Tax filing season is upon us, and it can be confusing for those who are unsure of how much money they need to make in order to file taxes. In this article, we will discuss how to calculate your taxable income and what the filing requirements for taxes are.
Calculating Taxable Income
Taxable income is the amount of money you make that is subject to income taxes. To calculate your taxable income, you need to subtract any pre-tax deductions from your total earnings. This includes deductions from retirement accounts, health insurance premiums, and any other pre-tax deductions you may have. Once you have calculated your taxable income, you can then use this figure to determine if you need to file taxes.
Filing Requirements for Taxes
The Internal Revenue Service (IRS) requires most individuals to file taxes if their taxable income is above a certain threshold. For individuals who are filing as single, the threshold is $12,400. For those filing as head of household, the threshold is $18,650. For married couples filing jointly, the threshold is $24,800.
If your taxable income is below these thresholds, you are not required to file taxes. However, if you are eligible for certain tax credits or deductions, you may want to file even if you are not required to.
Knowing how much you need to make to file taxes can be confusing, but understanding the basics of calculating your taxable income and the filing requirements for taxes can help you better understand your tax situation. It is important to consult with a tax professional if you are unsure of what filing requirements you must meet.
Every year when tax season approaches, one question always comes up: “How much money do I need to earn in order to be required to file taxes?” Although the answer might differ from person to person, the general rule is that every person must file taxes if they meet a certain income threshold.
For the 2020 tax year, if you categorized yourself as a single filing status and earned more than $12,400, you must file taxes. It does not matter if all of the money was not earned through wages; it includes any earnings such as alimony, income from rental properties, unemployment benefits, etc.
If you are married filing jointly, the threshold rises to $24,800 and is calculated by combining the income of both parties. For the filing status of head of household, the threshold is $18,650, while married filing separately is $5.
In addition, anyone claiming themselves as a dependent of another person (for example, a child) must also file taxes, regardless of what they earned. The dependent filing threshold is only $0; in other words, even if you made no money, you may still be required to file taxes.
In general, you will be exempt from filing taxes if your taxable income, which is earned income minus any applicable deductions and credits, is less than the filing threshold. If, however, you are claiming any deductions or credits, you must file taxes.
The Internal Revenue Service (IRS) provides detailed explanation about tax filing thresholds and obligations. It is important to review the information thoroughly before making a decision about filing taxes or determining whether you qualify for any deductions or credits.
In conclusion, it is important to understand the filing threshold and your obligations to the IRS. If you exceed the filing threshold, then you must file taxes. If you are claiming deductions or credits, then you must also file taxes. For more information and guidance, you can consult the IRS directly.
