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Not every taxpayer has to file a tax return

5 tax tips
5 tax tips 01:50

Does everyone have to file a federal tax return every year? Nope. Generally, if your income falls below a certain level, the personal exemption and standard deduction you’ve entitled to claim can reduce any income you’ve earned to zero, resulting in no taxable income to report -- and no requirement to file a tax return.

Here’s an example: If you’re single, and your total income in 2016 was $10,350 or less, you owe no tax. For a married couple, the same goes for those earning up to $20,700 in 2016. 

In addition to how much you’ve earned, several other factors affect whether you’re required to file a return. If your earnings weren’t more than the amounts mentioned above, but if you were self-employed, can be claimed as a dependent on someone’s tax return or received tax credits to buy health insurance on an exchange, you’ll still have to file.

The basic criteria for self-employed individuals is that you must file if your net earnings are at least $400. You’ll also be required to file Form SE and pay the additional self-employment tax on this source of income.

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If you received an advance of the premium tax credit to pay for health insurance you purchased on an exchange, you’ll have to file to reconcile the actual premium tax credit you’re entitled to. Otherwise, you could be barred from receiving this payment assistance in 2017. 

And failure to file a 2016 tax return means you’ll be responsible for the full cost of your health insurance in 2017. You could even be required to repay some or all the advance tax credit you received in 2016.    

Even if you’re not required to file a tax return, but you had taxes withheld from your pay or you’re eligible for tax credits such as the American Opportunity Tax Credit or the Earned Income Tax Credit, you should file to claim the tax refund you’ll be due. In fact, the IRS recently estimated that about 1 million taxpayers who didn’t file in 2013 are owed refunds totaling over $1 billion.  

Single dependents under age 65, with less than $1,050 of income from dividends and interest, and earned income from wages of no more than $6,300 don’t owe any federal tax and aren’t required to file a tax return. But if federal and state income taxes were withheld, they’ll have to file a tax return to claim refunds due. High school and college students who worked summer jobs are the most common examples.

There are too many examples to list exactly who is and isn’t required to file a tax return. If you want to know the answer for your specific situation, use the Interactive Tax Assistant on the IRS website. You can also ask tax professionals at H&R Block, Jackson Hewitt or Turbotax about your specific situation.   

Finally, keep in mind that this focuses on the federal tax rules. Even if you’re not required to file a federal tax return, you may still be required to file a state tax return because the rules for your state can be very different. Some states require their residents to pay tax on every dollar of income, meaning everyone with any income must file a return.

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