How Do You Know if You Have to File a Tax Return?

How Do You Know if You Have to File a Tax Return?

It is important to know that not everyone is required to file an income tax return. Check carefully to make sure that you meet the various tests and income thresholds to see what, if any, tax returns you are required to file with the IRS. All income thresholds are based on your gross income, and other tests.

Your gross income is defined as all the income you received in 2010, before it was taxed. This can be an important difference. Income after taxes is referred to as net income. Gross income does not included income specifically stated as tax-exempt. Generally, items included in gross income include: wages, interest and dividends, self-employment income, tips, capital gains, rental income, pensions and annuities, and trust fund distributions.

When considering the gross income filing threshold test, both your filing status and gross income are pertinent when determining whether you need to file a 2010 income tax return. Age requirements are determined by your age 'on or before January 1, 2011.' Check the following breakdown carefully to determine whether or not you are required to file a 2010 income tax return.

Single:

Under age 65 with a gross income higher than $9,350 must file

Over age 65, with a gross income of at least $10,750 must file

Married and living apart at 2010 year end:

Must file a joint or separate return if their 2010 gross income is at least $3,650

Married, living together at 2010 year end:

Both spouses under age 65, when gross income is at least $18,700, file a joint tax return.

One spouse is 65 or older, when gross income is at least $19,800, file a joint tax return.

Both spouses are 65 or older, when gross income is at least $20,900, file a joint tax return.

Any Age-If both spouses are filing a separate income tax return, gross income must be at least $3,650.

Head of Household:

Under the age of 65 when gross income is at least $12,000 in 2010 must file.

65 or older, when gross income is at least $13,400 in 2008 must file.

Widow(er) in 2009 or 2010, if under 65 with at least one dependent child, with gross income of at least $15,050 in 2010, must file.

Widow(er) in 2009 or 2010, if over 65, with gross income of at least $16,150 in 2010, must file.

You may also owe taxes even if you didn't earn any income directly from an employer this year. You must file taxes for 2010 if you:

    Are self-employed with earnings of more than $400.00 Sold your home Utilized certain types of retirement plans, including: a) receiving an early distribution from a qualified plan b) making excess contributions to your IRA or MSA c) Not taking the minimum required distribution from your qualified retirement plan and d) Receiving a distribution in the excess of $160,000 from a qualified retirement plan. Will be subject to Alternative Minimum Tax (AMT). Are a nonresident alien and you have income from a trade or business in the U.S., or you have income not from a trade or business, and not all the U.S. tax you owe was withheld from that income.

Finally, you may still owe taxes even if someone else is claiming you as a dependent on their 2010 tax return. You still owe taxes if you meet the following criteria:

    Have unearned income (e.g., from investments) more than $950 Have earned income more than $5,700

These limits will be higher if the dependent is over 65, blind, or both.

Article written by: Letty G.

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