For most people, filing an annual tax return is a stressful event. After all, you have to figure out which forms you need to use and how to complete those forms correctly to provide the required information to the IRS.
Paying taxes is even less fun—who wants to turn over their hard-earned money to Uncle Sam?
The good news is if you don’t make a lot of money, you don’t necessarily have to pay any taxes or even file a tax return. The specific earnings threshold at which you’re required to pay taxes depends on factors such as your age and anticipated filing status.
To find out if you have to file a tax return based on your personal tax situation—and to learn how much money you can make before you do—keep reading.
In this guide:
The Standard Deduction
Americans can earn a surprising amount of money before they have to pay taxes. That’s because every taxpayer who is not claimed as a dependent on someone else’s tax return is entitled to claim a standard deduction, the amount of which varies based on their filing status.
When you take a deduction, you reduce your taxable income by the amount of the deduction. If you made $1,000 in income and took a $1,000 deduction, your income would be reduced to $0 and you wouldn’t meet the filing requirements for a federal tax return.
So if you earn less than the standard deduction and your income is reduced by the amount of that deduction, it’s as if you earned nothing, which would not require you to file taxes. However, if you had an internship and you made $5,000 for the summer, it makes sense to file since taxes were likely withheld. By filing, you will probably get all of the money you paid in taxes back.
For 2019, the standard deduction (with an additional $1,300 if you are elderly or blind) is:
- $24,400 for married filing jointly
- $12,200 for single filers or married filing separately
- $18,350 for single filers, but may have some dependents who are not your children
So if you earn less than the standard deduction—whether as a W-2 wage earner or from self-employment—and your income is reduced by the amount of that deduction, it’s as if you earned nothing, which would not require you to file taxes.
Taxable income doesn’t necessarily include every dollar you earn, either—tax-exempt income isn’t counted. Examples of tax-exempt income include:
- Income from most disability insurance policies, unless the policy was paid for by an employer
- Gifts valued at up to $15,000
- Payouts from life insurance policies
- Money from the sale of a property that meets the IRS test for being a principal residence
- Income from municipal bonds
However, if you have self-employment income or earnings from rental real estate, investments, or other wages, that would all be considered taxable income.
Taxpayers 65 and Older
If you are over the age of 65 at the end of the tax year, you can actually earn a bit more than the standard deduction and still not have to pay taxes or file a tax return.
The IRS explains in Publication 501 the specific amount of money seniors over 65 can make. Publication 501 hasn’t yet been released for the 2019 tax year, but the numbers for 2018 show how much more seniors can generally earn—from Social Security and other sources—compared to those under the age of 65:
- A senior filing as single could make up to $13,600 in income in 2018 before having to file, compared to $12,000 for someone under 65 who filed as single.
- A senior filing as head of household could make up to $19,600 in income before having to file, compared to a person under 65 who could make only $18,000.
- A married couple filing jointly could make up to $26,600 if both spouses were over 65 (or up to $25,300 if only one spouse was), compared to a married couple under 65 who’d have to file once they earned $24,000.
Filing and Tax Refunds
If you aren’t required to pay taxes or file a tax return because you don’t meet the earnings threshold, there are still circumstances where you might want to file a return anyway.
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If you have a dependent child, you might want to file a federal tax return even if you don’t meet the general tax filing requirements because you may be eligible for tax credits—such as the Child Tax Credit or Earned Income Tax Credit (EITC)—that could result in you getting money back from the IRS. You’d have to file a federal income tax return to claim your credit.
If you’ve had money taken out of your paychecks and sent to the IRS, you may also need to file to see if you’re entitled to a tax refund.
Bottom Line: Do You Need to File Taxes?
You don’t want to waste time filing a tax return if you don’t have to, so make sure you know the minimum income thresholds at which you’d be required to do so. Before you decide not to file, ensure the IRS doesn’t owe you money by way of a tax credit or general overpayment—if it does, you should file a return to get your cash back.