Are You Required to Submit a 2018 Tax Return?

Are You Required to Submit a 2018 Tax Return?
Ines Zemelman, EA
23 April 2018

Tax season is open, and the IRS estimates it will process almost 155 million tax returns from individuals during the 2018 tax season. So the question is, are you required to file a tax return?

The tax system requires that income be reported for the previous year, so in 2018 you will report your income and deductions from the 2017 tax year. Note that even if you were paid for work you performed during 2017, if that pay was not received until 2018 it goes on your 2018 return.

But, just receiving income during 2017 doesn’t always mean you are required to submit a federal tax return. Most taxpayers can look at the following chart to determine if filing is required. Simply choose the correct filing status, age, and look at the minimum gross income required for filing. If your income exceeds this number, you must file.

chart to determine
Filling Status Taxpayer Age Gross Income
Single Under 65 $10,400
Single 65 or older $11,950
Married Filing Jointly Both spouses under 65 $20,800
Married Filing Jointly One spouses 65 or older $22,050
Married Filing Jointly Both spouses 65 or older $23,300
Married Filing Separately Any $4,050
Head of Household Under 65 $13,400
Head of Household 65 or older $14,950
Qualifying Widow(er) with Dependent Child Under 65 $16,750
Qualifying Widow(er) with Dependent Child 65 or older $18,000

For the purposes of this chart, gross income includes all income received that is not exempt from taxation, including:

  • Income from outside of the US
  • Income from selling your primary home, regardless of if that income is fully or partially tax exempt
  • Gains reported on Schedule D or Form 8949 (but not losses)
  • Business income on Schedule F or Schedule C (but not losses)

When calculating your age, you will be considered 65 in 2017 if your birthdate is January 1st, 1953.

This chart is applicable as long as no one else claims you as their dependent on their tax return. When someone else can claim you, there are a few differences.

  • Single dependents under 65 (not blind) - Taxpayers usually need to submit a federal return if they have earned income (usually salary or wages) exceeding $6,350 or if they have unearned income (for example, from interest or dividends) that exceeds $1,050.
  • Single dependents either blind or over 65 - Taxpayers usually need to submit a federal return if they have earned income exceeding $7,900 or unearned income over $2,600.
  • Single dependents blind and over 65 - Taxpayers usually need to submit a federal return if they have earned income exceeding $9,450 or unearned income over $4,150.
  • Married dependents (either of whom are not blind and under 65) - Taxpayers usually need to submit a federal return if they have earned income over $6,350, unearned income over $1,050, or if they had gross income of $5 or more with their spouse filing separately and itemizing deductions.
  • Married dependents (either of whom is blind or over 65) - Taxpayers usually need to submit a federal return if they have earned income over $7,600, unearned income over $2,300, or if they had gross income of $5 or more with their spouse filing separately and itemizing deductions.
  • Married dependents (either of whom is blind and over 65) - Taxpayers usually need to submit a federal return if they have earned income over $8,850, unearned income over $3,550, or if they had gross income of $5 or more with their spouse filing separately and itemizing deductions.

These points are applicable to married dependents, not just married taxpayers. Remember that a taxpayer’s spouse cannot be their dependent for tax reasons.

These are just a few reasons you may need to submit a federal return. Most frequently, the requirement to file a federal return even if you don’t meet any of the income thresholds is triggered by being self-employed. Taxpayers who are self-employed are required to submit a federal return if they have a minimum of $400 of net earnings. This includes amounts reported on Form 1099-MISC.

Still other common reasons include special taxes, such as recapture taxes; homebuyer’s credits; alternative minimum tax (AMT); unpaid Medicare, social security, or railroad retirement taxes; taxes on tip income; tax on group life insurance; employment taxes for household employees; or tax on wages when the taxes weren’t withheld by the employer. There is also a requirement to submit a return if a taxpayer had at least $108.28 in wages from a qualified church-controlled organization. Also, if you, a spouse, or your dependent received advance payments for health insurance tax credits you are required to file.

Accounts with favorable tax treatment may also trigger the requirement to file. HSA or MSA distributions, early distributions or excessive distributions from qualified retirement plans, excess plan contributions, or not taking a requirement minimum distribution can lead to a filing requirement.

Remember that even if a taxpayer isn’t required to submit a federal return, there may be certain tax credits that you can take advantage of by filing. Examples include excess withholding refunds, or the earned income tax credit (EITC).

Health care legislation also makes taxes a bit more complicated. Here are a few key points:

  1. If you do not have a filing requirement, you are also exempt from paying the penalty for not having health insurance. There is no need to submit a return to allow a claim to this exemption.
  2. If there is a filing requirement, and you didn’t have the required health insurance, you must file a Form 8965. This will allow you to calculate the penalty or claim your exemption from it.
  3. If you are eligible for any subsidies, you are required to submit a federal tax return to reconcile any advance payments you received in the previous tax year. Failing to do this may prevent you from being able to receive additional payments. Not filing will result in being responsible for your health insurance at full cost, and you might even need to repay a portion of any previous advance payments.
  4. Although the new law repeals many of these requirements, but it does not take effect until 2019 and the Internal Revenue Service has said they will be enforcing current law until then.

Finally, keep in mind that this all pertains to federal tax returns. State and local laws will vary. It is entirely possible that a taxpayer could be required to submit a state tax return even though they are not required to submit a federal tax return.

As with most tax topics, this can be complicated. If in doubt, contact a tax professional.

Ines Zemelman, EA
founder of Taxes for Expats