Regular Withholding Allowances | Show I Claim 0

Regular Withholding Allowances    |   Show I Claim 0

Tax season is here and almost gone, but for some, there is the lingering question of “Do I need to file a tax return?” Unfortunately, as we’re dealing with taxes, the answer is, it depends on these five questions:

• How old are you?
• What is your filing status?
• Are you blind?
• What is your gross income?
• Is someone else claiming you as a dependent?

Even with these answers, you may still have some questions. Gross income is your income amount before you take any deductions or tax credits. How do you know if you are a dependent? Here are the rules:

            1. The person cannot be the qualifying child of anyone else

            2. The person must have lived with you all year.

            3. The person’s gross income for the year must be less than $4,050

            4. You must have provided more than half of their total support during the calendar year.

Disclaimer: The following information is based on the 2020 tax year.

How Much do you Have to Make to File Taxes?

Here are the minimum salary requirements based on filing status for tax year 2020. Note: these amounts do change each tax year, so be sure to check the tax bracket before filing each tax year.

If you are a dependent, your minimum salary requirements differ as you need to include earned income, unearned income (royalties, dividends, stocks, for example) and gross income.  As above, the minimums for these amounts will be determined by your age and if you are blind.

How much do you have to make to file taxes if you are claimed as a dependent?

Here are the minimum salary requirements if you are claimed as a dependent based on filing status for tax year 2020. Note: these amounts do change each tax year, so be sure to check the tax bracket before filing each tax year.

Single dependents under 65 and not blind:

• Earned income exceeds $12,200
• Unearned income exceeds $1,100
• Gross income was more than the larger of either $1,100 or earned income up to $11,850 plus $350

Single dependents 65 years or older or blind:

• Earned income exceeds $13,850
• Unearned income exceeds $2,750
• Gross income was more than the larger of either $2,750 or earned income up to $11,850 plus $2,000

Single dependents 65 years or older and blind:

• Earned income exceeds $15,500
• Unearned income exceeds $4,400
• Gross income was more than the larger of either $4,400 or earned income up to $11,850 plus $3,650

Married dependents under 65 and not blind:

• Earned income exceeds $12,200
• Unearned income exceeds $1,100
• Gross income was $5 or more and your spouse files a separate return and itemizes deductions
• Gross income was more than the larger of either $1,100 or earned income up to $11,850 plus $350

Married dependents 65 years of older or blind:

• Earned income exceeds $13,500
• Unearned income exceeds $2,400
• Gross income was $5 or more and your spouse files a separate return and itemizes deductions
• Gross income was more than the larger of either $2,400 or earned income up to $11,850 plus $1,650

Married dependents 65 years of older and blind:

• Earned income exceeds $14,800
• Unearned income exceeds $3,700
• Gross income was at least $5 and your spouse files a separate return and itemizes deductions
• Gross income was more than the larger of either $3,700 or earned income up to $11,850 plus $2,950

As a note, if you take the standard deduction, you cannot itemize your deductions.

How Can I Get an Earned Income Tax Credit?

The Earned Income Tax Credit is a refundable credit and is a benefit for working people with low or moderate income. For tax year 2020, the earned income tax credit ranges from $538 to $6,660.  This credit changes depending on your filing status and how many children you have, however, you could qualify even if you do not have children.

To learn more about the Earned Income Tax Credit (EITC) and see if you qualify, visit the link to the IRS website.

Should I File a Return Even If I Don’t Have To?

As outlined above, if your salary is less than listed for your filing status, then you do not need to file. However, you could be missing out on a refund, so there are a few possible reasons to file even if you fall below the minimum requirement line:

• You may have had some tax withheld either from a paycheck or other source. To collect this amount, you will need to file a return in order to receive the refund.
• You made at least $400 in self-employment income.
• You may qualify for tax credits
• You may have made some estimated tax payments.
• If this is the first year you would not be filing a return, doing so could protect you from an audit as filing a return starts the clock on three years the IRS has to begin the auditing process. 

Do Students Have to File Taxes?

If you are student who is claimed as a dependent, you do not need to file a tax return if you have earned less than $12,200, the same as the dependent tax information we outlined previously. So, you will need to file a return if your:

• Earned income exceeds $12,200
• Unearned income exceeds $1,100
• Gross income was more than the larger of either $1,100 or earned income up to $11,850 plus $350
• Your business or self-employment net income is at least $400

How Can I File a Tax Return?

Upon review of the information listed in this article you find there is a need to file, you should file a Form 1040, or 1040-SR if you are above the age of 65.  You can obtain these forms from the IRS website.  Taxes can be confusing and if there are every any questions, it’s best to reach out to a tax professional who are skilled in tax preparation and up to date on all the new tax changes and laws.