Who need to file an income tax return?
Do you really need to file an individual tax return? In most situation, the answer is ‘yes’. However, in some particular cases, the taxpayer is not required to file an income tax return. To determine obligation for filing the tax return each year, taxpayer need to know the amount of standard deduction and personal exemption in that year. In 2018, the Tax Cuts and Jobs Act changed some rules and amount about deduction and exemption. In following paragraph, we will introduce who needs to file tax return in different conditions.
Generally, you are not required to file tax return if your annual gross income doesn’t exceed the standard deduction plus one exemption and you aren’t a dependent to another taxpayer. In 2017, the standard deduction for a single taxpayer was $6,350 and the personal exemption was $4,050. That means you don’t need to file tax return for 2017 if you didn’t get income more than $10,400. Under the new tax plan, exemptions have been removed and the standard deduction has increased hugely. For years 2018-2025, the standard deduction is:
$12,000 for Married Filing Separate or any Single filer
$18,000 for Head of Household
$24, 000 for Married Filing Joint or Surviving Spouse
Thus, you aren’t required to filing the tax return for 2018 if your gross income in 2018 is equal or lower than $12,000. Also, the additional standard deduction for the elderly (65 or over), blind and disabled is $1,300 ($1,600 for unmarried taxpayers).
However, you may still want to file the tax return even you don’t make more than $12,000 in 2018. When you get paid by the employers, a part of your gross income has been taken out and the IRS keeps it named federal withholding tax. You have to file the tax return if you want to claim a refund since the IRS does not issue refunds automatically without a tax return being filed. For example, you earn $5,000 in 2018 with $600 withheld for federal tax. You can file tax return for 2018 to get refund $600 in full because you earn less than the standard deduction.
Finally, you are required to prepare tax return for 2018 if you earn more than the standard deduction. You should find your tax adviser to prepare the income tax files. After several step calculations, you will know the amount you can get from the IRS or the amount you may need to pay to the IRS. You can still enjoy the benefit from standard deduction even you earn more than $12,000. Certainly, there are some other ways to reduce income tax amount. We will talk about the tax credits and itemized deduction in the future.