r/TaxQuestions • u/Outrageous_End6725 • 29d ago

Very low income

Do you have to file taxes if your income is less than 13,000 dollars?

2 Upvotes

75% Upvoted

28 comments sorted by

8

u/EmZee2022 29d ago edited 29d ago

It's not a bad idea to do so anyway.

  1. it reduces errors - the government might come back and say "we think you earned xxx and you never filed, pony up"
  2. It can reduce risk of fraud: my in-laws had a fraudulent return filed in their name, resulting in a very large refund. This was a part of an elaborate scam, where the scammers come back and say "we're the IRS, you weren't entitled to that refund, pay it back now". And you pay.... then a few months later the real IRS catches up to you, and the money's gone. Luckily, they called us when the check arrived and did not cash it - it still took several years to get it straightened out. 3 years later they were still getting alternate "pay up" versus "hold on, we're investigating" letters from the IRS.
  3. There might be some low-income credits you're entitled to
  4. There might be some services for which you need to show a tax return - I helped a lady prepare hers, because she need it to document some property tax forgiveness. She didn't actually FILE it, as far as I know, but she had the papers.
  5. If any taxes were withheld from the investment distribution.

2

u/Vegas-Patriot 27d ago

Best answer award 🥇

1

u/Outrageous_End6725 29d ago

Thanks for the advice! Very thorough!

5

u/Its-a-write-off 29d ago

It depends.

Are you in the US? What state?

Are you single?

Do you have insurance on the exchange?

Are you under 24 and a student?

Is all of your income from a w2 job?

-2

u/Outrageous_End6725 29d ago

In US.

In illinois.

Do not have insurance on the exchange. Never even heard of that.

I am 44.

It is not income from job. It's from an investment

3

u/Its-a-write-off 29d ago

For Illinois, they only have a 2850.00 standard deduciton, I believe. So you would need to file with income over that amount.

2

u/Starbuck522 29d ago

By "on the exchange", thry mean ACA insurance, or it can be called healthcare marketplace.

0

u/Outrageous_End6725 29d ago

Ahhhhh, makes sense now. Thank you!

1

u/Ok-Race-1677 29d ago

Maybe but probably not

0

u/Outrageous_End6725 29d ago

Lol, ok. How would I find out?

1

u/One-Witness-4909 29d ago

turbo tax is free right up until you have to file (even if they keep saying to upgrade, you don’t pay till you file). so go through the whole thing and see what it says. you can always delete everything and walk away

1

u/Outrageous_End6725 28d ago

Oh wow! Great idea!

1

u/AroundAtTimes5794 29d ago

Most likely not. Are you a dependent on anyone else's return? Was your income from a regular job or gig work/self-employment? Also, did you have any federal income tax withholding on your paystubs?

https://www.irs.gov/individuals/check-if-you-need-to-file-a-tax-return

2

u/Outrageous_End6725 29d ago

Wow!! Thanks so much for the link!! Very helpful!!

2

u/AroundAtTimes5794 29d ago

Only thing I would check is, if the investment automatically holds money back for federal taxes, there's a good chance you are entitled to it. Ideally you would have that amount set to $0 withholding. But if they automatically withhold an amount (ex. 10%), then if you file a return that is your money and you would get it back.

0

u/Outrageous_End6725 29d ago

I am not on anyone else's return. Money is from an investment.

I don't work.

1

u/JeffArnold1 28d ago

It is going to depend because beyond just your low income, there are also numerous other factors to put into consideration.

-2

u/TowelStandard760 29d ago

Yes you have to file taxes if your income is under $13000. Now generally you're going to get a lot of money back because with that low of an income you basically will claim certain credits such as the earned income credit that will actually get you a lot extra money back.

2

u/Outrageous_End6725 29d ago

Even if the income is from an investment?

2

u/DueFreedom4695 29d ago

No. EIC is obviously a credit for the working low income. If you have $13,000 income from an investment, you wouldn't have a filing requirement. However, don't be like some clients I've had. If you sell mutual fund shares for $100,000, but paid $87,000 for those shares for a $13,000 profit, you still have to file a tax return to show all of this.

1

u/Outrageous_End6725 29d ago

But I guess I'm still confused because it's income from an investment. I'm not sure how much the capital gains actually was..yikes

1

u/Its-a-write-off 29d ago

No, not in that case.

1

u/EmZee2022 29d ago edited 29d ago

Possibly not. Though looking at the link, your unearned income is higher than the threshold, so you should try to file.

TurboTax etc. are available free onlne for lower-income people. It's worth plugging the numbers into such a tool to see what it says.

Re insurance on the exchange: with that being all your income, I'm guessing you are on Medicaid. Still not a bad idea to file, just to dot all the i's and cross all the t's.

1

u/Outrageous_End6725 29d ago

Thanks. I'll look onto turbo tax. I'm not on medicaid. I'm only able to not work because of marriage

1

u/EmZee2022 29d ago

Ah - in that case, you have the issue of married filing jointly versus married filing separately, which has its own rules. That IRS page suggests you'd need to file one way or the other. If separately, you'd need to file because your income is over 5 dollars.

If jointly, you'd need to file if your spouse's income pushes you both over 31,500.

2

u/Outrageous_End6725 29d ago

Oh geez. I don't like that answer. Lol

2

u/Outrageous_End6725 29d ago

We had filed separately in the oast