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When am I Required to File an Income Tax Return?

The starting point to determine if you are required to file a tax return is “taxable income”. Taxable income is the amount of income that is used to calculate how much tax is owed to the government in a given year. It is defined by the Internal Revenue Code (IRC) as gross income minus any deductions allowed in a particular year. Taxable Income includes wages, bonuses, tips, investment income, and some unearned income.

The deductions mentioned above actually come in two flavors, standard or itemized. The standard deduction is an amount determined by the IRC for an individual’s filing status. Itemized deductions are eligible expenses that a taxpayer can take to reduce their taxable income. The types and amounts of the itemized deductions are unique to each individual taxpayer; thus, the Internal Revenue Services (IRS) uses the standard deduction as a benchmark for the filing requirement.

Traditionally, if a taxpayer’s taxable income exceeded the standard deduction and personal exemption, the taxpayer was required to file an income tax return. The personal exemption has been repealed by the Tax Cuts and Jobs Act (TCJA); therefore, an individual taxpayer is required to file an income tax return if the taxpayer’s income exceeds the standard deduction. The former and current standard deductions are as follows:

There are also additional standard deductions amounts for blind and elderly taxpayers. The additional amounts are added to the current standard deduction to increase the deduction for individuals fitting the criteria. The amount of the additional standard deduction is $1,300.00 for an elderly individual and $1,300.00 for a blind individual. If an individual who is blind or elderly is single or qualifies to file as head of household, the additional standard deduction increases to $1,600.00. Thus, an individual that meets both criterions qualifies for an additional standard deduction of $2,600.00 (or $3,200.00 for individuals filing as single or head of household). The chart below demonstrates the filing requirement for taxpayers under and over age 65.

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