Introduction to U.S. Taxation: Who Needs to File?

As tax season approaches, many individuals wonder if they’re required to file a federal income tax return. Understanding your filing obligations is crucial for avoiding penalties and ensuring compliance with U.S. tax laws. Let’s explore who needs to file and why it might be beneficial to do so, even if you’re not legally required.

Who Is Required to File?

The IRS requires you to file a federal income tax return if your income meets or exceeds specific thresholds. These thresholds vary based on:

Filing Status: Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Widow(er).

Age: Whether you’re under or over 65 years old.

Income Type: Earned income (wages, salaries, tips) and unearned income (interest, dividends, capital gains).

For example, in the 2024 tax year, a single taxpayer under 65 must file if their gross income exceeds $13,850. However, this threshold changes yearly, so always check the latest IRS guidelines.

When You Should File Even If Not Required

Even if you don’t meet the income thresholds, filing a return can be beneficial. You may be eligible for:

Refundable Credits: Claim credits like the Earned Income Tax Credit (EITC) or Child Tax Credit if you qualify.

Tax Refunds: If your employer withheld federal income taxes, you might receive a refund.

Social Security Benefits: Filing may establish eligibility for future benefits, even if you’re not required to file.

Special Situations That Require Filing

In some cases, filing is mandatory regardless of income:

Self-Employment Income: If you earned $400 or more from self-employment, you must file to pay self-employment tax.

Marketplace Health Insurance: Filing is required to reconcile advance premium tax credits for ACA marketplace coverage.

Early Retirement Account Withdrawals: If you took distributions from an IRA or 401(k) before age 59½, taxes and penalties may apply.

Why Accurate Reporting Matters

Failing to file when required or omitting income can lead to penalties and interest. Filing accurate and timely returns ensures you avoid these issues and maintain compliance with federal tax laws.

Filing taxes doesn’t have to be overwhelming. Whether you’re required to file or doing so for a potential refund, staying informed helps you make the best financial decisions.

If you’re unsure whether you need to file or need assistance preparing your return, reach out to us at info@mkhstaxgroup.com. We’re here to help you navigate the process and ensure you meet all your tax obligations.