January 28th saw the entry of another tax season. Several million returns have already been processed, however many are still confused as to whether they are obligated to file a tax return or not.
This article focuses on US citizens residing within the USA. Please note that there are different regulations for US expats. Feel free to contact us for details on filing a tax return as a US expat.
For those completely new to filing their personal tax return, the 2019 tax return covers income and corresponding deductions dating between the January 1st, 2018 and December 31st 2018. There are a number of reasons why you may have to report your income to the IRS through a tax return. If you surpass the threshold set out by the IRS for gross income, in accordance with your age and filing status, then you will be required to file a personal tax return. Below is a chart showing Filing status, Age, Gross Income thresholds for 2019.
When determining your income- as well as a partners- you much consider all income you received that isn’t exempt from tax i.e.
· Income from sources outside the United States
· Income from the sale of your main home even if you can exclude part of it from tax
· Gains on form 8949 or schedule D
· Business income reported on schedule C, line 7 or Schedule F, line 9
The chart shown above is not applicable if someone is claiming you on their Federal income tax return. Below we have summarised details for those who are claimed as dependents on another person tax return:
There are a number of reasons why you may be required to file, even if not expressed on the chart above. For instance:
Generally speaking, if you are self-employed you are will have to file a personal tax return. If your net earnings from self-employment are $400 or more you must file a personal tax return to the IRS.
As an accountant for creative industry professionals, such as actors and photographers, we are expert in filing self-employed creative professionals tax returns and saving them money against tax while doing so.
If you pay special taxes such as recapture tax you will be required to file a personal tax return to the IRS.
IRA or MSA contributions
If you have made excess contributions to an IRA or MSA during the tax year you will be required to file a personal tax return
Required Minimum Distributions
If you did not take required minimum distributions (RMD) you will be required to file a personal tax return.