Income Tax 2020 to 2023. Do you have to file? Let’s do some wealth preservation with some income tax preparation. Most of this information comes from the form 1040 instructions tax year 2022 filing requirements you could find at the IRS website irs.gov,
IRS dot G O V, we’re now asking the question, do you have to file before we dive in note, there is a difference between the question of do you have to file and the question of,
would it be beneficial if you were to file in other words, you can imagine a scenario where you are not legally required to file but where you might still have a benefit, possibly be able to get a refund if you were to file so you want to make sure to have that distinction in mind when people ask you this type of question.
So the general rule would be if your income is below a certain threshold, you would think that the IRS would not be requiring you to file under an income tax type of system,
because it’s likely that you’re not going to owe any taxes, everyone gets, in essence, a standard type of deduction. If your taxable income is below the standard deduction, you would think you might not owe any tax.
And therefore you would think that the IRS would not be coming after you hunting you down or anything like that. If you were not to file in a situation where you do not owe taxes. But even in a situation where you don’t owe taxes, you might still have a benefit.
Now, it used to be that if your income was below a certain threshold, there might not be a lot of benefit unless you had withholdings meaning you worked someplace your income was below a certain threshold,
you got w two income, and they withheld money from you. And your you would seek to get that back by filing, even if your income was low. But you might say,
Well, I only withheld like $20 or something. And I don’t want to go through the hassle of filing the return to get that $20. But these days, you have that scenario on top of the fact that you’ve got these refundable type of credits, which means that even if your income goes below zero, you might still get a refund,
or in that case, it would be like a benefit type of program in that scenario. So even if you had a limited amount of income, you might be able to get access to credits such as the earned income tax credit, and the child tax credits. And the IRS often offers free software online if your income is below a certain threshold.
Therefore, I would think the general idea the general strategy for most people, even if they’re on the low income side of things, even if they think they may not be required to file even if they don’t think they’re gonna get much benefit. It might be worthwhile, I think it would be to get access to the Free Software,
if you can, and run a projection check it out. And that would be the general strategy, I would recommend if asked these questions. So if you’re asked the question, Does someone have to file distinguished
between the question of having to file and the possible benefit of filing even if not required to do so. And then I would stress the resources that are there to help people to kind of double check to see if it would be beneficial to file.
So you can use chart A, B or C to see if you must file a return US citizens who lived in or had income from a US possession should see publication 570 residents of Puerto Rico can use tax topic 901 to see if they must file. Here’s the chart, so I won’t go into them in a lot of detail. But let’s just go over kind of a recap.
So if your filing status is single, and then you’ve got your chart, this is how the charts often work. So you’ve got the label up top if your filing status is, and at the end of 2022, you were under 6565 or older, then file a return if your gross income was at least 12,009 50 14,700.
So notice they’re basically lining up to kind of like the standard deduction, right? That would be what you would generally think.
Because if your income is below the standard deduction, you’re not going to owe any tax. That doesn’t mean that you might not get any benefit because you might have had withholdings and you might be subject to these other kind of refundable credits.
So married filing joint. So if you’re under 65, both spouses, then then file a return if your gross income was was at least 25,065 or older, it goes up to 27 three, and then if I go to married filing joint, any age at five, married filing separately at $5. That’s because when you married filing separately,
they’re kind of concerned that you’re going to do some kind of strategic type of thing. So oftentimes, the thresholds are quite different for married filing separately than single or married filing joint, and then you’ve got the head of household and so on, so I won’t go.
You can check out the charts in more detail if you so choose here or arm the IRS Form 1040 instructions chart B for children and other dependents.
So you can go through your worksheet there and then chart see other situations when you must file tip. So even if you do not otherwise have to file the return, you should file when to get a refund of any federal income tax withheld.
That’s why I think going through these rules in a lot of detail to determine whether or not you should file is becoming a little bit more irrelevant, not because the rules don’t still apply. But because filing is fairly easy to do.
And, and with software, I mean, it’s as easy to file possibly with the software as it is to, you know, look at these rules and try to tick them off. And you might get a benefit from filing even if you’re not required to do so.
So it might be worth checking out. So you should also file if you are eligible for any of the following credits. So the Earned Income Tax Credit very kind of complicated credit. So there’s different resources to see whether or not you are you have access to it. But I think the best resource to use is if you can get access to actual free software to check it out, then run up run a projection.
If your income is fairly low, it should be fairly easy hopefully to do a projection and see if you would qualify for credit, additional child tax credit. Another credit that could have a like a refundable component to American Opportunity Credit.
These are education credits that might have a refundable component to it, meaning even if your income is fairly low, and you’re not subject to tax,
because you’re under the standard deduction of taxable income, you might still get some benefit from the refundable parts of these credits, credit for federal tax on fuels, premium tax credits and credits for sick and family leave requirement to reconcile advanced payments of the premium tax credits.
If you or your spouse with whom you are filing a joint return or a dependent was enrolled in coverage through the marketplace for 2022. And advance payments of the of the premium tax credit were made. For this coverage, you must file a 2022 return and attach form 8962.
So in other words, if your income is below a certain threshold, it’s likely that that you might have participated in the in the marketplace for the health coverage, in which case,
the typical standard process would be that they were trying to estimate what kind of credit you would get for it and lower your actual premiums by it, which means you’ve already got the benefit of the lower premiums.
And therefore even if your income is low, they’re going to want you to file the tax return. So you can compare the benefit that you got in essence in a prepayment by lowering the insurance premiums to the credit calculated on the tax return. So once again, I’m thinking more and more these days, even on the low income side of things.
Even if you’re not required to file due to the income thresholds, it’s kind of worthwhile to check out you’re going to be more and more kind of required to file when they have these kinds of benefit programs in refundable credits.
And that’s I think, why they’re trying to push to have the free software available because those kinds of programs make the tax return quite difficult and require more people to file. So you or whoever enrolled you should have received a form 1095 A from the marketplace.
So if you get that form a 1095 a, not a C but an A, that’s usually the indication that you’re like, Oh, this is going to be a little complicated with this health insurance marketplace credit type of thing. So and that will give you the information.
So you must attach form 8962 Even if someone else enrolled you, your spouse or your dependent, if you are a dependent who has claimed on someone else’s 2020 T return, you do not have to attach form 8962.
So exception for certain children under age 19 are full time students. So now you’re talking situations where you’re saying, What if What if I’m possibly subject to someone else, a dependent of someone else due to me being under 19, or possibly a full time student?
We’ll talk about more dependent rules going into the future. But generally when we look at the income tax, we’re talking about this, we said you might not have to file if your income is below a certain threshold.
And that threshold generally is tied to the the amounts of the standard deduction because everyone gets a standard deduction if your income is below the standard deduction, you would think you wouldn’t owe any tax but the standard deduction will change if you’re claimed as a dependent on someone else’s tax return because you’re under 19.
And or you’re a student and what happens if you have some income. So if certain conditions apply, you can elect to include on your return the income of a child who was under age 19 At the end of 2022 or was a full time student under age 24 At the end of 2022.
So you might be able to have to report the income on of the dependent on the tax return of generally the parent. So to do so you can use 18814. If you make this election, your child doesn’t have to file a return.
So if the child had income, you’re claiming them as a dependent because they’re under 19, or go a full time student under 24, then possibly you’re using if they had income,
possibly claiming it on the parents tax returns, and therefore the child wouldn’t have to file for details, you can use tax topic 553, or C form 881 For a child born on January 1 1999, is considered to be age 24 At the end of 2022.
So obviously, whenever we have these age things, we’ve got these cutoff dates to determine exactly when someone hits you know, the 24, the 19 threshold, do not use form 819 For such a child. So resident aliens, these rules also apply if you were a resident alien. Also, you may qualify for certain tax treaty benefits.
So you can see publication 519 for details if that is applicable to you, non resident aliens and dual status aliens. These rules also apply if you were a non resident alien or a dual status alien and both of the following apply. You were married to a US citizen or resident alien at the end of 2022. You elected to be taxed as a resident alien. Caution.
specific rules apply to did apply to determine if you are a resident alien, non resident alien or dual status alien so we gotta get the correct categorization. If that’s what we’re applying here.
Most non resident aliens and dual status aliens have different filing requirements and may have to file Form 1040. In our publication 519 discusses these requirements and other information to help aliens comply with US tax law