If you don’t work, you may still be able or even need to file a tax return. Here’s what you need to do and how it helps you.
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This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.
Who Must File a Tax Return
There are several situations where you must file a tax return. The most common are:
- Having total income that’s over the standard deduction. If you’re not working, this may include investment income, savings account income, or other sources of income.
- Having self-employment income of at least $400. This can include even small, one-time projects you’re paid for.
- Taking the Premium Tax Credit for health insurance.
- You hire a household employee such as a housekeeper or babysitter.
Here are the current standard deduction amounts.
|Single and Married Filing Separately||$12,950||$12,550||$12,400|
|Married Filing Jointly and Qualifying Widower*||$25,900||$25,100||$24,800|
|Head of Household||$19,400||$18,800||$18,650|
|Single Age 65+||$14,700||$14,250|
|Married Filing Separately One Spouse 65+||$14,350||$13,900|
|Married Filing Separately Both Spouses 65+||$15,750||$15,250|
|Married Filing Jointly and Qualifying Widower Age 65+||$27,300||$26,450|
|Married Filing Jointly Both Spouses 65+||$28,700||$27,800|
|Head of Household Age 65+||$20,800||$20,500|
|Dependent with Unearned Income Only||$1,150||$1,100|
|Dependent with Earned and Unearned Income Totalling Less Than the Usual Standard Deduction Amount||Earned income plus $400||Earned income plus $350|
Dependent Unearned Income
If you are a dependent, such as a college student supported by your parents or a retiree supported by your adult children, you must file a tax return if you have unearned income above the following amounts. Unearned income is things like investments and savings account interest.
|Single Age 65+||$2,800|
|Married Age 65+||$2,450|
Why File a Tax Return If You Don’t Have To
There are several benefits you can receive by filing a tax return even when you’re not required to. Here are some of the most common.
- Get a refund for taxes withheld from your job if you left your job during the tax year or you work part-time
- Receive the Earned Income Tax Credit if you left your job during the tax year or you work part-time
- Receive the Child Tax Credit if you have dependent children
- Receive tax credits for education if you or a dependent is in school
- Receive the Recovery Rebate Credit if you never received your stimulus payment
There are two types of tax credits — refundable and nonrefundable. Nonrefundable credits only cancel out any taxes you owe. Refundable credits let you get a refund even if you owed zero taxes.
Many of these credits are refundable, but the only way to get them is if you file a tax return.
You Won’t Have to Pay Taxes
Filing a tax return when you don’t need to doesn’t mean you will have to pay taxes. There are two reasons to file tax returns — because you owe taxes and when you can receive benefits.
If you owe taxes, you’re generally already required to file a tax return. If you’re claiming a refundable credit, it’s not considered income. The IRS sends you a check, and you don’t pay taxes on it.
File for Free
Did you know you can file your tax return for free? See your free tax filing options here.