Ask The Taxman: When Should I and When Do I Have To File A Return?
Three things must be considered when determining whether you are required to file a return: your age, your filing status and your income. Generally, once you reach a certain income level, the law requires you to file regardless of if you will have a balance due. The income threshold each year is your standard deduction, based upon your filing status and age (last day of the year) plus the total allowance for exemption(s). The amounts are adjusted annually for inflation.
Tax-filing earnings thresholds for 2015 taxes
Filing status Younger than 65 65 or older
Single $10,300 $11,850
Head of household $13,250 $14,800
Married filing jointly $20,600 (both spouses) $21,850 (one spouse 65 or older)
$23,100 (both spouses 65 or older)
Qualifying widow/widower with dependent child $16,600 $17,850
Married filing separately $4,000 $4,000
ACA premium credit claim
If you have health care coverage as required by the Affordable Care Act, also referred to as ACA or ObamaCare, you may need to file a return.
This may be the case if you qualified for federal help in buying your health care coverage through the health insurance marketplace. If advance payments of the ACA premium tax credit were made for you, your spouse, or a dependent who obtained such marketplace medical coverage, that amount must be reported by filing a Form 1040 tax return and Form 8962, Premium Tax Credit.
By filing, this will ensure you have the appropriate tax credit in advance. If you received too much premium help, you’ll have to repay it with your return filing. If you did not receive enough, you are able to collect the extra when you file.
When Does A Dependent Have To File?
When it comes to dependents, the IRS breaks the income into two types. Each type has its own filing requirement; the two types of income are unearned (subject to the “kiddie tax” rules) or earned.
Generally, a child must file a return and pay tax due depending on the type of income:
Earned – generally characterized as a salary, wages or tips. It also includes taxable scholarships and fellowship grants. The filing requirement is dependent upon the filing status threshold, or;
Unearned – which includes investment interest or dividends, capital gains, unemployment benefits and some trust distributions. The filing requirement is dependent on the “kiddie tax” rules and is described in Form 8814- What is the “kiddie tax”?
What If I am Self Employed, When Do I have to File?
Regardless of whether it was your sole source of income or just an occasional side job, you may have a filing requirement due to your self-employed activities.
If your annual gross self-employment income is at least as much as the income threshold for your filing status, you will need to file a Form 1040 and Schedule C or Schedule C-EZ reporting your earnings.
You also must file a Schedule SE to pay self-employment tax if your net earnings exceed $400.
NOTE: It is possible to have a situation where you do not have an income tax liability yet still have a liability on the return due to the self-employment taxes.
When it pays to file
For those few who don’t legally have to file, it sometimes pays to send in a return anyway.
Audit Statute of Limitations
The statute of limitations for audit never expires for an unfiled return; therefore, some people feel it is important to always file a return.
Earned Income Credit
Certain individuals may be eligible for the earned income tax credit. This benefit is available to qualified individuals even if they owe no tax, meaning they would get money back from the federal government. Many people think the credit is available only to parents. It’s not, but the credit amount is greater for eligible low-wage taxpayers with children.
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