How much can you earn before paying federal income tax?

MOST Americans earn the first part of their money entirely tax free through a standard deduction.

This ensures that taxpayers have at least some income that is not subject to federal income tax.

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Whether you should file depends on your age, filing status, income level and source of income

The amount you can get depends on filing status and age, and blind people also get an additional amount.

Below we explain what you need to know.

What are standard deductions?

Standard deductions generally change each year as wages increase with inflation.

The amounts below are for 2021 tax returns due April 18, 2022.

Single filing status

  • $12,550 if under 65
  • $14,250 if age 65 or over

Married filing jointly

  • $25,100 if both spouses are under age 65
  • $26,450 if one spouse under age 65 and one age 65 or over
  • $27,800 if both spouses are 65 or older

Groom filing separately

  • $12,550 if under 65
  • $14,250 if age 65 or over

head of household

  • $18,800 if under 65
  • $20,500 if age 65 or older

Eligible widow(ers) with dependent children

  • $25,100 if under 65
  • $26,450 if age 65 or older

For the 2022 tax year, the standard deduction for most couples will increase to $25,900, up $800 from this year.

And for most single filers, the threshold will jump to $12,950, an increase of $400.

Who does not benefit from a standard deduction?

It is important to note that some taxpayers are not entitled to the standard deduction.

This includes a married single filing as a separately married filing whose spouse details deductions.

It also includes an individual who was a nonresident alien or dual status alien during the year.

People filing for less than 12 months due to a change in their annual accounting period also do not receive one.

Also, an estate or trust, mutual trust fund or partnership will not get one either.

Who must file a tax return?

Whether you need to file a tax return depends on your age, filing status, income level, and source of income.

If your 2021 gross income exceeds the standard deduction, you must file a federal income tax return.

You will also need to know your gross income.

The IRS defines gross income as all income you receive in the form of money, property, goods, and services.

This includes income from outside the United States, the sale of stock, a business, and the sale of your home.

Deposit requirements for dependents

Even if a person is declared as a dependent on another person’s tax return, the person will generally have to file their own tax return if the person’s total income is more than the standard deduction.

In the following, earned income includes salaries, wages, tips, professional fees, and taxable scholarships and fellowships.

While unearned income includes taxable interest, ordinary dividends, capital gains distributions, unemployment benefits, taxable social security benefits, pensions, annuities, and distributions from a trust.

Single dependents under the age of 65 and who are not blind must file a declaration if any of the following apply.

  1. Your unearned income was more than $2,800 ($4,500 if you are 65 or older) and blind).
  2. Your earned income was more than $14,250 ($15,950 if you are 65 or older) and blind).
  3. Your gross income was greater than the greater of—
    1. $2,800 ($4,500 if age 65 or older) and blind), or
    2. Your earned income (up to $12,200) plus $2,050 ($3,750 if you’re 65 or older) and blind).

Married dependents under the age of 65 and who are not blind must file a declaration if any of the following apply.

  1. Your gross income was at least $5 and your spouse files a separate return and details the deductions.
  2. Your unearned income was more than $2,450 ($3,800 if you are 65 or older) and blind).
  3. Your earned income was more than $13,900 ($15,250 if you are 65 or older) and blind).
  4. Your gross income was greater than the greater of—
    1. $2,450 ($3,800 if age 65 or older) and blind), or
    2. Your earned income (up to $12,200) plus $1,700 ($3,050 if 65 or older and blind).

You can find full details of income requirements on the IRS website.

What if you received social security benefits?

Whether you receive Social Security benefits will depend on a few factors to determine whether you need to file a tax return.

For the 2021 tax year, unmarried seniors will generally need to file a return if the person is at least 65 years old and their gross income is $14,250 or more.

If the person is married and wants to file a joint return with a spouse who is also 65 or older, they must file a return if their combined gross income is $27,800 or more.

In most cases, if a person only receives Social Security benefits, they will have no taxable income and will not need to file a tax return.

You may want to submit a tax return to claim a tax refund

Even if you are not required to file a tax return, you may still be eligible for a refund.

So it is something to consider before deciding whether or not you will file this year.

Refunds are available for W-2 employees, who are usually salaried workers, and others who had tax deducted from their pay during the year.

The government also offers a few tax credits for low-income and senior citizens that can earn you money at tax time.

It is important to know that the IRS does not automatically issue refunds without a tax return.

Therefore, if you wish to claim a refund of tax owed to you, you must file one.

The Sun also explains when tax refunds will be released in 2022 and key tax changes for 2022.

Plus, here are five ways to increase your tax refund.

How the Child Tax Credit Boost Could Happen to Parents in 2022

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