Filing tax returns is a legal obligation. If you do not file a tax return when you are required to file a tax return, it is a severe breach of law and may create not only penal monetary consequences ( failure to file penalty ) but even prosecution by IRS may follow if you have a bit of bad luck and relates to serious tax evasion charges. So, here are seven major reasons that will compel you to comply with the law for tax filing.
What are Income limits for filing tax returns?
For the tax year 2022, the minimum annual income that will legally force you to file a tax return is based on the filing status. It means, for each type of filing status, the annual income is fixed differently.
- Single status – annual income limit is $12,900 if you are below 65 years and $14,700 if you are 65 or above.
- Married Filing Jointly- if both are below 65 years, the limit for annual income is $25,900
- If one spouse is 65 or above -the income threshold is 27,300
- If both are 65 or above, the income threshold for filing a return is $28,700
- Head of Household, having age below 65 years, must file a tax return if earning $19,100. If aged 65 years or more, the annual income limit is $21,150
- Married filing separately must file a tax return if earning a bare minimum of $5.
- A qualifying widower below 65 years must file a tax return if he earns $25,900. If he/she is 65 or more, must file a tax return if annual income is $27,300
Video: Income limit for filing tax return
Easy calculator if you must file tax return
The calculator below computes based on your gross income input for the tax year 2022.
List of other compelling reasons for filing tax returns
2. You must file a return if you owe any tax like :
- AMT or alternative minimum tax.
- Any additional tax on a qualified plan, including an individual retirement arrangement (IRA) or other tax-favored accounts.
- Social security or Medicare tax on tips not reported or, if reported, not collected
- Household employment taxes.
- Recapture taxes.
3. You must file a joint tax return if you or your spouse received Archer MSA or Medicare Advantage MSA, or other health savings account distributions.
4. A self-employed person having annual earnings from self-employment of $400 or more in a year must file a tax return. Please note that “self-employment” may be selling goods or providing services. While in the case of goods, it is profit (sales – cost ) is considered as your annual earnings; however, in the case of services, receipts itself is considered earnings,s and only very few items are reduced as an expenditure.
5. If you work for a church or qualified church-controlled social security taxes and received wages of $108.28 or more, you must file tax return.
6. If somebody made advance payments of the premium for health insurance bought from the Health Insurance Marketplace. The payments made on behalf of you get reflected on Form(s) 1095-A
7. If your case falls under section 965 of IRC, you must file a tax return. Section 965 imposes a tax on some taxpayers that have untaxed foreign earnings and profits to pay a tax as if those earnings and profits have been repatriated to the United States.
What happens if you do not file a tax return?
Internal Revenue Code provides a failure to file a penalty that can be imposed if you are required to file a return but fail to do so. If you willfully fail to file a return, you may be subject to criminal prosecution. Also, note that a penalty may not be imposed without hearing you or being given an opportunity to defend. So, if you if present reasonable cause for failure to file the tax return, IRC empowers the IRS not to impose a penalty in such a case.
While the information on this site - Internal Revenue Code Simplified-is about legal issues, it is not legal advice or legal representation. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of information contained herein.