Tax season—the time of year when we gather up our Important Tax Documents, and realize we’ve been using our W-2 as a coffee coaster. But before you dive in, let’s address a fundamental question: Do you even need to file a 2024 income tax return? Let’s break it down so you can file (or not file) with confidence.
Who Must File a 2024 Federal Income Tax Return?
Here’s the rule of thumb: If you meet certain income thresholds, Uncle Sam expects to hear from you. The IRS determines who must file based on income, age, and filing status.
The Facts:
- Single Filers Under Age 65: If you earned $14,600 or more in gross income, it’s time to file.
- Single Filers 65 or Older: Your threshold increases slightly to $16,550.
- Married Filing Jointly (Both Under 65): A combined gross income of $29,200 means you need to file.
- Married Filing Jointly (One Spouse 65+): The threshold rises to $30,700.
- Married Filing Jointly (Both Spouses 65+): You’re looking at $32,200.
- Head of Household Under Age 65: The threshold is $21,900.
- Head of Household 65 or Older: You’re required to file if your income hits $23,850.
- Self-Employed Individuals: You must file if you earn $400 or more in net income from self-employment, even if it’s a side hustle.
Additional Considerations for Unique Situations:
There are specific rules for:
- Dependents: If you’re claimed as a dependent on someone else’s return, your filing requirement depends on your earned income, unearned income (like interest, dividends, or capital gains), and total gross income. For example:
- A dependent under 65 must file if they have more than $1,250 in unearned income, more than $13,850 in earned income, or if their total income exceeds the larger of $1,250 or their earned income plus $400.
- A dependent under 65 must file if they have more than $1,250 in unearned income, more than $13,850 in earned income, or if their total income exceeds the larger of $1,250 or their earned income plus $400.
- Investment Earnings: Income from investments, such as dividends, interest, and capital gains, can push you above the filing threshold. If you had significant investment income or received Form 1099s for these earnings, you might need to file even if your wages were below the threshold.
- Special Filing Statuses: If you’re a nonresident alien, have foreign-earned income, or need to reconcile advance payments of the Premium Tax Credit for health insurance, filing might still be necessary without regard to income levels. Alos, if you’re subject to the alternative minimum tax (AMT) or owe taxes on retirement account distributions, filing is required.
What Tax Documents Require Filing, No Matter the Amount?
Receiving certain tax forms can also trigger the need to file a return, regardless of the dollar amounts shown on them. These documents include:
- Form 1099-INT or 1099-DIV: Reporting interest or dividend income. Even small amounts can require filing if you owe taxes on the income.
- Form 1099-B: Reporting proceeds from the sale of stocks, bonds, or other investments. Even if you have a net loss, the IRS expects a report.
- Form 1099-R: Reporting distributions from retirement accounts, pensions, or annuities. Filing is required if taxes are owed on the distribution.
- Form W-2G: Reporting gambling winnings. Even a modest slot machine payout might require a tax return. Beware.
- Form 1099-K: Reporting income from third-party payment platforms (e.g., PayPal or Venmo) if the total exceeds $600. This applies to both goods sold and business income.
- Form 1095-A: Reporting advance premium tax credits for health insurance through the Marketplace. You must file to reconcile the credits.
If you receive any of these documents, double-check your filing obligations to avoid IRS scrutiny.
Who Is NOT Required to File?
Good news for some: Not everyone has to face the paperwork.
- If your gross income is below the thresholds listed above, you’re off the hook.
- If you’re a dependent and your earned income plus unearned income doesn’t exceed certain limits, you may not need to file.
- Retirees with lower income levels—such as only Social Security—often don’t need to file, as Social Security benefits may not be taxable unless you have additional income.
Of course, exceptions exist. For example, if you owe special taxes (like the additional tax on a Health Savings Account withdrawal), you’ll need to file regardless of income level. Also, if you received advance premium tax credits for health insurance under the Affordable Care Act, you’re required to reconcile those credits by filing a return.
Why File a Tax Return If You’re Not Required To?
If you’re not obligated to file, congratulations! But hold on a second before you toss those tax forms in the shredder. There are compelling reasons to file anyway:
- Claim a Refund: Did your employer withhold federal income taxes from your paycheck? Filing a return is the only way to get that money back.
- Tax Credits: Even if you’re below the income threshold, you may qualify for credits like the Earned Income Tax Credit (EITC) or the Child Tax Credit, which could result in a refund.
- Future Benefits: If you’re self-employed, filing ensures your earnings are reported to the Social Security Administration, helping you qualify for retirement benefits down the road.
- Peace of Mind: Filing gives you a clean slate and eliminates any worry about whether you’ve met your obligations.
- Prevent Identity Theft: Filing a return, even if not required, makes it harder for scammers to file a fake return in your name.
A Lighthearted Takeaway
Filing taxes may not be anyone’s favorite pastime, but it doesn’t have to be painful. Think of it like flossing: necessary, occasionally tedious, but ultimately good for you (and rewarding if you discover you’re due a refund!). And if you’re not required to file but decide to do so anyway, you’re not just a responsible citizen—you’re practically a superhero in the eyes of your future self.
If you’re unsure about your filing status or thresholds, consider reaching out to a tax professional. They’ll help ensure you’re on the right track—without any tax-related headaches. Do you know any good tax professionals???
Still not sure whether you need to file? Need help maximizing your refund? At Tax Rescue CPA, we’re here to make the process as smooth as possible—and maybe even a little fun (yes, really). Let us help you rescue your taxes today!
“Who’s Doing Your Taxes?” – Tax Rescue CPA