or Older | $12,200 $13,650 |
| Married Filing Separately | Any Age | $3,700 |
There are certain situations when you need to file a tax return if your gross income is less than the above amounts.
Examples:
- Owe any special taxes such as Alternative Minimum Tax
- Received Archer MSA, Medicare Advantage MSA, or health savings account distributions
- Earned net earnings from self-employment of at least $400
- Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.
- Collect income tax withheld or receive certain credits such as Earned Income Credits.
Generally, a tax return should be filed when gross income is equal to or greater than the total of your standard deduction and personal exemption amount. (See an earlier post for 2011 standard deductions and personal exemption amounts.) If in doubt, I would file a federal tax return.
State and federal taxes can be confusing and complex, you should contact your tax advisor on what you can and can not include on your tax return. For more information and federal tax return forms, click here to go to the Internal Revenue Service website (http://www.irs.gov/). Federal Tax forms for 2010 can also be found under the ‘Resources‘ tab here at MoneyandMap.com
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