Is It Mandatory to File Taxes Annually?

Filing a federal income tax return is a civic responsibility, but the requirement is not universal. The Internal Revenue Service (IRS) sets rules based on gross income, filing status, and age to determine who must file. These factors account for an individual’s financial and personal situation.

Gross Income Filing Thresholds

Your gross income is the primary factor in determining if you must file a tax return. Gross income includes all income you receive that is not tax-exempt, such as wages, salaries, tips, business income, interest, dividends, and capital gains. The income threshold that requires you to file varies by your filing status and age, as these factors determine your standard deduction.

For the 2024 tax year, a single individual under age 65 must file if their gross income is at least $14,600. This threshold increases to $16,550 for single filers who are age 65 or older.

The thresholds are different for those who are married. If a couple files a joint return and both spouses are under 65, they must file if their combined gross income is at least $29,200. If one spouse is 65 or older, that threshold rises to $30,750, and if both spouses are 65 or older, it increases to $32,300. For those who are married but file separate returns, the filing threshold is only $5.

Other filing statuses have unique income levels. An individual filing as Head of Household must file if their income is $21,900 or more, provided they are under 65. This amount increases to $23,850 if they are 65 or older. A Qualifying Widow(er) with a dependent child who is under 65 has a threshold of $29,200, which increases to $30,750 if they are 65 or older.

Special Filing Requirements

You may be required to file a tax return even if your gross income is below the standard threshold. This obligation can be triggered by specific financial activities or the need to pay certain types of taxes. These situations are based on particular events rather than your total income.

An example is self-employment income. If you have net earnings from self-employment of at least $400, you are required to file a return. This rule is in place because self-employed individuals are responsible for paying their own Social Security and Medicare taxes, known as self-employment tax.

You must also file if you owe any special taxes. This can include the Alternative Minimum Tax, Social Security and Medicare tax on tips you did not report to your employer, or household employment taxes.

Receipt of certain tax-advantaged funds can also trigger a filing requirement. You must file if you received distributions from or advance payments for any of the following:

• Health Savings Account (HSA), Archer Medical Savings Account (MSA), or Medicare Advantage MSA
• Advance payments of the premium tax credit for health insurance purchased through the Health Insurance Marketplace

Filing Requirements for Dependents

Individuals who can be claimed as a dependent on another person’s tax return have different filing requirements. The IRS sets separate income limits for dependents based on whether their income is earned or unearned.

Earned income includes salaries, wages, and tips received for work performed. Unearned income includes money from investments like interest and dividends. For the 2024 tax year, a dependent must file a return if their earned income exceeds $14,600 or if their unearned income is more than $1,300.

When a dependent has both earned and unearned income, the calculation is more complex. In this scenario, they must file if their total gross income is more than the larger of two amounts: either $1,300, or their total earned income (up to $14,150) plus $450. For example, if a dependent has $1,000 in unearned interest income and $3,000 in earned income, their total gross income is $4,000, which is greater than their earned income plus $450 ($3,450), so they must file.

The filing thresholds for dependents are also adjusted for age and blindness. For a single dependent who is either age 65 or older or blind, the earned income threshold increases to $16,550 and the unearned income threshold rises to $3,250. Even if a dependent does not meet these filing requirements, they may want to file a return to get a refund of any federal income tax withheld from their pay.