Do I Have To File Taxes?

You’ve probably heard it’s tax filing season again. Like clockwork, it is back and you have seen the marketing efforts by companies notifying you to file your tax return: television commercials, pandora ads, billboards shouting for you to file your return. Do you find yourself left baffled at the whole process of filing taxes, are you a first time filer, or are questioning whether or not you have to file in the first place?

It’s true, filing your taxes can be an overwhelming affair. Gathering the right paperwork and entering numbers seems like a chore, let alone proofing such numbers and making sure you entered them correctly. There are a number of methods that one can adhere to during tax season to ensure the process isn’t as demanding as it may seem at first. Of course, the first step needs to be addressed before going any further this tax season. Determining whether or not you need to file.

Who Needs to File?

Tax season officially opened just days ago on January 29, 2019. This is when the Internal Revenue Service begins to receive tax returns. Those people whose earnings don’t meet certain thresholds each year don’t have to file taxes. There are three main categories to look at when you are determining whether to file: age, your filing status, and your income. The income amounts are adjusted annually to factor inflation. Let us look at each factor in more detail.

Age, Filing Status, and Income

The first factor that determines filing status is age. For IRS purposes, the only marker you have to worry about is whether or not you are younger than 65 or 65 or older on the last day of the tax year. For instance, if you are filing in 2019 for your 2018 taxes, you have to ask yourself how old you were on the last day of 2018, or on the first day of 2019 (The IRS states that you are considered 65 or older if you turn 65 on New Years Day and should consider yourself 65 for the prior year’s taxes).

Under 65 Years of Age

For those that are under the age of 65, they will look at certain number thresholds when determining whether or not they are to file a tax return. In order to not file, they will have had to make under $10,400 if they are single according to tax purposes. This number jumps to $13,400 if they are the head of household, and to $20,800 for those married and filing a joint tax return. For those that are considered to be a qualifying widow or widower with dependent child, the number has to be under $16,750 to not file, and under $4,050 for those married by filing separate returns.

65 Years and Older

For those that are considered to be 65 years and older for the filing of their 2018 taxes, the numbers change a bit. For those who are listed as single for filing purposes, they will be have to make under $11,950 to avoid filing. The number jumps to $14,950 for the head of the household and to $22,050 for one spouse filing jointly and to $23,300 for two spouses filing jointly. The 2018 threshold for those that are considered to be a qualifying widow or widower with dependent child is $18,000, and stays at $4,050 for those who are married but filing separate returns.

The IRS also has certain rules regarding dependents and their filing. Dependents are those that are claimed by the head of household when they file taxes: they have to be under a certain age and be deemed a dependent by the IRS. The IRS determines whether or not a dependent has to file by looking at money earned that is deemed to be earned and unearned.

Earned income is considered money earned from salary, wages, or tips. It also includes taxable scholarships and fellowship grants. Unearned income are things like dividends or investment interest, unemployment benefits, capital gains, and certain trust distributions.

You also might have to file a claim if you received health care as required by The Affordable Care Act. This would be the case if you received some federal help in buying your health care coverage through the health insurance marketplace. As always, it may pay to file even if you don’t think you need to. Make sure to do proper research in determining whether or not you have to file. If you determine you have to file, hiring a CPA may be an option for you.

Benefits of having a CPA file

Yes, filing taxes can be a hassle. That is why trusting a certified accountant to file your taxes for you may be just what you need. There is no stress involved; simply bring in all of the necessary paperwork (ask beforehand if you are questioning what paperwork you need) and let the CPA do the work. The process can go from hours to minutes. Make sure you find one that is reputable in your area and go from there.

About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.