The IRS has restrictive guidelines for determining who needs to file, which means even if you don't owe, you may still have to submit a tax return.
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
It's very common to feel like you shouldn't need to file a return if you don't owe any tax. However, owing tax and having a filing requirement are two separate situations in the IRS' eyes. The IRS has restrictive guidelines for determining who needs to file, which means even if you don't owe, you may still have to submit a return. These restrictions are based on the amount and type of income you receive, the standard deduction amount for your filing status, and if not claimed as a dependent—the exemption amount for the year.
General filing requirement
The IRS has general filing requirements for most taxpayers. Even if no tax is owed, most people file a return if their gross income is more than the sum of the standard deduction and a personal exemption. The standard deduction amount you can take will depend on your filing status and age. Standard deduction amounts change each year, however, a single filer’s standard deduction is always less than the amount a head of household filer can take.
Children and dependents
Children and other dependents may be required to file their own tax returns despite being claimed on someone else’s tax return. However, a different set of rules govern when these individuals need to file since they aren’t eligible for personal exemptions and are subject to reduced standard deduction amounts.
Moreover, there is a distinction between a dependent’s earned and unearned income insofar as larger amounts of unearned income can be received without having to file. Examples of unearned income includes interest, dividends, taxable Social Security benefits and unemployment compensation. Earned income, however, typically includes earnings from employment and self-employment.
Self-employed business owners
You’re self-employed if you earn money by providing services to individuals or entities, other than an employer, or operate a trade or business as a sole proprietorship or as a partnership, for example. You must file a return if your net earnings from self-employment is $400 or more. This generally requires you to file a Schedule C (or C-EZ) with your 1040 to calculate and report net profit, and a Schedule SE to cover the self-employment taxes you’ll also owe.
Filing for refunds
Even if you aren’t required to file a return, you still may want to. If you don’t owe tax at the end of the year, but had taxes withheld from paychecks or other payments—filing a return may allow you to obtain a tax refund. You may also be eligible for certain refundable tax credits, like the Earned Income Tax Credit (EITC), which could generate a refund for you. The only way to get your tax refund is to file a tax return.
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