The Internal Revenue Service (IRS), the federal tax agency of the United States liable for the collection of taxes and implementation of tax laws, has threshold levels for tax return requirements. Your responsibility to file tax returns is based on your level of income and status for the tax year, which means that the IRS does not require everyone to file federal taxes. While a professional may be exempt from filing a tax return, knowing the basics of tax filing is beneficial, particularly for individuals who strive to increase their income as they advance professionally.
As a taxpayer, you need to know and understand your tax obligations. Filling out tax forms can be an intimidating duty due to it involving legal processes that require you to abide by stringent rules. Primarily, it is advantageous to learn the prime determiners to know whether or not you need to file a tax return.
Federal Filing Requirements
According to the IRS, your filing status and gross income are the main factors to help you determine if you need to file a return.
In 2019, here are the set guidelines by the IRS —
If your filing status is single, file a return if :
- your gross income was at least $12,200 at the end of the year and you were under 65 years old; or
- your gross income was at least $13,850 at the end of the year and you were 65 years old or older.
If your filing status is head of household, file a return if:
- your gross income was at least $18,350 at the end of the year and you were under 65 years old; or
- your gross income was at least $20,000 at the end of the year and you were 65 years old or older.
If your filing status is married and filing jointly, file a return if:
- the combined gross income of you and your spouse was at least $24,400 at the end of the year and both of you are under 65 years old;
- the combined gross income of you and your spouse was at least $25,700 at the end of the year and either of you is 65 years old or older; or
- the combined gross income of you and your spouse was at least $27,000 at the end of the year and both of you are 65 years old or older.
If your filing status is married and filing separately, file a return if:
- your gross income was at least $5 at the end of the year regardless of your age.
If your filing status is a qualifying widow or widower, file a return if:
- your gross income was at least $24,400 at the end of the year and you are under 65 years old; or
- your gross income was at least $25,700 at the end of the year and you are 65 years old or older.
Tax Brackets and Tax Rates
A tax bracket determines and refers to a range of incomes subject to a specific income tax rate. It depends on your taxable income and filing status. The government decides the amount of tax you owe by determining which tax bracket you belong to. In general, taxpayers with higher taxable incomes are subject to higher federal tax rates and taxpayers with lower taxable incomes are subject to lower federal income tax rates.
On the other hand, a tax rate is a ratio, generally in the form of a percentage, at which a person or corporation is taxed by the government.
For the year 2020, follow the table below:
|Head of Household|
|10%||$0 to $9,875||$0 to $19,750||$0 to $9,875||$0 to $14,100|
|12%||$9,876 to $40,125||$19,751 to $80,250||$9,876 to $40,125||$14,101 to $53,700|
|22%||$40,126 to $85,525||$80,251 to $171,050||$40,126 to $85,525||$53,701 to $85,500|
|24%||$85,526 to $163,300||$171,051 to $326,600||$85,526 to $163,300||$85,501 to $163,300|
|32%||$163,301 to $207,350||$326,601 to $414,700||$163,301 to $207,350||$163,301 to $207,350|
|35%||$207,351 to $518,400||$414,701 to $622,050||$207,351 to $311,025||$207,351 to $518,400|
|37%||$518,401 or more||$622,051 or more||$311,026 or more||$518,401 or more|
Tax Filing Information
The first and perhaps most essential step in filing a tax return is to gather all the information and documents you need to complete the process. It does not matter whether you are filing on your own or hiring a professional; the goal is to collect proof of income, tax-deductable expenses, expenses and deductions that might give you tax credits, and proof of already-paid taxes throughout the current tax year.
If you are an employee, you may get your IRS Form W-2 or Wage and Tax Statement from your employer. This document reports your annual wages and taxes withheld from your paycheck.
Methods to File a Tax Return
The most common way to file a tax return is filing on your own. The federal tax agency enables taxpayers to file manually using Form 1040 or the U.S. Individual Income Tax Return. Follow the instructions precisely and send the form to the IRS along with any payment if you owe any amount.
You can also hire a tax professional or an accountant to file your tax return on your behalf.
After Filing a Tax Return
You can either owe money or get a refund after filing your tax return.
If you owe the IRS money, you have several options to send the tax agency money to settle up. You can pay using electronic payments, wire transfers, debit or credit cards, and checks. You may visit the official website of the IRS to learn other ways to make a payment.
If you are getting a refund, you can ask the IRS to deposit your refund directly into your bank account or to send a paper check.