Do You Have To File Taxes? 3 Times You Can Skip It
Filing taxes isn’t fun, so you wouldn’t be alone in wanting to skip it. Unfortunately, the IRS requires most U.S. citizens and permanent residents to file if they earn over a certain income threshold.
Even if you don’t have to file taxes, you might still benefit from doing so anyway. After all, you could be eligible for a tax break or refund you never would’ve gotten otherwise. Here are three times you can skip filing taxes (and one where you might want to).
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Your Regular Income (Traditional Job) Is Too Low
Taxpayers normally must file (and pay) federal taxes by April 15. That’s the IRS’ deadline for individual returns. Even if you get an extension, you’ll still need to file by that date.
But if your income falls below a certain threshold, you might be legally able to skip it. For traditional workers under 65 (not self-employed), you won’t need to file if your income falls below:
$15,750 (single)
$23,625 (head of household)
$31,500 (married filing jointly)
$31,500 (qualifying surviving spouse)
There are a few exceptions to these rules, such as if you’re 65 or older or if you’re married and filing separately. The income thresholds do tend to change from year to year, so it’s worth checking for updates.
You’re Self-Employed and Earning $400 or Less
If you’re self-employed, the rules are a little different. You could legally skip filing taxes if your net earnings are $400 or less.
So, say you drive for Uber or do a little freelance writing on the side. As long as your income after taxes is under $400, you don’t need to report it.
Note that there are a few special cases where you might still need to file, though.
“Even if your total income is less than the standard deduction for your filing status, you will be required to file a return if you have self-employment income above $400, owe special taxes like the alternative minimum tax, receive healthcare Premium Tax Credits or receive distributions from HSAs, Archer MSAs or Coverdell ESAs,” said Rob Burnette, financial advisor and registered tax preparer at Outlook Financial Center.
Yours Is a Niche Case
If you don’t work, you probably don’t need to file taxes. But there are a few niche cases who aren’t legally required to do it either.
“Some students, retirees and part-time workers with little income below the filing threshold may not be legally required to file,” said Nicole Green, EA, MST at NGG Tax Group, Inc.
As a student, for example, you don’t typically have to file taxes if any earned income comes only from one of the following:
Foreign sources
Interest income from a U.S. bank, credit union, savings and loan institution or insurance company
Tax-free scholarship or fellowship grant
Investments that generate Portfolio Interest
Any other nontaxable income (unless it’s not taxable due to an income tax treaty)
When You Might Still Want To File
Just because you don’t legally need to file taxes doesn’t mean you should automatically skip it. You could actually end up benefiting from filing.
“If your income falls below certain threshold levels (usually the standard deduction for your filing status), you may not be required to file a federal income tax return but should file anyway to get refunds of taxes withheld or receive refundable tax credits like the Earned Income Credit or Additional Child Tax Credit,” said Burnette.
If you’re due a refundable tax credit and don’t claim it, that’s essentially money lost. And if you’ve made estimated tax payments but overpaid, something that commonly happens with self-employed individuals, not filing could mean losing out on a potential refund.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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