Tax season for fiscal year 2021 opens on Jan. 31, 2022, meaning that’s when the IRS starts accepting returns. However, some people don’t need to file taxes every year. If your earnings don’t meet certain thresholds, you get a reprieve from filing.

To determine whether you have to file taxes, you must consider three factors: your age, filing status and income. Once you reach a certain income level, the law usually requires you to file taxes. The amounts are adjusted annually for inflation.

How much you have to make to file taxes

Your first consideration is: Does my level of earnings mean I must file taxes? If your gross income for 2021 is above the thresholds for your age and filing status, you must file a federal tax return. See the table below.

Income requirements for filing a tax return
Filing status Younger than 65 65 or older
Single $12,400 $14,050
Head of household $18,650 $20,300
Married filing jointly $24,800 (both spouses under 65) $26,100 (one spouse over 65)

$27,400 (both spouses over 65)

Qualifying widow/widower with dependent child $24,800 $26,100
Married filing separately $5 $5
Dependents who are single
Younger than 65 65 or older 65 or older, and blind
Your unearned income was above … $1,100 $2,750 $4,400
Your earned income was above … $12,400 $14,050 $15,700
Your gross income was more than the larger of … $1,100, or your earned income (up to $12,050) + $350 $2,750, or your earned income (up to $12,050) + $2,000 $4,400, or your earned income (up to $12,050) + $3,650
Dependents who are married
Younger than 65 65 or older 65 or older, and blind
Your unearned income was above … $1,100 $2,400 $3,700
Your earned income was above … $12,400 $13,700 $15,000
Your gross income was more than the larger of … $1,100, or your earned income (up to $12,050) + $350 $2,400, or your earned income (up to $12,050) + $1,650 $3,700, or your earned income (up to $12,050) + $2,950
Your gross income was at least … and your spouse files a separate return and itemizes deductions $5 $5 $5

In addition to federal taxes, you may also have to pay state taxes. Currently, nine states don’t tax income at all, while two other states only tax investment income. You can find out if you owe state income taxes by going to your state’s revenue, finance or taxation office’s website. The IRS also has a link to every state’s tax office.

Penalties for not paying your taxes

Even if you file an extension to submit your tax return, you must pay any estimated tax you owe by April 15, 2022. If you do not pay your taxes, you will be charged a penalty and owe interest on any unpaid balance.

The penalty for failing to pay your taxes by the due date is 0.5 percent of your unpaid tax for each month or part of a month that your return is late. This penalty is capped at 25 percent of late unpaid taxes. If you file your return on time and request to pay by an installment agreement, the penalty drops to 0.25 percent for each month or part of a month of the installment agreement.

You’re also charged interest on the unpaid balance, which compounds daily. The rate is set each quarter and is based on the federal short-term rate, plus an additional 3 percent.

If you owe taxes and don’t file your return on time, you’ll be charged a penalty for failing to file. This is usually 5 percent of the tax owed for each month or part of a month your return is late. This penalty is also capped at 25 percent.

Affordable Care Act premium credit claim

If you have health care coverage as required by the Affordable Care Act, also known as ACA or “Obamacare,” you might need to file a return.Specifically, this will be the case if you qualified for federal help in buying your health care coverage through the health insurance marketplace or exchange. If advance payments of the ACA premium tax credit were made for you, your spouse or a dependent who obtained such marketplace medical coverage, that amount must be reported by filing a Form 1040 tax return and Form 8962, Premium Tax Credit.

This will ensure that you got the appropriate tax credit in advance. If you received too much premium help, you’ll have to repay it when you file your return. If you did not get enough, you can collect the extra when you file.

IRS rules regarding your age

As the table above indicates, individuals younger than age 65 must file if they make certain amounts. The earnings threshold amounts go up a bit for individuals 65 and up.

For married couples that file separate tax returns, the earnings target is based on the age of the older spouse.

In most situations, your age for tax purposes depends on how old you were on the last day of the year. But when it comes to determining whether you have to file a return, the IRS says that if you turned 65 on New Year’s Day, you are considered to be 65 at the end of the previous tax year. The one-day grace period allows you to use the higher-income thresholds to determine whether you must file a tax return.

Dependents and filing

The IRS also has different rules for dependents who earn money. Generally, a dependent must file a return and pay any taxes due. But the amounts that trigger the filing depend on the type of income — earned or unearned.

  • Earned income: Generally characterized as a salary, wages or tips. It also includes taxable scholarships and fellowship grants.
  • Unearned income: Includes investment interest or dividends, capital gains, unemployment benefits and some trust distributions.

The amount of each type of income that triggers a young dependent’s filing requirement is adjusted each year for inflation, and is calculated using a formula that factors in the annual standard deduction amount.

Older individuals and persons of any age who are blind must also make some extra calculations to determine whether they need to file a Form 1040 (aka an individual tax return).

Self-employment earnings

Don’t forget about self-employment earnings, whether you’re a teenager running a neighborhood lawn service or an adult with a 10-person manufacturing operation. This money counts as income and will determine whether you have to file a return, regardless of whether it was your sole source of income or an occasional side job.

If your annual gross self-employment income is at least as much as the income level for your filing status, you have to send in a Form 1040 and Schedule C or Schedule C-EZ reporting your earnings.

You must also file a Schedule SE to pay self-employment tax if your net earnings from self-employment is at least $400.

When it pays to file

For those few who don’t legally have to file, it pays sometimes to send in a return anyway.

This is the case for individuals who don’t earn much but might be eligible for the earned income tax credit. This benefit is available to qualified individuals even if they owe no tax, meaning they would get money back from the federal government. Many people think the credit is available only to parents — while that is not true, the credit amount is greater for eligible low-wage taxpayers with children.

The IRS also says that most individual taxpayers are due a tax refund. But those taxpayers must send in a Form 1040, Form 1040A or Form 1040EZ to get that cash.

You can check out the filing requirements section of IRS Publication 17 for more details.

Once you’ve determined that you need to file taxes, your next question is likely to be — when do I have to file taxes? This year, the deadline for filing your 2021 tax return is Friday, April 15, 2022. If you’re still not sure whether you must file a tax return, ask a tax professional, call the IRS at (800) 829-1040 or make an appointment at your nearest IRS Taxpayer Assistance Center.

Other situations that require filing a tax return

In addition to requirements based on age, your filing status and income, and the rules regarding the Affordable Care Act and self-employment income, there are several other situations that require you to file a tax return.

For example, if you owe any special taxes, such as the alternative minimum tax; extra taxes on qualified plans like an IRA; household employment taxes for employees like nannies, housekeepers or gardeners; or tips you didn’t report to your employer, then you need to file a federal return. You must also file if you had write-in taxes that might include taxes on group term life insurance or health savings accounts. In addition, you have to file if you have recapture taxes on the profitable sale of an asset.

Another instance which requires you to file a return is if you or your spouse (if filing jointly) received distributions from a health savings account, Archer MSA or Medicare Advantage MSA.

If you worked for a church or a church-controlled organization that is exempt from paying Social Security and Medicare taxes and you had wages of $108.28 or more, you’re required to file a return.

Finally, if you have a tax liability and are making payments under an installment agreement, you must file a return.

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