Believe it or not, there may be years when you don't have to file an income tax return with the Internal Revenue Service. To make this determination, you need to evaluate a number of factors, such as the amount of income you earn and your filing status. It also depends on whether you're the dependent of another taxpayer, and a number of special circumstances that require the filing of a tax return regardless of other factors.
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IRS income thresholds
If you aren't the dependent of another taxpayer, you will have to file a tax return if your gross income is greater than or equal to the sum of your standard deduction and personal exemption. Your total gross income for the year includes all earnings that aren't exempt from income tax. Exemptions are a fixed amount and are the same for all taxpayers eligible to claim them. Standard deductions are also predetermined amounts, but are different for each filing status. If you plan to file a joint return with your spouse, you can use two exemptions, but you must include the income you both earned.
Taxpayers 65 and older
The IRS increases the standard deduction amount for taxpayers who are 65 or older by the end of the tax year. As a consequence, the income threshold you use to evaluate whether you should file a tax return also increases. If your 65th birthday falls on January 1, you can take the larger standard deduction for the prior tax year since the IRS treats you as being 65 on December 31.
Dependent filing requirements
When other taxpayers, such as your parents, are eligible to claim you as a dependent on their own tax return, you still may need to file your own return — but you can't claim a personal exemption. You will need to file a return if your earned income is greater than the standard deduction amount for the single filing status.
However, if the total of your unearned income is more than $1,000, you need to file a return even if it is not required by your earned income. Unearned income covers all other earnings, such as taxable interest, dividends, and capital gains that aren't the result of performing services.
Dependents who are 65 and older, blind, or married are subject to the dependent filing rules, but the IRS raises the income filing thresholds for these taxpayers.
Special filing situations
Regardless of special circumstances, you are expected to file a tax return if you owe taxes other than income tax. These taxes include Social Security taxes, alternative minimum taxes, or household employment taxes. Other situations where you will also have to file are if you're self-employed and earned at least $400 during the year, or if you received distributions from a health savings account.
Although you may not be required to file a tax return, you may still want to file a tax return if you had any withholdings that can be refunded, or if you qualify for any refundable credits.