Do I Need to File a Tax Return?

This is a question many taxpayers ask, and the question is far more complicated than people believe. Believe it or not, not every person must file a tax return. Generally, individuals are required to file an individual tax return if gross income exceeds a threshold amount. Even if you do not have to file a return, you should file one if you had federal income tax withheld from your pay, qualify for the earned income credit, health coverage tax credit, additional child tax credit, the American Opportunity Credit, or the credit for federal tax on fuels. Finally, special filing requirements apply to taxpayers who may be claimed as dependents on other taxpayers’ returns.

In certain cases, taxpayers must file a return even if their income does not exceed the filing threshold. For example, if a taxpayer owes special taxes, such as AMT, self employment tax, social security or Medicare taxes that were not withheld from tip income, household employment taxes, or tax on a qualified retirement plan or IRA, the taxpayer must file a return.

Self-Employed Individuals

Self employed individuals are taxpayers who carry on a trade or business as sole proprietors or independent contractors. They decide when, how, and where to work; obtain their own jobs or sales; pay their own expenses; and receive social security and Medicare coverage through payment of self-employment tax (the equivalent to payroll taxes for an employee).

A self-employed individual must file a return if either of the following is met:

  • Gross income is at least as much as the filing requirement for the individual’s filing status and age.
  • The net earnings from self-employment are $400 or more.
  • Church employee income is $108.28 or more.

In general, whether or not an individual must file a tax return depends on three factors:

  • Filing Status
  • Age
  • Gross income

Gross income means all income from whatever source derived. Unless specifically exempt or excluded by law, all income is subject to income tax and is reported on a tax return. Gross income includes income realized in any form, whether in money, property, or services.

DON’T PROCRASTINATE! The Internal Revenue Service is legally prohibited from making a refund or credit for your claim if you file it after the time for filing has expired under the statute of limitations. There is a three year statute of limitations on refunds, and after it runs out, any refund due is forfeited. The statute is three years from the due date of the tax return (including valid extensions).

For more information about filing requirements and your eligibility to receive tax credits, please contact us.

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