Please ensure Javascript is enabled for purposes of website accessibility

Do I Need to File a Tax Return This Year?

By Maurie Backman – Feb 25, 2020 at 7:18AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Lower earners may be exempt from filing taxes -- but that doesn't mean they shouldn't do so.

You're required to pay taxes when you earn income. But if your income falls below a certain threshold, you may be exempt from the process of filing a tax return. Lower earners can often avoid filing taxes without penalty -- but if you don't submit a return, you could lose out on a key opportunity to actually get some money from the IRS.

Who needs to file a tax return?

If you're a moderate earner or higher, you can pretty much bank on having to file a tax return. But if your income falls below these thresholds, you may be exempt this year:

Age and Tax-Filing Status

Income Limit

Single tax filer under 65

$12,200

Single tax filer 65 or older

$13,850

Married filing jointly, both spouses under 65

$24,400

Married filing jointly, one spouse 65 or older

$25,700

Married filing jointly, both spouses 65 or older

$27,000

Married filing separately, all ages

$5.00

Head of household under 65

$18,350

Head of household 65 or older

$20,000

Qualifying widow(er) under 65

$24,400

Qualifying widow(er) 65 or older

$25,700

Data source: IRS.

The above numbers mostly align with the standard deduction for 2019. The standard deduction (like all deductions) exempts a portion of your earnings from taxes. Now, let's say you're married filing a joint return with an income of $23,000. Since that falls below the standard deduction, there's nothing for the IRS to tax you on, and so you're off the hook with regard to filing a return.

Tax Form 1040

Image source: Getty Images.

That said, above thresholds don't apply if you're self-employed. In that case, you have to file a tax return if your net earnings from self-employment total at least $400.

It could pay to file a return anyway

While you may technically be eligible to avoid filing a tax return this year, that doesn't mean you shouldn't make the effort. The reason? If your income is low enough, you may be entitled to valuable tax credits that actually pay you money, even if you don't owe the IRS anything.

For example, the Earned Income Tax Credit is a tax credit that's completely refundable, which means you'll get paid the full value you qualify for. That credit could be worth up to $6,557 for the 2019 tax year, depending on the number of qualifying children you have in your household, but if you don't file a tax return, you won't get to collect that money.

The same applies to the Child Tax Credit. It's worth up to $2,000 per child in your household under the age of 17, and $1,400 of it is refundable, so even if you're not required to file a tax return, doing so could put that money back in your pocket.

Make the effort

While filing a tax return may take a little time, doing so could leave you with quite a financial windfall. Best of all, if your earnings are such that you're not required to file taxes, it means you're eligible to submit your return for free (this option applies to anyone with an income of under $69,000). You have until April 15, 2020, to submit your 2019 return, so it pays to get moving on your taxes -- even if you're technically off the hook.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.