All the moaning and whining over filing a tax return can be exhausting in itself. But if your income is low enough, you can escape filing and tune out the noise and angst altogether. The Internal Revenue Service sets federal tax-filing thresholds that are regularly adjusted for inflation. In addition to income, whether you must file depends on age, filing status and if someone else claims you as a dependent. The thresholds noted are current as of tax year 2012.
Non-Dependent Younger Than 65
The threshold formula is simple if you are not yet 65 and if no taxpayer claims you as a dependent. Just add the IRS standard deduction amount to the personal exemption amount. Use the standard deduction amount that applies to your filing status. For example, for single filers, as of 2012, the standard deduction is $5,950 and the personal exemption is $3,800. Add the two together to arrive at $9,750. For married taxpayers filing jointly, the threshold is $19,500.
Non-Dependent 65 or Older
One of the upsides of aging is that the IRS lets you earn more money without requiring that you file a return. Non-dependent seniors who are single can escape filing when their income is less than $11,200. Married seniors who file jointly can earn up to $21,800 before they must file.
Dependents Younger Than 65
The rules for dependents are a bit complicated. First, you can't claim a personal exemption if and when you file if someone else claims you as a dependent. Second, the source of your income comes into play when it comes to determining whether you have to file.
Earned income must be less than $5,800 for a dependent who is not yet 65 to avoid filing. But if a dependent receives investment income of $950 or more, he has to file a return, no matter how little he earned. This is true even for children; the parents must then file and sign on their behalf. If you are a dependent and your status is "married filing separately," you have to file with income as low as $5 if your spouse itemizes deductions.
Dependents Older Than 65
A single senior who is claimed as a dependent can earn up to $7,250 without being required to file. The threshold is much lower when it comes to unearned income, just $2,400. Married seniors are allowed up to $2,100 in unearned income or $6,950 of earned income without filing a return. If you are a married senior and your spouse files separately and itemizes deductions, the IRS insists that you file a return if your income reaches $5.
If you run your own business, you have to file a return even if you earn only $400 from that pursuit. Self-employment taxation kicks in at this low income level and cannot be avoided. This rule applies to everyone, regardless of age or dependent status.
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