If you want to know whether filing tax return is required under law for you , then you must first ask whether you are self employed person or a salaried or a person with income from other sources. This is so because of tax law regarding filing of tax return -Internal Revenue Code section 6612 -provides the different laws regarding filing of tax return for different class of persons.
Tax filing rules for the self-employed
A self-employed must file a tax return if his net earnings from self-employment is at least $400.
What does Net earnings mean ? It means your total earnings from self-employment after deducting expenses incurred for earning it. You can deduct various kinds of business deductions from gross revenue from self employment .
Is filing tax return good even if your net earning is less than $400?
The answer is Yes , for two reasons
- If you have over all business loss, then you can adjust that business loss with income of future years. The benefit is to person who filed a tax return for the year in which loss was incurred.
- You do not lose anything if you file tax return
Okay , I am not a business man. What is the filing rules for me.
If you’re not a businessman or woman or not a self-employed person, the tax filing rules usually depends on your filing status and the gross income you earned . The gross income threshold given below is for income earned in 2019,for which you must file tax return in 2020.
Please note that the due date for filing tax return extended to 15th July 2020 on account of Covid-19 pandemic.
|Tax filing Threshold for 2019||Gross Income|
|Single under age 65||$12,200|
|Single age 65 or older||$13,850|
|Married filing jointly, both spouses under 65||$24,400|
|Married filing jointly, one spouse age 65 or older||$25,700|
|Married filing jointly, both spouses 65 or older||$27,000|
|Married filing separately, any age||$5.00|
|Head of household under age 65||$18,350|
|Head of household age 65 or older||$20,000|
|Qualifying widow(er) under age 65||$24,400|
|Qualifying widow(er) age 65 or older||$25,700|
What is Gross Income ?
The term “Gross income” for the purpose of determining if you need to file tax return compulsorily , means all the income you received during the year that was not exempt from tax. The receipts that may be regarded as your income includes:
- Income from sources outside the United States
- Income from the sale of your main home even if you can exclude part or all of it from tax
- Gains, but not losses, from sales of stock and other securities, and
- Business income reported on IRS Schedule C or Schedule F (not including losses)
If the aggregate of your earnings from various sources is above the threshold , then you are obliged to file tax return. You can use any of of the 10 free tax filing offers approved by IRS
Also read Who Must File Estate Tax Return & When ?