How Much Money Can I Make Without Having to File Taxes?

Filing taxes is a crucial part of adult life in the United States, but the amount of money you need to earn to file a federal income tax return can vary depending on a few different factors. Your age, filing status, gross income, and dependency on other taxpayers can all play a role in determining whether or not you need to file.

For example, in 2021, a single person under the age of 65 had to earn more than $12,550 before they were required to file taxes. Keep in mind that even if your income falls below the threshold limit set by the IRS, it's still a good idea to file taxes.

Do I Need to File Taxes?

Not everyone is required to file or pay taxes. The amount you need to make to file a U.S. federal income tax return depends on several factors, including your age, filing status, dependents, and gross income. For the 2022 tax year, the gross income threshold for filing taxes is between $12,550 and $28,500, depending on your specific circumstances. However, even if you're not required to file taxes, it's generally a good idea to do so.

If you have self-employment income, you're required to report your income and file taxes if you make $400 or more. The main factors that determine whether you need to file taxes include your filing status, age, dependents, and gross income. Other variables that may impact your tax filing requirements include whether you owe special taxes, such as household employment taxes, recapture taxes, or the alternative minimum tax (AMT). Additionally, if you or your spouse (if filing jointly) received distributions from a health savings account (HSA), Medicare Advantage MSA, or Archer Savings Account, or if you, your spouse, or a dependent received advance payment from the health coverage tax credit or the premium tax credit, this may impact your tax filing requirements.

You don't have to file taxes if:

• Your income is below the gross income threshold for your filing status and age
• You made less than $400 in self-employment income
• You don't owe any special taxes
• You (or your spouse, if filing jointly) didn't receive distributions from an HSA, Medicare Advantage MSA, or Archer Savings Account
• You, your spouse, or a dependent didn't receive an advance payment for the health coverage tax credit or the premium tax credit

You do need to file taxes if:

• You earned more than the gross income requirements for your filing status and age
• You're married but filing separate tax returns (and your gross income is $5 or higher)
• You made more than $400 in self-employment income
• You owe one or more special taxes
• You (or your spouse, if filing jointly) received distributions from an HSA, Medicare Advantage MSA, or Archer Savings Account
• You, your spouse, or a dependent received an advance payment for the health coverage tax credit or the premium tax credit.

Filing Status

Before you can determine whether you are required to file taxes, it's important to determine your filing status. The IRS recognizes five different filing statuses:

• Single: This status applies to filers who are unmarried, divorced, or legally separated.
• Married Filing Jointly: Married couples have the option to file a single tax return for both parties. This status applies to filers who are married and filing a joint tax return with their spouse.
• Married Filing Separately: While married couples have the option to file a joint tax return, they may choose to file separate tax returns. This status applies to married taxpayers who are filing separately.
• Head of Household: This status applies to taxpayers with children and/or qualifying dependents that covered at least half of the cost of keeping up the home during the tax year.
• Qualifying Widow(er) with Dependent Child: This status applies to filers whose spouse has passed away within the past two years and have a dependent child.

To determine your filing status, review each category and choose the status that reflects your current situation. Choosing the right filing status is important because it determines your filing requirements and can impact your tax liability.Age

There are different tax filing requirements based on age—more specifically, there are different standard deductions and filing requirements for filers under the age of 65 vs. filers over the age of 65.

(If you’re legally blind, you have the same requirements as people over the age of 65—regardless of your age.)

Dependents

Taxpayers who are claimed as dependents have their own set of filing requirements. Dependents include children under the age of 19, or under 24 if they are full-time students, as well as permanently disabled individuals and qualifying relatives. These individuals have different tax thresholds and filing requirements, which can vary depending on their age, income, and dependency status. It's important to review the IRS guidelines for dependents to determine if you or someone you claim as a dependent needs to file a tax return.

Determine Your Gross Income

Determining whether you need to file taxes requires calculating your gross income, which is the total amount of income you earn before tax deductions. If your gross income is equal to or exceeds the taxable threshold for your filing status and age, you are required to file your taxes. However, if your gross income falls below this threshold, you are not required to file taxes.

General Income Requirements

To determine whether you need to file taxes for the 2023 tax year, you should check the gross income threshold for your age and filing status. If your income meets or exceeds that threshold, you'll need to file your taxes. It's important to note that these income requirements apply to all types of income, including wages from traditional W-2 jobs, self-employment income, and other taxable income sources.

Self-Employed Income Requirements

If you earn more than $400 in self-employment income during a tax year, it is required that you report that income and file taxes. This is true regardless of your age or filing status. However, if you earn less than $400 in self-employment income, you are not required to file taxes.

According to the IRS, self-employment income is any earnings that are not received as traditional W-2 wages. This includes earnings from formal employment arrangements, such as 1099 contracts or freelance work, as well as more informal sources of income like dog-walking or babysitting. If you are unsure whether your income qualifies as self-employment income, it’s a good idea to consult a tax professional.

Dependents Income Requirements

Dependents who earn income have their own unique filing requirements. If a dependent earns equal to or more than the income threshold, they are required to file taxes. Otherwise, they are not obligated to file.

Dependent income is categorized as either earned or unearned. Earned income comes from sources such as wages, salaries, and tips, while unearned income comes from sources such as dividends and interest. If a dependent's income comes entirely from unearned sources, the filing requirements may be different.

Where Can I Find Filing Requirements Each Tax Year?

It's important to keep in mind that tax laws and regulations are subject to change each year. The IRS publishes updated tables each year in Publication 17 and Publication 501, which provide guidance on filing requirements based on income, filing status, age, and other factors. Checking these publications and consulting with a tax professional can help ensure that you file your taxes accurately and avoid any potential penalties or other issues.

How Much Can a Small Business Make Before Filing Taxes?

If you own a corporation, regardless of its income, it is mandatory to file a tax return. This rule also applies to LLCs that elect to be taxed as a C-Corp or S-Corp. For partnerships, LLCs, or sole proprietorships (the default status for freelancers), the self-employment threshold is applicable. It means that you must file a federal income return and pay self-employment tax if your income exceeds $400. The tax return form you need to file depends on the type of business structure you have. For instance:

• Sole proprietorship: Form 1040 and Schedule C
• Partnership: Form 1065
• C Corp or S Corp: Form 1120
• LLC: Depends on tax election

Should I File Taxes, Even if I Don’t Have To?

Even if you’re not required to file taxes, it’s still worth considering filing a tax return. You might be entitled to a tax refund even if you don’t owe taxes. There are situations where the IRS owes you money, such as if you overpaid quarterly taxes or if you qualify for a tax credit. However, if you don’t file, you’ll miss out on any potential refunds.

Consulting a tax professional can be helpful if you’re unsure whether you should file taxes. They can offer advice on tax preparation and help you decide whether filing taxes is the right choice for you, even if it’s not mandatory. Remember that the tax rules and regulations change frequently, so it’s essential to stay up-to-date with the latest IRS guidelines before making any decisions.

How Can I Reduce My Taxable Income?

If you aim to decrease your taxable income to a level that doesn't necessitate filing taxes, there are several strategies you can employ.

One method to lower your taxable income is by increasing your contributions to traditional (not Roth) IRAs and 401(k)s, ensuring you reach the maximum permitted amount. You can also reduce your taxable income by contributing to Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA). For business owners, eligible expenses can further aid in decreasing taxable income.

It's possible to earn a substantial amount without owing taxes. However, even if your income is below the threshold that requires paying taxes, you should still file your taxes to receive a refund.

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