Whether self employed or running a business, knowing the minimum taxable income rate is necessary. The numbers are subject to change, but the figures below should give you some idea.
You will need to file taxes if you fit in any of the following brackets.
For singles under 65 the lowest gross income is $8,950. For senior citizens (65 and above) it is $10,300. For the head of the family it is $11,500 (below 65) and $12,500 (+65).
Widows with an offspring need to earn $14,400 (under 65) or $15,450 (over 65). These are the minimum taxable income figures as set down by the IRS (Internal Revenue Service) in the US.
Other Important Issues
Social Security should not be part of your gross earnings. There is only one exception: that is if combining it with your other gross income equals or exceeds $25,000. For married couples the figure is $32,000 (joined filing). If you and your spouse will file separately, check with Social Security. The regulations vary depending on income. Check with an expert to make sure.
Other Instances When Tax Filing is Necessary
You will need to file if you are self employed / running a business and your net is more than $400. The minimum taxable income rule for church earnings is as follows: you need to file if it is greater than $108.28 and excused from Medicare and Social Security. Selling your house also requires filing a tax return. The amount varies, so consult a tax consultant.
Even if it isn’t necessary, you might want to do it anyway. The reason would be if you have tax credit. It’s also a good idea to do it if you have federal withholding.
Bear in mind that tax measures change frequently. The IRS 1040 manual will help clarify and keep you updated on the facts. The information given above are general guidelines. There are more specific laws on minimum taxable income.
Those who are self employed, an employer / contractor will have separate rules. Finding out if you’re self employed is easy: getting a 1099 means you’re regarded as self employed. An employee receives a W2 form and contractors the 1099 form.
This means you can lower the amount of tax you have to pay. The items that can be deducted vary. There are deductibles on vehicle sales, mortgage insurance pay and credits for new home buyers. Expenses you incur from using vehicles can also be deductible.
Consult with a tax expert to see how much you can save by getting these expenses listed as deductible. Using alternative sources of energy is included in the list. The same is true when contributing to charity.
Being aware of the minimum taxable income is the first step to getting your finances organized. By knowing the facts and figures, you’ll keep yourself away from legal trouble. This also helps you save money.