Do I Have to File Taxes?
How to Figure Out If You Need to File Current and/or Back Taxes
You only need to file a federal tax return if your income is over a certain level. However, even if you're not required to file, you may want to file to claim a refund. The income thresholds vary based on the type of income and whether you're claimed as a dependent on someone else's return.
This guide explains when you need to file taxes and outlines reasons to file, even if you're not required to. Then, it answers some frequently asked questions and details the filing requirements for 2021, 2022, and 2023.
How Much Do You Have to Make to File Taxes?
The IRS requires you to file if your gross income exceeds the standard deduction for your filing status. However, there are exceptions to this rule, and in some cases, you may need to file even if your income is less than the standard deduction.
The standard deduction adjusts annually with inflation, but for the tax year 2023, it is $13,850 for single filers, $20,800 for head-of-household filers, and $27,700 for married taxpayers filing jointly. If you use married filing separately as your filing status, you must file if your income exceeds $5.
Your standard deduction is slightly higher if you're blind or over 65. For the tax year 2023, the deduction increases by $1,850 for single filers, $1,500 for married filers, and $2,550 for head-of-household filers. If you're both blind and over 65, you get to double this amount.
To give you an example, imagine a married couple who files jointly. Their standard deduction would generally be $27,700. However, one spouse is over 65 and blind. As a result, their deduction increases by $3,000 to $30,700. If the other spouse were also over age 65, the deduction would increase by another $1,500.
Situations When You Need to File Even If You Earn Less Than the Standard Deduction for Your Filing Status
There are several exceptions to the above rules, and if you fall into any of the following categories, you must file a tax return:
- You have more than $400 in net self-employment income.
- You earned a taxable gain or received a 1099 for the sale of your home.
- You owe alternative minimum tax.
- You owe tax on a qualified retirement plan.
- You owe Social Security or Medicare on tips that you didn't report to your employer.
- Your employer didn't withhold Social Security or Medicare from your wages.
- You owe household employment taxes.
- You owe recapture taxes.
- You or your spouse received distributions from a health savings account such as an Archer MSA or a Medicare Advantage MSA.
- You had $108.28 or more in wages from a church or church-controlled organization that doesn't have to pay employer Social Security or Medicare taxes.
- You received advance payments of the premium tax credit on health insurance coverage purchased through the marketplace for yourself, your spouse, or your dependent.
Filing Rules for Dependents
If you're claimed as a dependent on someone else's return, you don't have to file if your wages are under the standard threshold, but you must file if you have over $1,150 in unearned income. If you're over age 65 and claimed as a dependent on someone else's return, the filing threshold for unearned income increases to $2,900.
Even If You're Not Required to File, You Can Claim a Tax Refund
Even if you're not required to file a tax return, you may want to file if you can earn a refund. Here are a few indicators that you may get a refund even if you're not required to file:
- You earned under the standard deduction for the year, and income tax was withheld from your pay. If you are under the standard deduction, you can get the income tax back when you file your return, and you may even qualify for additional credits.
- You paid the same estimated tax payments as last year but earned less this year. In this case, you may be entitled to a refund of some of your estimated payments.
- You qualify for the earned income tax credit (EITC). This is one of the IRS's most valuable credits, and you can qualify as long as you have earned income under a certain threshold. If you're under the standard deduction for your filing status, you should be able to claim this credit, but as of 2023, you can't have more than $11,000 of investment income. Taxpayers with no children can get up to $600, and if you have three or more kids, you can get up to $7,430.
- You qualify for the additional child tax credit. As of the tax year 2022, the child tax credit is $2,000 for qualifying children under age 17. The first $500 will go to cover your tax bill (which you likely don't have if you are under the filing threshold), but you will be able to get the remaining $1,500 as a tax refund.
- You qualify for the American Opportunity Tax Credit. If you have qualifying educational expenses and meet other requirements, you can claim an AOTC worth $2,500. If you don't owe any tax, you can get $1,000 of this credit as a refund.
- You qualify for a credit on federal fuel tax. When you purchase gasoline, you pay a tax on each gallon. You can claim a refund of that tax in certain situations, such as business use of a vehicle that is not registered for highway use. For instance, you may qualify for this credit if you paid tax on gas for a side-by that you drive on your ranch or for a vessel that you use in your whaling business.
- You qualify for the premium tax credit. The premium tax credit helps to reduce health insurance premiums of plans purchased on the marketplace. It's based on your income, and if your income ends up lower than expected, you may qualify for a higher tax credit which effectively provides you with a refund of some of the premiums you paid.
You may also want to file if you have a business loss that you want to carry forward. For instance, if you're self-employed and you lost $10,000 last year, you don't have to file if you don't have any other income sources. However, if you file, you can roll that loss forward and use it to reduce your business income in a future filing year. As of 2023, you can roll forward losses indefinitely.
FAQs About Tax Filing Requirements
To help you figure out if you need to file a tax return, we put together answers to some commonly asked questions about this topic. Take a look at the following:
Do You Have to File Taxes If You Live Abroad?
Yes, if you are a U.S. citizen, you must file taxes even if you live abroad. You should use the same filing rules noted above. In other words, if your income is over the standard deduction or if you meet one of the special circumstances, you must file.
You should report all of your worldwide income and pay tax accordingly. Luckily, you shouldn't have to pay U.S. income tax on all of your income, as the United States has tax treaties with over 200 different countries. This helps to minimize the risk of double taxation. The only way to get rid of your filing requirement is to renounce your citizenship.
Do You Have to File a Tax Return If Social Security Was Your Only Income?
If Social Security benefits were your only income, you typically don't have to file a tax return. Social Security benefits are only taxable if you have a significant amount of other income, and even then, only up to 85% of your benefit may be taxed.
Do Deceased People Have to File Tax Returns?
If someone dies during the tax year, you need to file a return on their behalf if both of the following are true:
- They met the filing requirement at the time of their death.
- You are their spouse or the executor, administrator, or legal representative of the estate.
For example, imagine that your spouse died during the tax year. They earned $40,000 during the year, and you earned $20,000. You are over the filing requirements, so you should file as married filing jointly, and you can note on the return that they died during the tax year.
Note that the filing threshold is slightly higher for 65 or older. Typically, as long as you turn 65 by the end of the tax year, you use the 65 and over deduction. However, if someone dies during the tax year, they are only considered to be age 65 or older if they turned 65 before they died or if their 65th birthday was the day after their death.
Do You Have to File Taxes If You Don't Owe?
If you meet the filing requirements, you must file a tax return even if you don't owe any tax. In this case, your return shows the IRS that you paid all the taxes you owe.
For instance, if you're self-employed and paid all of your tax due through estimated payments, your tax return shows the IRS your business income and expenses. If you're employed, and your employer withheld the correct amount of income tax, your return shows the IRS how much you earned and how much you paid during the year.
Does Everyone Pay Federal Income Tax?
No, under 60% of U.S. households pay federal income tax annually. The remaining 40% don't pay federal income tax but generally pay other taxes such as sales and property tax.
However, anyone who earns income pays Social Security and Medicare taxes on their earnings.
If you're self-employed or if your employer didn't withhold any federal income tax, this can mean that you owe tax when you file a tax return, but the tax may not be income tax. It may only be Social Security and Medicare.
Consequences of Not Filing a Tax Return
If you are supposed to file, and you don't, you can face a range of consequences. The consequences for not filing a tax return vary based on the situation, but here is an overview:
- Failure to file penalty of 5% of the balance owed — This can get up to 25% of the balance. If you file 60 days or more late, the minimum penalty is $205 or 100% of the tax that you owe.
- Substitute for return — If you don't file a tax return, the IRS may file a substitute for return on your behalf. This tax return typically doesn't include deductions or tax credits, meaning that your tax liability often ends up being higher than it should be.
- IRS collection notices — Once the IRS files a substitute for return, the tax is assessed against you. This means that the IRS can start demanding that you pay the tax. The agency will send you delinquent payment notices and demands for payments.
- Involuntary collection actions — If you don't pay or make arrangements to pay your tax owed, the IRS can collect it involuntarily. The agency will seize your tax refunds, and it can also issue tax liens, garnish your wages, and seize your bank accounts or other assets.
- Problems applying for mortgages or other loans — Many lenders want to see your tax returns as proof of income when you apply for a loan. This is especially true if you're self-employed.
- Statute of limitations for an audit never starts — Generally, the IRS can only go back three years to audit your old returns (six years if your income was understated by 25% or more), but if you don't file your returns, the IRS can go back an unlimited amount of time.
Again, if you're not required to file, the biggest drawback is that you can lose your tax refund. You have three years to claim a refund. If you haven't filed, you may still have time.
Do I Need to File Back Taxes?
To figure out if you need to file a return for a certain year, you need to look at the filing requirements for that year. Again, the standard deduction changes every year so you need to look at the filing requirements for the years that you didn't file.
Often, if you haven't filed for a long time, the IRS will only require you to file the last six years of tax returns. However, there can be exceptions to this rule.
Do I Need to File a Tax Return in 2021?
As of the tax year 2021, you must file a return if you fall into any of the following categories:
- Single, under age 65, and gross income exceeds $12,550
- Single, 65 or older, and income exceeds $14,250.
- Married filing jointly, under age 65, and income exceeds $25,100.
- Married filing jointly, one spouse under 65 and one older than 65, and income exceeds $26,450.
- Married filing jointly, both age 65 or older, and income exceeds $27,800.
- Married filing separately, any age and income exceed $5.
- Self-employed with more than $400 in net self-employment income.
- Sold your home and received a 1099 for the sale, earned a capital gain that is not excludable from income, or want to report the gain from the sale so you can save the exclusion for the future.
- Owe taxes on a retirement account.
- Tipped worker who owes Social Security or Medicare taxes on tips.
If you are blind, you have a higher filing threshold than noted above. If you are claimed as a dependent on someone else's return, your filing requirements are also different than those noted above.
Do I Need to File a Tax Return in 2022?
For 2022, you need to file if your income is over the following thresholds for your filing status:
- Married filing jointly and under age 65 with income over $25,900.
- Married filing jointly with one spouse over age 65 with income over $27,300.
- Married filing jointly with both spouses over age 65 with income over $28,700.
- Married filing separately, with income over $5.
- Qualifying widower with income over $25,900.
- Single with income over $12,950.
- Single and over age 65 with income over $27,650.
- Head of household, with income over $19,400.
- Head of household over age 65 with income over $21,150.
If you're blind, you can use the guidelines for taxpayers who are over age 65, and if you're over age 65 and blind, you get an even higher filing threshold than noted above. If you are claimed as a dependent on someone else's taxes, you should file if your earned income is over the threshold for the single filing status, but if you have unearned income, the filing threshold is much lower. Consult with a tax professional if you are unsure.
You also need to file a 2022 tax return if you have over $400 in net self-employment income (that's revenue minus business expenses), you owe taxes on a retirement account, or you are a tipped worker who needs to pay Social Security and Medicare on tips. If you sold your home during 2022, you need to file if any of the following apply: 1) you received a 1099-form from the sale, 2) your capital gain exceeds the capital gains exemption for home sales, 3) you don't qualify for the capital gains exemption, or 4) you qualify for the exemption but want to report the gains anyway.
Do I Need to File a Tax Return in 2023?
For 2023, you must file a tax return if you have over $400 in self-employment income after expenses. You also must file if you need or want to report capital gains from the sale of a home or if you received a 1099 related to the sale of a home.
Additionally, tipped workers who owe Social Security or Medicare tax on tips must file, and people who owe taxes on retirement accounts must file. If none of those criteria apply, you need to file if your income is above the following thresholds for your filing status:
- Single with income over $13,850.
- Single and age 65 or older with income over $15,700.
- Married filing jointly with income over $27,700.
- Married filing jointly with one person age 65 or older with income over $29,200.
- Married filing jointly with both people over age 65 and income over $30,700.
- Married filing separately with income over $5.
- Qualifying widow(er) with income over $27,700.
- Head of household with income over $20,800.
- Head of household age 65 or older with income over $22,550.
If you are blind, you have a higher filing threshold than noted above. The above thresholds also don't apply to taxpayers who are claimed as dependents on someone else's return.
Get Help With Unfiled Returns
If you're unsure whether you need to file taxes, reach out to a tax professional. Using TaxCure, you can search for local tax pros in your area. They can help you file your current year's returns and any back taxes you need.