Why is Tax Filing so Important?
Tax filing is one of the most important requirements to run a country. Though, there are individuals who think that individual tax return is useless as it is a very small amount for the tax authorities, as a result they at times choose not to file their tax returns in order to save their investments and money. People who do not file tax returns and hide themselves are at mistake. By not filing tax returns, they are likely missing the benefits of being in the good lists of banks, development of the nation, reducing their tax liability and tax evasion.
Declaration of Tax Filing Season by the IRS – Tuesday, January 19, 2016
The IRS has officially affirmed about the tax filing season for 2016. There are five more days to go for the tax filing season, Tuesday, January 19, 2016. This time the IRS is expecting to receive at least 150 million individual tax returns for 2016. Though, the last date to file taxes for this year is unlike the traditional date, April 15. This time the last date to file taxes is Monday, April 18, 2016. But prior to filing for tax returns, often tax payers wonder about tax filing requirements. So you may be wondering how much do I have to make to file taxes.
You Need to Understand the Tax Filing Return Phenomena
When you file for the tax season 2016, you will actually report the income which you received in 2015. This means you will report for the income you received in 2015 and not the income you received in 2016 for the services rendered in 2015. Though, you will be reporting for that income in the next year, 2017. In addition, those tax payers who worry how much do I have to make to file taxes, must keep in view that not every person who received income in 2015 has to file a federal income tax return.
Wondering ‘How Much Do I have to Make to File Taxes’? – Wait! Let’s Have a Look to Some Factors for Filing Federal Income Tax Return
When people ask themselves, ‘how much do I have to make to file taxes’; they are actually asking how much money do they generate in order to file federal income tax returns.
As previously mentioned, every individual is not required to file for the tax returns. Here are some factors that determine whether or not you are required to file a federal income tax return.
- If the total income of the year does not exceeds the standard deduction
- In case of exemption amount
- If you are a dependent (dependency status)
- Type of income
- Source of income
- Your age
- Your filing status
It is simple and straightforward, you are liable to file for your federal income tax returns if your gross income is above the threshold for your filing status and age.
Who Needs to File Income Tax Returns?
It has been fourteen days and the New Year has begun as well as the tax filing season. As per the official announcement by the IRS, the tax filing procedure will be opened from Monday, January 19, 2016. But now with the beginning of the New Year, most of the individuals have questions in mind such as, ‘do I really need to pay taxes like other tax payers?’, ‘how much do I have to make to file taxes?’, ‘when is the last date to file taxes?’, ‘is filing taxes earlier better than filing them later?’, or ‘when is the right time to file my income tax return?’ including many others.
In this section, you will learn the core of ‘how much do I have to make to file taxes’ question. Firstly, all tax payers must keep in mind that no matter if you are required or not required to file a federal income tax return, but the federal income tax return depends and is calculated on the basis of some important factors. The following are the factors on the basis of which the tax filing return is calculated.
- Your age matters
- Your filing status
- Your source of income
- Your received income
- Your dependency status
Those who are wondering about, ‘how much do I have to make to file taxes’ then they should know the fact that it is not necessary that everyone needs to file an income tax return. Though, there is a minimum income requirement by the IRS authority to either efile or file a tax return for the Tax Year 2015.
For instance, in case a tax payer earns below the minimum requirement of income for your filing status and age, in such a situation, you will be liable to file for the tax return for the current Tax Year, 2016. All tax payers must remember that these rules only apply on the tax payer until another person claims them on their federal income taxes.
All tax payers must remember that the minimum income requirements, exemption amounts and standard tax deduction are decided and fixed upon the tax payers by the government. Also, this practice takes place prior to the tax filing season to avoid issues at the last minute. Though, these deductions and amounts increase during the inflationary period.
Minimum Income Requirements to File Federal Income Tax Returns for Tax Year 2016
We have come up with a table highlighting your minimum income requirement on the basis of your filing status and age. So, those who have a question in mind, ‘how much do I have to make to file taxes’ can have a look to this table to file their federal income tax returns for the Tax Year 2016.
Figure 1: Minimum Income Tax Requirement for Tax Year 2016
What if You Are Claimed as a Dependent on Someone Else’s Returns?
In case you are claimed as a dependent on someone else’s tax return, then the rules will not be the same for you as prescribed in the table. In such a situation, the rules will be a bit different. If you want to know are questioning yourself ‘how much d I have to make to file taxes’ in case of a dependent then here are some basic guidelines for single and married tax dependents.
· For Single Dependents – Under the Age of 65 years and Not Blind
Those individuals who are single dependents, under the age of 65 years and are not blind are liable to file federal income tax return for 2016 if their unearned income from the interest or dividends exceeds $1,000 limit. Also, they are required to file the federal tax returns if their earned income such as salary or wages is more than $6,200.
· For Single Dependents – Over 65 Years of Age or Blind
The people who are single dependents, over 65 years of age or are blind are liable to file their federal income tax return if their earned income i.e. wages or salaries are more than $7,750. In addition, such people must file a federal income tax return if their unearned income i.e. dividends or interests is more than $2,250.
· For Single Dependents – Over 65 Years of Age and Blind
Generally, the people who are over 65 years of age, single dependents and are blind are required to file their federal income tax return if their salaries or wages (earned income) is more than $9,300. In addition to earned income, they are also required to file their federal income tax return if their interests or dividends (unearned income) are more than $4,100.
· For Married Dependents – One of the Spouses is Under the Age of 65 Years and Not Blind
If you are a married dependent and when one of the partners is under the age of 65 years and they are not blind, then filing of federal income tax return is due on them. They are required to file for the federal income taxes when the unearned income (dividends and interests) crosses $1,000.
On the contrary, they are required to file the federal income tax returns if their earned income (salaries or wages) exceed $6,200. Moreover, they will be considered as tax payers if their gross income is at least $5 and one of your partners itemizes deductions and files a separate return.
· For Married Dependents – One of the Spouses is Over 65 Years of Age or Blind
Assume that you are a married dependent and one of your partners is over 65 years of age or they are blind. Generally speaking, in this type of situation you must file a federal income tax return if your dividends or interests (unearned income) are more than $2,200.
On the other hand, the duty of filing federal income tax returns will be levied on you if your wages or salaries (earned income) is over $7,400 as well as your gross income is $5 and one of your spouses files a separate return and itemizes the deductions.
· For Married Dependents – Both the Spouses are Over 65 Years of Age and Blind
When both the married partners are over the age of 65 and are blind, then they should file a federal income tax return if their unearned income i.e. dividends and interests is more than $3400. In addition, such married partners are required to file federal income tax returns if their earned income i.e. salaries and wages is more than $8,600. Not only this, your gross income should at least be $5 and one of your partners has to itemize deductions and file a separate return for taxes.
Those who are still wondering ‘how much do I have to make to file taxes?’ must keep in mind that these rules are only levied to those dependents who are married and are not only married tax payers. In addition to this, you must always remember that your spouse or partner is never considered your dependent for tax purposes.
Here’s an Easy and Quick Formula To Know Your Minimum Income Requirement
As you know, the minimum income tax requirement is dependent upon your age, filing status, your received income as well as your dependency status. But those who are really worried about the question, ‘how much do I have to make to file taxes’ then they can take their standard deduction and personal exemption and add them together. But if you are over the age of 65 then you must make sure to consider the increased standard deduction and add it to the personal exemption.
Minimum Gross Income Requirement = Standard deduction + Personal Exemption
If you are over 65 years of age,
Minimum Gross Income Requirement = Increased Standard deduction + Personal Exemption
How Much Do I Have to Make To File Taxes – Under 16 or a Beginner
Those individuals who are under 16 years of age are considered beginners for income tax filing. So, if you are also one of them or you find any beginner asking ‘how much do I have to make to file taxes?’ then tell them to prepare their tax return online and print it. The printed form should be sent to the IRS. After submitting the forms to the IRS, the beginners will be able to file the tax returns electronically as well as manually the next year.
Moreover, such beginners will be liable to file for their federal income tax returns in the next year after the consent from the IRS, when their income from the interest or dividends (unearned income) is more than $1,000. On the contrary, they are required to file the federal tax returns if their income from salary or wages (earned income) is more than $6,200.
Other Reasons to File a Federal Income Tax Return
In order to know the core of the question, ‘how much do I have to make to file taxes’ you must know some of the other reasons to file a federal income tax returns. There are some more reasons other than just gross income, earned and unearned income. As a result, you are required to file a federal income tax return in case if any of the following points are true.
- When you do not meet the basic income criteria
- If you are self employed and in case your net earnings are at least $400 or more
- If you have unemployment income
- If you owe household employment taxes
- If you are liable to alternative minimum tax
- If additional taxes on a retirement plan, health savings account or other tax favorable accounts are levied on you
- If you owe any Medicare taxes or Social Security
- In case you received any distributions from a Health Savings Account
- On receiving any advance payment on the Premium Credit Card for you, your spouse, or any dependent
- If you have wages of $108.28 or more from a qualified church or church controlled organization
- If you made excess contributions to your IRA or MSA
Benefits of Federal Income Tax Filing
Often it is seen that individuals do not care about filing the taxes and later suffer with penalties and fines. They want to save their money and investment by not filing for the federal income taxes. On the contrary, there are individuals who want to file their taxes at the earliest and question ‘how much do I have to make to file taxes’. It is better to file the taxes at the right time, keeping in view your financial position and the deadline of the current tax season. Here are some benefits for filing federal income taxes.
· Advantage on Tax Credits
Not everyone has to file for the federal income tax returns but if you do not owe taxes but still file a return then you likely get the advantage on certain tax credits.
· Receive Refunds
When you file for the federal income tax returns then you it is expected to receive a refund.
· Refundable Tax Credits
On filing for federal income tax returns, you get the benefit of refundable tax credit.. The common examples of such credits are child tax benefit, working income tax benefit, GST or HST credit and many more. You do not usually receive these credits when you do not file a return.
· Transfer Education, Books or Tuition Using Tax Credits
At times, you may not have enough income, in such a condition; you can carry the tax credit for future years and transfer for you or your family member’s education, books or tuition.
Important Tax Dates to Remember for Tax Year 2016
Tax season is here, opening in five days. Those who are wondering how much do I have to make to file taxes, must also remember the important tax dates. You must not only remember the deadline of the current tax season, Tax Year 2016. You must also know the associated tax dates for a seamless tax filing procedure.
- Tax Season Opening: Tuesday, January 19, 2016
- Tax Season Deadline: Monday, April 18, 2016
- Extended Tax Deadline: Monday, October 17, 2016
Taxes are not levied on everyone but if paid, they are beneficial to the individuals. There are different income requirements for the all the tax payers. Please make sure that you consult your lawyer prior to filing federal income tax return. We hope now you can identify the answer to the question ‘how much do I have to make to file taxes’ for the current tax season, Tax Year 2016.