You may want to file even if you make less than that amount because you may get money back if you file. This could apply to you if you:
- Had federal income tax withheld from your pay
- Made estimated tax payments
- Qualify to claim tax credits such as the Earned Income Tax Credit and Child Tax Credit
Benefits of Filing a Tax Return
- Get your money back: In certain instances, it is possible to receive a refund when filing your tax return. For instance, if your employer deducted taxes from your paycheck, you may be eligible for reimbursement upon filing 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 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 applying for help with education expenses easier.
- Build your Social Security benefit. By including your self-employment income in your return, you ensure that it is factored into calculating your benefits. This not only promotes accuracy but also upholds fairness when determining your entitlements.
- Get an accurate picture of your income. When you apply for a loan, lenders will look at your tax return to determine 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 you’re doing the right thing to follow the law.
Do You Need to File a Tax Return?
Whether or not you need to file taxes depends on several factors, including your income level, filing status, age, and other variables. Here’s a general guideline for the United States:
- Income Level: If your income is below a certain threshold, you may not be required to file. Look at your income to see if you made the minimum required to file a tax return. This threshold varies based on your filing status (e.g., single, married filing jointly, etc.) and age. For example, for the tax year 2024 in the United States, the income threshold for single filers under 65 has been adjusted. Single filers must file a tax return if their income is at least $14,600. This increase reflects the adjustments made for inflation and is part of the annual changes the IRS makes to tax brackets and standard deductions.
- Decide which filing statusis best for you, as you may be required to file a tax return depending on your filing status, income, and age. For example, different rules may apply if someone else can claim you as a dependent.
- If you’re retired, some of your retirement income may be taxable; find out if your retirement income is taxable.
- Self-Employment: If you are self-employed, you must file if your net earnings are $400 or more.
- Find out if you qualify to claim certain credits and deductions. Even if you are not required to file, you might want to file a tax return if you had taxes withheld from your pay or qualify for certain tax credits, as you may be entitled to a refund.
- Other Factors: There are other situations where you might need to file, such as if you owe any special taxes (like self-employment tax, household employment taxes, etc.), received distributions from a health savings account, or have other specific financial situations.
It’s always important to remember that these figures are subject to change based on annual revisions and tax laws. Therefore, it’s a good practice to check the latest tax guidelines each year or consult with a tax professional for the most current information. For precise and tailored advice, get in touch with NexGen Taxes today. Our certified tax professionals are ready to guide you based on your unique circumstances. Experience personalized assistance for your tax needs.