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To File or Not to File?

Filing taxes

Everyone has to file a tax return, right? Actually, no…there are situations where a person may not have to file taxes. It depends on age, income level, where income comes from and what status you are filing under.

Let’s take a look at some of the guidelines provided by the IRS.

Thresholds For Income

Anyone who makes under the minimum income line does not have to file taxes. You are entitled to one standard deduction and an exemption, unless you are being named as a dependent on another person’s tax return that year. Anything over that rate is subject to a tax and you have to file a proper return.

The amount of those deductions and exemptions are changed every year to keep up with changing inflation rates. You can see those rates at the IRS website. The amount will be partially decided by whether you are filing as a single taxpayer or in a joint filing with a spouse.

Age Specific Exemptions

The rules for tax filings changes when you hit the age of 65. You may be subject to a higher income bracket before you are required to file, especially if you are receiving social security benefits.

Keep in mind that social security benefits are taxable if you are receiving an income from another source in addition to that monthly allotment. So make sure it is being factored into your final calculations when ascertaining whether you need to file a return.

ACA Status

The Affordable Care Act has opened up an insurance marketplace with benefits that offset the cost of health care for many Americans. At the end of the year, people who used the Marketplace are required to report it on their taxes, which includes providing information given from a special form issued in the mail along with W-2’s.

If you have used the Marketplace you will have to file a tax return.

Filing Rules For Dependents

Dependents are not able to name themselves as a deduction because they are being named on someone else’s return. Income they earn over $6,300 has to be reported on a return. If they are not employed but earning dividends on investment accounts or interest on bank accounts they are required to report it once it hits $1,500 per year.

Why You Should File Anyway

There are several instances where you can get out of filing a return. But do you really want to? Many Americans learn later on that they could have gotten a refund if they had only filed. You may want to consider filing a return even if it isn’t necessary. You never know what you could get.

Find out more at AATAS.

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