What Is The Government tax Reporting Threshold?



Each year thousands of people file a tax return when it is not required. This means that people are spending money to file a return when they shouldn’t and that the government has to waste resources processing returns that should not have been filed. Clearly, it is in everyone’s best interest to understand when they have to file a federal tax return.




The Standard Deduction

All taxpayers, unless they are the dependent of another person, may claim a standard deduction on their return. This amount is determined by the filing status chosen which can be one of the following: Single or Married Filing Separately; Married Filing Jointly or Qualifying Widow(er); or Head of Household. These categories entitle the filer to a deduction of $5,700, $11,400 or $8,400.

Tax filers age 65 or older you can claim an additional $1,100 or $1,400 if they are Single of Head of Household. If you are blind you are also entitled to these additional deductions.

The Personal Exemption

Each person on a tax return is entitled to a personal exemption which for 2010 is $3,700. For the purposes of filing requirements the number of dependents is not taken into account.

What Does All This Mean?

The government is effectively giving everyone a certain amount of income free of government tax and they do not want you to file a return unless the amount of your income is above that number. The amount is calculated by taking the applicable standard deduction and adding to it the personal exemption.

A Single person would not have to file a return unless their income was more than $5,700 plus $3,700 or $9,400. If they were 65 or older, or blind, then that number would be increased by $1,400. If they were 65 years old and blind then the number is $2,800 which means that they do not need to file unless the income is greater than $12,200.


A Caveat

Even though your income may be below the filing requirement you may still want to file a return if you have had any government tax withheld or be entitled to one of the many credits such as Earned Income Credit or Make Work Pay Credit. However as long as your income is below the combined standard deduction and personal exemption you will not be penalized for not filing a return since you could not owe any government tax.

Related posts:

  1. How Does the Government Pick Tax Returns to Audit?
  2. Married & Filing Separately, What Can I Claim On My Government Taxes?
  3. Why Would The Government Reject My Tax Return?
  4. Why Do I Need To File Government 1040X?
  5. Can I File My Government Tax Return Myself?



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