Not every person believes it is mandatory to file a federal income tax return. Some of them are right because of their circumstances, but many should file who are not doing so. The answer is contingent upon your gross income, age and your filing category and applies to U. S. citizens and residents.
All income from any enterprise becomes part of your reportable gross income. This statement is a seemingly straightforward and direct definition. Anything you receive during the tax year (before taxes and deductions) is your gross income.
Salary or wages as well as employee bonuses, income from investments, self-employment income, pension, retirement or unemployment income are all part of your gross income. If you gamble, then you may have both wins and losses. You need to include this income â€“ or loss â€“ with the rest of your gross income.
Sometimes, benefits received from Social Security Administration are taxable income. This happens if 50% of your total benefit amount plus other income equals more than $25,000 for a single filer and $32,000 for a joint filing.Â
December 31 is a key date to determine your filing category. There are five possible selections for your filing category, which depends on whether you are married or unmarried on the last day of the year. Simple. State law determines your marital status.
However, for purposes of filing a federal income tax return, same sex couples cannot file a joint return. This is not a legal marriage in the eyes of the federal government.
Â Â Â Â *Â File single if you have never been legally married or in such case that you are legally separated or divorced. If you became a widow and did not remarry by December 31, you are a single filer.
Â Â Â Â Â *Â Â File a joint return if you are married on the last day of December. It does not matter if you are living together or if your spouse died and you did not remarry before December 31.
Â Â Â Â Â *Â A couple may file separately if they choose and if they are married to each other as of December 31.
Â Â Â *Â Â Special rules will apply if you are filing as head of household, which you can do if you are single, unmarried or divorced on December 31.
Â Â Â *Â Â A qualifying widow or widower with a dependent child can file in this category for two years after the death of a spouse.
Once again, December 31 is the date that determines your age for the entire tax year. There is only one exception to this guideline and that applies to those with a 65th birthday on January 1. Anyone who turns 65 on January 1 is 65 on the last day of the previous tax year.
Depending on your view of aging, there are some rewards to turning 65 one day earlier. It allows you to use the higher income thresholds when determining if you must actually file a tax return. There are filers who are not under obligation, but have paid taxes at a part time job. Filing a tax return will not only give you some income credits, but it will retrieve taxes paid during the year in the form of a refund.
Still Scratching Your Nogginâ€™?
Consider these statistics garnered from those filing an income tax in April 2010.
Â Â Â Â * 139 million returns filed
Â Â Â Â * 108 were entitled to a refund
Â Â Â Â * $316 billion was the total amount ofÂ refunds
Â Â Â Â * On the average, $2900 was due to taxpayers
Are you ready to give up some of the credits you deserve? Do you qualify for the Earned Income Credit, Making Work Pay Credit, Child Care Credit, American Opportunity Credit, First Time Homebuyer Credit or the Health Care Coverage Credit? You will not get any of these valuable credits if you decide not to file!