What If I Only Receive Social Security Benefits
In most cases, if you only receive Social Security benefits you wouldn’t have any taxable income and wouldn’t need to file a tax return.
One catch with Social Security benefits is if you are married but file a separate tax return from your spouse who you lived with during the year. Then you will always have to include at least some of your Social Security benefits in your taxable income to see if it is greater than your standard deduction. If your taxable income is greater than you standard deduction, you would need to file a return.
Case Law Prior To The Sixteenth Amendment
Article I, Section 9 of the U.S. Constitution states: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.” In 1894, Congress passed the Wilson-Gorman Tariff, which created an income tax of 2% on income of over $4,000. Charles Pollock contested that the tax was unconstitutional under Article 1, Section 9. As such, the Supreme Court granted certiorari to hear this issue in Pollock v. Farmers Loan and Trust Company, 157 US 429 .
In Pollock, the Court held that the Wilson-Gorman Tariff was unconstitutional under Article I, Section 9 of the Constitution, as the act created a direct taxation on property owners, not a tax apportioned among the states.
You Can Get A Refund Of Withheld Or Estimated Taxes
If your employer withheld federal income taxes from your pay or you made estimated tax payments, filing a tax return may allow you to receive some or all of those overpayments back in the form of a tax refund.
Keep in mind, if you regularly file a tax return just to get a refund of the tax your employer withheld, you might want to decrease your withholding.
File a new Form W-4 with your employer to reduce your withholding and increase your take-home pay, and you wont have to worry about filing a return unnecessarily.
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What Are Some Other Must
Self-employment is a common reason for filing a return even if you dont meet the basic income criteria. If you had net earnings from self-employment of $400 or more, youre required to file a return. Basically, if you owe any self-employment tax, youre required to file Form 1040.
Here are some other reasons youll need to file.
- Owing special taxes. These can include the alternative minimum tax, additional taxes for nonqualified distributions from tax-favored accounts such as IRAs and HSAs, Social Security or Medicare tax on tips not reported to your employer, or employment taxes for a household employee
- You received distributions from a medical savings account or health savings account.
- You received wages of at least $108.28 from a church or organization that is exempt from employer Social Security and Medicare taxes.
- You, your spouse or your dependent received advanced payments of the premium tax credit by enrolling in coverage through the Health Insurance Marketplace.
When Dependents Might Be Required To File
Individualschildren or adultswho are claimed as dependents on another taxpayers return are governed by different income tax filing regulations. As with other taxpayers, they must file a tax return when the income they earn income exceeds their standard deduction. However, their standard deduction is calculated differently.
For single dependents who are not blind and are under age 65, the standard deduction is the larger of:
· $1,100 in 2019, or
· The sum of $350 plus the individuals earned income, up to the standard tax deduction for a single person .
Income that a dependent receives from dividends and interest is considered to be unearned income. If a dependent’s unearned income exceeds $1,100 , the individual is required to file a tax return.
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Federal Income Tax Filing Requirements
The determination of whether you are required to file a federal individual income tax return is based on:
- your federal tax filing status
- your gross income
- whether you are claimed as a dependent on another individuals income tax return and
- whether you received a specific credit or owe a tax liability .
General Filing Requirements when an individual is NOT claimed as a dependent on another individuals income tax return
|Filing Status||Gross Income1 is at least|
1 Gross income generally means all income that you received in the form of money, goods, property, and services that is not exempt from tax, including any income from outside of the United States or from the sale of your main home . Please note that certain social security benefits may be excluded from the definition of gross income.
2 If you did not live with your spouse at the end of 2021 and your gross income was at least $5, you must file a return regardless of your age.
For items of gross income generally pertaining to students, please refer to IRS Publication 970, Tax Benefits for Education, Chapter 1, Scholarships, Fellowships, Grants and Tuition Reductions and the IRS web page for students, Students Page – Higher Education.
If you will be claimed as a dependent on another individuals tax return, please refer to the Federal Form 1040 Instructions for filing requirements and worksheet.
Do You Need To File A Tax Return
Here’s how to figure out if you should file a tax return this year:
- Look at your income to see if you made the minimum required to file a tax return
- Decide which filing status is best for you
- If you’re retired, find out if your retirement income is taxable
- Find out if you qualify to claim certain to lower the amount of tax you owe
- Use the Interactive Tax Assistant to see if you need to file
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Nonresident Athlete Individual Income Tax
A nonresident individual who is a member of the following associations is considered a professional athlete and is required to electronically file a Louisiana income tax return, IT-540B reporting all income earned from Louisiana sources:
- Professional Golfers Association of America or the PGA Tour, Inc.
- National Football League
- East Coast Hockey League
- Pacific Coast League
Income from Louisiana sources include compensation for the services rendered as a professional athlete and all income from other Louisiana sources, such as endorsements, royalties, and promotional advertising. The calculation of income from compensation is based on a ratio obtained from the number of Louisiana Duty Days over the total number of Duty Days. Duty Days is defined as the number of days that the individual participated as an athlete from the official preseason training through the last game in which the individual competes or is scheduled to compete.
Are My Social Security Benefits Taxable
As a very general rule of thumb, if your only income is from Social Security benefits, they wont be taxable, and you dont need to file a return. But if you have income from other sources as well, there may be taxes on the total amount.
If youre married and file a joint return, both spouses must combine their incomes and Social Security benefits when figuring taxable amounts. This applies even if the spouse did not have any benefits.
The IRS offers a worksheet to calculate taxable benefits.
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Do I Have To File Taxes Other Situations That Require Filing A Tax Return
Regardless of income, you’ll generally have to file a tax return if:
You had self-employment net earnings of at least $400.
You received distributions from a health savings account, Archer Medical Savings Account or Medicare Advantage MSA.
You owe taxes on an IRA, health savings account or other tax-favored account.
You owe taxes on household employees.
You made more than $108.28 from a church or church organization.
You owe recapture taxes.
You owe Social Security or Medicare tax on tips you didnt report to your employer or that your employer didnt already take out of your pay.
Advance payments of the premium tax credit were made for you, your spouse or a dependent who got health coverage through the insurance marketplace.
Advance payments of the health coverage tax credit were made for you, your spouse or a dependent who got health coverage through the insurance marketplace.
You owe uncollected Social Security, Medicare or railroad retirement tax on tips you reported to your employer or on group-term life insurance and additional taxes on health savings accounts.
What If Someone Else Can Claim Me As A Dependent
If someone else can claim you as a dependent on their tax return, you may be required to file a return even though your income is below the threshold shown in the table above. Or if youre the parent or guardian of a dependent who qualifies under these guidelines but cant file their own return , you must file a return on their behalf.
To determine if a dependent must file, you need to look not only at gross income, but also at unearned income and earned income.
Unearned income is income that comes from sources other than work. It includes interest, dividends, capital gains, social security and pension payments, distributions from a trust and unemployment compensation. Earned income includes salaries, wages, tips, income from self-employment, taxable scholarships and fellowship grants.
The table below shows the limits for how much income dependents can earn before being required to file a tax return. There are also requirements related to gross income that are a bit more complicated . If your unearned or earned income exceeds the limit in each ones respective category, then you must file a federal income tax return. Here are the 2020 thresholds for unearned and earned income, based on the 1040 draft instructions from the IRS .
|More than $3,700||More than $15,000|
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Dont Forget About State Returns
The filing requirements outlined above apply to federal income tax returns, but if you live in a state with a state-level income tax, you may also need to file there.
Filing requirements vary by state, so check with a tax professional or your states tax agency to figure out whether you need to file a state return.
Filing Taxes For Kids: Does My Child Have To File A Tax Return
Did your kids discover the joys of entrepreneurship this year, raking in the dough from lemonade stands, shoveling driveways, or walking the neighbors dogs? Or maybe generous family members gave them stocks and bonds instead of toys.
Your child may enjoy having some money of their own. But they might also get to experience a little something called paying taxes.
As dependents, your kids face different rules for determining whether they need to file a federal income tax return. However, unlike adult taxpayers, children have some flexibility in choosing how to report their income. But you still need to understand the tax rules for children and dependents.
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Requirements For Llcs Treated As Partnerships
You dont have to file a federal business return when theres no business activity in your inactive LLC taxed as a partnership.
LLCs treated as partnerships report their business activity on Form 1065. As a pass-through entity, partnerships pay taxes through each owners personal return, not at the company level.
Still, an LLC taxed as a partnership files information return Form 1065 to relay earnings, deductible business expenses, and credits to the IRS. Since partnerships file information returns, theyre not considered disregarded entities like businesses taxed as sole proprietorships.
Qualifying Rules If You Can Be Claimed As A Dependent
You must file a tax return for 2021 under any of the following circumstances if you’re single, someone else can claim you as a dependent, and you’re not age 65 or older, or blind:
- Your unearned income was more than $1,100.
- Your earned income was more than $12,550.
- Your gross income was more than $1,100 or $350 plus your earned income up to $12,550, whichever is greater.
Dependents who are students must include taxable scholarships and fellowship grants in their incomes.
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Benefits Of Filing A Tax Return
Get money back. In some cases, you may get money back when you file your tax return. For example, if your employer withheld taxes from your paycheck, you may be owed a refund when you file your taxes.
Avoid interest and penalties. You may avoid interest and penalties by filing an accurate tax return on time and paying any tax you owe in the right way before the deadline. Even if you can’t pay, you should file on time or request an extension to avoid owing more money.
Protect your credit. You may avoid having a lien placed against you when you file an accurate tax return on time and pay any tax you owe in the right way before the deadline. Liens can damage your credit score and make it harder for you to get a loan.
Apply for financial aid. An accurate tax return can make it easier to apply for help with education expenses.
Build your Social Security benefit. Claiming your self-employment income on your return ensures that it will be included in your benefit calculation.
Get an accurate picture of your income. When you apply for a loan, lenders will look at your tax return to figure your interest rate and decide if you can repay. If you file accurate tax returns, you may get a loan with a lower interest rate and better repayment terms.
Get peace of mind. When you file an accurate tax return and pay your taxes on time, you’ll know that you’re doing the right thing to follow the law.
Special Rules For Taxpayers Age 65 And Older
Taxpayers who are age 65 or older have different, more generous filing thresholds. You would be considered age 65 for tax purposes if you were born on Jan. 1, 1957. However, the age-65 rule doesn’t apply to you if your income for the tax year was $5 or more and you were married but don’t file a joint return.
For most people, Social Security benefits dont count toward your income. However, they will if:
- You lived with your spouse at any time during the tax year and are submitting a married-filing-separate return.
- Half of your Social Security benefits plus your other gross income and tax-exempt interest exceeds $25,000
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Penalty For Failure To Pay Or Underpayment Of Estimated Tax
Revised Statute 47:118authorizes a penalty for failure to pay or underpayment of estimated income tax. The penalty is 12 percent annually of the underpayment amount for the period of the underpayment.
Determination of the Underpayment Amount
Determination of the Underpayment PeriodThe underpayment period is from the date the installment was required to be paid to whichever of the following dates is earlier:
Notification of Underpayment of Estimated Tax Penalty
Extension To File Your Tax Return
If you cant file your federal income tax return by the due date, you may be able to get a six-month extension from the Internal Revenue Service . This does not grant you more time to pay your taxes. To avoid possible penalties, estimate and pay the taxes you owe by the tax deadline of April 19, 2022, if you live in Maine or Massachusetts or April 18, 2022, for the rest of the country.
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How And When To File Your Tax Return
Learn how to fill out your return using tax preparation software or on paper.
The deadline for filing personal income tax returns and paying outstanding income tax is . After April 30, penalties and interest start to apply to any outstanding balance owed.
If you are self-employed or filing for someone who has passed away, please see the CRA’s website for filing deadlines.
Does Social Security Count As Income
Since 1935, the U.S. Social Security Administration has provided benefits to retired or disabled individuals and their family members. … While Social Security benefits are not counted as part of gross income, they are included in combined income, which the IRS uses to determine if benefits are taxable.
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