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How Much you Have to Earn to File Taxes in 2023

It’s critical to get your tax information ready as soon as possible (which means you should start now if you haven’t already). 

But, depending on how much money you make and how you want to file your taxes, one more item to consider: do you even make enough money to be required to file taxes?

If you’re not making a lot of money, it’s a good question to ask. You may not have to submit them if your annual income is below a specified threshold.

Even in these situations, other factors such as your health insurance, whether you’re self-employed or eligible for an earned income tax credit, may demand filing a tax return. 

In this article, we’ll look at how much you have to earn to file taxes in the US. We’ll also look at other scenarios that affect tax filing.

Ensure you read this article to the end, as it promises to be very informative and insightful.

The amount you must earn to avoid paying federal income tax is determined by age, filing status, reliance on other taxpayers, and gross income. 

For example, a person under 65 earning the maximum amount before taxes in 2018 was $12,000.

If your income falls below the IRS’s threshold, you may not be required to file taxes; however, it is still a good idea to do so.

Table of contents

What is the Bare Minimum for Filing Taxes?

You don’t have to file a federal income tax return if your annual gross income is below a certain threshold.

However, the precise threshold is determined by several circumstances.

  • Your filing status – Single filers have a lower filing threshold than married couples filing jointly.
  • Age – Filing thresholds for those 65 and older are generally higher in all filing statuses.
  • Dependency status – Filing thresholds for children and other dependents vary according to their income (earned or unearned).

If you’re self-employed, you may be subject to additional rules.

Read Also: How Much Can You Earn While on Social Security in 2023

How much money Do you need to make?

This depends on your filing status. If you plan to file as a single person, a married couple filing jointly, a married couple filing separately, or the head of household?

Let’s take a look at each one individually.

Single:

If you are single and under 65, you can earn up to $12,200 in annual gross income without having to file a tax return.

If you’re 65 or older and intend to file a single tax return, the minimal amount increases to $13,850.

Head of Household:

If you make $18,350 or more and are under age 65, you must submit a tax return if you qualify for head of the household status and wish to file as such. If you’re 65 or older, your gross income is $20,000 per year.

If you’re an eligible widower with a dependent kid, you can file jointly as a married filing, with the age disparity remaining in effect: at least $24,400 if you’re under 65, at least $25,700 if you’re 65 or older.

Married and filing separately:

Married and filing separately must file a tax return even if their gross income is a mere $5.

Married and filing jointly:

The amount you must earn if you’re married and filing jointly is determined by the age of you and your spouse, but it’s usually double what a single person would need. 

You must earn at least $24,400 if both spouses are under 65. You must earn at least $27,000 if both couples are 65 or older. Split the difference if one of you is 65 or older; you’ll need to earn $25,700.

Read Also: 50 Best Paying Apps To Earn Extra Money

The Rules for Adults and Dependent Children

When someone can claim you on their tax return, the regulations change. Even if your income is lower than that depicted in the chart above, you may be required to submit a federal tax return. 

Because the IRS divides your gross income into two categories — earned and unearned — the thresholds appear different.

Earned income is earned by working for someone else or owning a business.

Investment income, such as interest, dividends, or capital gains, is considered unearned. It could also include debt forgiveness, taxable Social Security income, pensions, and other assets.

The threshold requirements for when a dependant must file can be complicated, so study them carefully.

They’ve usually contained in the Form 1040 instructions for each year. More information is also available in IRS Publication 501.

SEE ALSO: Tax Form Schedule C (Form 1040): Definition, Overview, Uses

When are Social Security Payouts Taxed?

Get Social Security benefits and don’t have any other taxable income. You should examine whether you need to submit a return since tax-exempt income can make your benefits taxable even if you don’t have any other income.

Here’s an example of where you might need to file, even though your income is tax-exempt:

You are under 65 and receive $30,000 in Social Security income plus $31,000 in tax-free interest. Your Social Security benefits will be taxed at a rate of $14,700.

You’d have to submit a tax return because this is more than your standard deduction ($12,550 for a single taxpayer in 2021).

To see if your Social Security benefits are taxable, do the following:

Add one-half of the Social Security income to any other income, including tax-exempt interest.

Then compare that amount to the filing status’s base amount. Your benefits may be taxable if the total exceeds the base amount.

What is the Maximum Amount a Small Business can earn before Paying Taxes?

If you own a small business, you must pay taxes on all income, regardless of profit or loss. 

The tax return you must file is determined by the structure of your company. For example, you’ll include schedule C with your tax return if you own a sole proprietorship.

You must also pay self-employment taxes if you earn more than $400 as a freelancer. These levies cover Medicare and social security taxes.

If your net income exceeds $400, you must file IRS Form 1040, Schedule C, and Schedule SE. You must withhold federal and state income taxes and Social Security and Medicare taxes from each employee if you have one.

READ ALSO: How Roth IRA Taxes Work

Other circumstances that necessitate filing a tax return

You’ll have to file a tax return regardless of your income if:

  1. You earned at least $400 through self-employment.
  2. A health savings account, an Archer Medical Savings Account, or a Medicare Advantage MSA made distributions to you.
  3. You owe taxes on an IRA, a health savings account, or any tax-favored account.
  4. Household employees owe you taxes.
  5. Alternative minimum tax is due.
  6. A church or church organization provided you with more than $108.28.
  7. You are liable for recapture taxes.
  8. On tips that you didn’t submit to your employer or that your employer didn’t deduct from your pay, you owe Social Security or Medicare tax.
  9. The premium tax credit was paid in advance for you, your spouse, or a dependent who purchased health insurance through the marketplace.
  10. The health coverage tax credit was paid in advance for you, your spouse, or a dependent who purchased health insurance through the marketplace.
  11. You owe uncollected Social Security, Medicare, or railroad retirement taxes on tips you reported to your company, group-term life insurance, and additional taxes on health savings accounts.

Do you want to be exempted from filing a tax return? There’s a compelling reason why you should do it in the first place.

You might be eligible for tax relief resulting in a refund. So, if you’re thinking about filing, consider the following:

  1. Your pay had income tax deducted from it.
  2. You paid estimated taxes or had a rebate from the previous year applied to this year’s projected tax.
  3. The earned income tax credit is available to you.
  4. The additional child tax credit is available to you.
  5. The American Opportunity education credit is available to you.
  6. You are eligible for the healthcare tax credit.
  7. You are eligible for the federal fuel tax credit.

How Can I Lower My Taxable Earnings?

Adding to your retirement savings with standard (not Roth) IRAs and 401(k)s, up to the maximum permissible contribution, is one strategy to lower taxable income.

Another strategy to reduce your taxable income is to contribute to a Health Savings Account (HSA) or a Flexible Spending Account (FSA).

Before paying taxes, you might earn thousands of dollars. Even if your income is below the cut-off level and you are not required to pay taxes, you must file taxes to receive a refund check.

Conclusion

You can utilize the information you record for seeking a tax return, including unearned income, for the next tax year. You can pay and file tax returns each year, as well as seek tax credits if applicable, by estimating your taxable income.

Talk to a tax specialist about filing your personal taxes, bookkeeping, payroll, company taxes, and incorporation in the United States if you have any queries or need tax help.

We hope you found this article very helpful. Do well to adhere to the guidelines stipulated here.

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What’s up, I’m Dums. I help brands gain visibility through SEO Writing and other applicable Content Marketing Strategies. My educational background includes a BSc in Mass Communication with a focus on writing for the New Media.

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