Filing taxes might not be the most exciting task, but it’s an important part of managing your finances. The answer isn’t always simple - it depends on your income, filing status, and a few other factors. Let’s break it down so you can feel confident when tax season rolls around.
Who Needs To File Taxes?
The IRS sets minimum income thresholds that determine whether you’re required to file a federal tax return. If your income meets or exceeds these limits, you’ll need to file.
These thresholds can change annually, so staying up to date is important. Here’s a basic breakdown based on 2024:
Single: You must file if your gross income was at least $14,600 (if under 65) or $16,550 (if 65 or older).
Married Filing Jointly: The threshold is $29,200 if both spouses are under 65, $30,750 if one spouse is 65 or older, and $32,300 if both are 65 or older.
Married Filing Separately: You must file if your income was at least $5, regardless of age.
Head of Household: The limit is $20,800 if under 65 and $22,650 if 65 or older.
Qualifying Widow(er): You’ll need to file if your income was at least $29,200 (under 65) or $30,750 (65 or older).
A quick way to see if you need to file or might get a refund is to take this short questionnaire.
Other Situations That Require Filing
Even if your income is below these thresholds, the IRS stipulates there are still other reasons you might need to file:
Self-Employment: If you earned $400 or more from self-employment, you must file a return.
Health Insurance: If you received advance premium tax credits for health insurance, you’ll need to reconcile those on your tax return.
Special Taxes: If you owe taxes on a retirement account withdrawal, Social Security benefits, or household employment taxes, you may be required to file.
Earned Income Tax Credit (EITC): If you qualify for refundable credits like the EITC, you’ll want to file even if you’re not required — you could get a refund!
Why Filing Could Benefit You
Even if you’re not legally required to file a tax return, it might be worth doing anyway. You could be eligible for a refund due to withheld taxes, education credits, or child tax credits. Plus, filing helps you stay in good standing with the IRS, which is never a bad thing.
Additionally, having a record of tax returns can be beneficial when applying for loans, mortgages, or even certain government benefits. Lenders and financial institutions often require proof of income, and a filed tax return is a solid way to verify your earnings. If you're a freelancer or self-employed, filing also helps establish your income history for future financial stability.
What Happens If You Don’t File When You Should?
Failing to file when required can lead to penalties and interest on any taxes you owe. The longer you wait, the more those penalties can add up. If you’re unsure, it’s better to check your status sooner rather than later.
The IRS charges a failure-to-file penalty, which can be as much as 5% of your unpaid taxes per month, up to a maximum of 25%. If you owe taxes and don’t file, you could also face additional late payment penalties and interest charges that continue to grow over time. In extreme cases, not filing for multiple years can lead to more serious consequences, including tax liens or legal action. Taking care of your tax obligations early can save you from unnecessary stress and financial strain.
Don’t Leave Money on the Table - Get Tax Prep Help Today
Taxes can be complicated, but with AMG Finance, they don’t have to be stressful. Whether you’re filing for the first time or need help with a complex return, our tax preparation team takes the guesswork out of tax season.
Contact us today to schedule your tax preparation appointment and ensure you meet all your filing obligations - while maximizing your refund. Let’s make this tax season your easiest one yet!
