Many of us can't avoid filing a tax return. But what if you don't have a job? Are you required to file a return in that case? Here's what you need to know.
It's all about your income
Whether you're required to file a tax return or not depends more on your income for the tax year you're wondering about than whether you're holding down a job at present. On April 15, tax returns will be due for the 2020 tax year, so whether you're employed right now makes no difference as far as those returns are concerned.
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To see if you'll have to file a tax return this year for the 2020 tax year, you can consult this table:
|
Tax-Filing Status |
Age at the End of 2020 |
Income Threshold |
|---|---|---|
|
Single |
Under 65 |
$12,400 |
|
Single |
65 or older |
$14,050 |
|
Married filing separately |
All ages |
$5 |
|
Head of household |
Under 65 |
$18,650 |
|
Head of household |
65 or older |
$20,300 |
|
Married filing jointly |
Both spouses under 65 |
$24,800 |
|
Married filing jointly |
One spouse under 65 |
$26,100 |
|
Married filing jointly |
Both spouses 65 or older |
$27,400 |
|
Qualifying widow or widower with dependent child |
Under 65 |
$24,800 |
|
Qualifying widow or widower with dependent child |
65 or older |
$26,100 |
Data source: IRS.
To use this table, first find the filing status that applies to you, and then see where you land on the age column. From there, you'll see the income limit that exempts you from filing a return. If your income exceeds that limit, you'll need to file. For example, if you're single and were under 65 as of the end of 2020, you won't have to file a tax return if your income was under $12,400. But if it was higher, you'll have to file.
That said, even if you're exempt at first glance based on the information above, you may still need to file a tax return if:
- You had at least $400 of self-employment income last year
- Someone can claim you as a dependent on his or her tax return
- You received a health savings account distribution
- You owe taxes on a retirement plan withdrawal that weren't previously withheld
As far as this year's tax return goes -- the one you'll file in 2022 -- whether you'll need to submit one will depend on your total income in 2021. If you're out of work right now, that doesn't mean you'll stay jobless the entire year, in which case your earnings may be high enough that you're required to file a return. Also, remember that unemployment benefits count as income, so if you're receiving those while you're not working, that could mean you'll need to file a tax return next year.
It could pay to file a tax return even if you don't have to
It may be the case that you're not required to file a tax return this year, or next year, for that matter. But that doesn't mean you shouldn't.
If you file a tax return, you may find that you're eligible for certain tax credits that will pay you, even if you don't owe the IRS anything. The Earned Income Tax Credit, or EITC, for example, is a fully refundable credit worth up to $6,660 for the 2020 tax year and up to $6,728 for the 2021 tax year. Similarly, the Child Tax Credit is partially refundable, so if you have children under age 17 in your household, that could put some money in your pocket.
Furthermore, if you didn't receive a stimulus check last year but were entitled based on your earnings, at this point, the only way to get that money is to claim it on this year's taxes via the Recovery Rebate Credit. There were two separate stimulus checks that went out in 2020 -- an initial $1,200 payment and a follow-up payment worth $600.
Know the facts
At the end of the day, your current employment status has little to do with your requirement to file a tax return. If you're not sure whether you should file a return, you can use this IRS tool to help figure it out. But again, remember that even if you're not obligated to file your taxes, doing so could still work to your benefit.
