When You're Required to File a Tax Return

Not everyone needs to file a federal tax return, but understanding who must file a tax return helps you stay compliant and avoid penalties. Filing requirements depend on your income, age, filing status, and specific circumstances.

This guide explains the tax filing requirements that determine whether you need to file, even if you don't owe any tax.

Income Thresholds and Filing Requirements

The IRS sets income thresholds that trigger filing requirements. These thresholds vary based on your filing status, age, and the type of income you receive.

If your gross income exceeds the threshold for your filing status, you're generally required to file a return. Gross income includes wages, self-employment income, interest, dividends, capital gains, and other taxable income.

The thresholds are different for:

• Single filers

• Married filing jointly

• Married filing separately

• Head of household

• Qualifying surviving spouse

Age also affects the threshold. Individuals who are above a certain age have higher income thresholds before filing becomes mandatory, though they may still choose to file for other reasons.

These thresholds are adjusted periodically, but the underlying principle remains: if your income exceeds the standard deduction for your filing status, you typically must file.

Self-Employment Income Requirements

Self-employment income has different filing requirements that apply regardless of your total income level.

If you have net self-employment income above a relatively low threshold (a few hundred dollars), you're required to file a return even if your total income is below the standard filing threshold.

This requirement exists because self-employed individuals must pay self-employment tax, which covers Social Security and Medicare contributions. Employees have these taxes withheld automatically, but self-employed individuals pay them through their tax return.

Self-employment income includes earnings from:

• Freelance work

• Independent contracting

• Side businesses

• Gig economy work like rideshare driving or delivery services

Even if your self-employment income is relatively small, exceeding the threshold creates a filing obligation.

When Filing Is Required Even With Low Income

Certain situations require you to file a return even if your income is below the standard threshold.

Special taxes owed: If you owe alternative minimum tax, household employment taxes, or have early withdrawal penalties from retirement accounts, you must file regardless of income.

Health coverage: In the past, the individual mandate required most people to have health insurance or pay a penalty, which created filing requirements. While the federal penalty no longer applies, some states have their own requirements.

Advance payments received: If you received advance payments of the premium tax credit for health insurance purchased through the marketplace, you must file to reconcile those payments.

Recapture of certain credits: Some tax benefits must be "recaptured" or paid back if circumstances change, which requires filing even with minimal income.

These special circumstances override the general income threshold rules.

Dependents and Filing Requirements

Different rules apply if someone can claim you as a dependent on their tax return.

Dependents have lower income thresholds for filing requirements. If you can be claimed as a dependent, you may need to file even if your income is quite modest.

The threshold depends on whether your income is earned (from working) or unearned (from investments, interest, or dividends). Unearned income has a particularly low threshold for dependents.

Students who work part-time, children with investment accounts, and adult children still claimed as dependents need to understand these lower thresholds.

Even if a dependent isn't required to file, they may want to file anyway to claim a refund of withheld taxes.

When You Should File Even If Not Required

There are several situations where filing makes sense even if you're not legally required to do so.

Tax withholding: If you had federal income tax withheld from your paychecks but your income is below the filing threshold, you must file to get that money refunded. The IRS won't automatically send it back.

Refundable credits: Credits like the Earned Income Tax Credit are refundable, meaning they can result in a refund even if you owe no tax. You must file to claim these credits.

State requirements: Some states have different filing requirements than the federal government. You might not need to file federally but still need to file a state return.

Estimated payments: If you made estimated tax payments throughout the year but ended up with income below the threshold, you need to file to get those payments refunded.

Documentation: Filing creates an official record of your income, which can be useful for loan applications, financial aid, or other situations requiring proof of income.

Special Situations That Affect Requirements

Certain circumstances create unique filing obligations.

Married filing separately: If you're married and your spouse itemizes deductions, you must file a return regardless of your income level, even if it's zero.

Foreign income: U.S. citizens and residents must report worldwide income. If you have foreign income or foreign bank accounts, you may have filing and reporting requirements even if the income is excluded or exempt from U.S. tax.

Disaster relief: If you received certain disaster-related payments or assistance, you may need to file to report them, even if they're not taxable.

Deceased individuals: The executor or personal representative of someone who died during the year may need to file a return on their behalf if they met filing requirements.

Business Owners and Filing Requirements

If you own a business, filing requirements extend beyond personal income thresholds.

Corporations must file annual returns regardless of income or activity level. This applies even if the corporation had no income or operated at a loss.

Partnerships must file informational returns, though the partnership itself doesn't pay income tax. The income flows through to partners, who report it on their individual returns.

Single-member LLCs that are disregarded entities report business income on Schedule C of the owner's personal return, which means the personal filing requirements apply.

However, if the business has employees, additional employment tax returns are required regardless of the business's profitability or the owner's income.

Penalties for Not Filing When Required

Failing to file when required can result in penalties and interest charges.

The failure-to-file penalty is typically calculated as a percentage of unpaid taxes per month, up to a maximum. This penalty applies even if you can't pay what you owe—filing on time is still required.

If you're owed a refund and don't file, there's no penalty, but you have a limited time to claim that refund. After a certain period, the right to the refund expires.

The IRS can also file a substitute return on your behalf if you don't file, but this return typically doesn't include deductions or credits you might be entitled to, potentially resulting in a higher tax bill than necessary.

Understanding who must file a tax return helps you avoid these consequences while ensuring you claim any refunds or credits you're entitled to.

If you're uncertain whether these requirements apply to your circumstances, Portentrade can help clarify your filing obligations.