Should I File a Tax Return?

Several people have asked me recently “should I file a tax return?”  Sometimes it can be difficult to know what is expected from the IRS.  Below may be of some help in making this decision.

When You Must File a 2011 Return

If your parent (or someone else) can claim you as a dependent, use the below information to see if you must file a return.  “Unearned income” includes taxable interest, ordinary dividends, and capital gain distributions.  It also includes unemployment compensation, taxable social security benefits, pensions, annuities, and distributions of unearned income from a trust.  “Earned income” includes salaries, wages, tips, professional fees, and taxable scholarship and fellowship grants.  Gross income is the total of your unearned and earned income.

Note: If your gross income was $3,700 or more, you usually cannot be claimed as a dependent unless you are a qualifying child.

SINGLE DEPENDENTS—Were you either age 65 or older or blind?

If NO, you must file a return if any of the following apply.

  1. Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
  2. Your unearned income was more than $950
  3. Your earned income was more than $5,800
  4. Your gross income was more than the larger of—$950, or your earned income (up to $5,500) plus $300

If YES, you must file a return if any of the following apply.

  1. Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
  2. Your unearned income was more than $2,100 ($3,250 if 65 or older and blind)
  3. Your earned income was more than $6,950 ($8,100 if 65 or older and blind)
  4. Your gross income was more than the larger of —-$2,100 ($3,200 if 65 or older and blind), or your earned income (up to $5,500) plus $1,450 ($2,600 if 65 or older and blind)

 

Other Situations When You Must File a 2011 Return

 

If any of the four conditions listed below applied to you for 2011, you must file a return.

1.

You owe any special taxes, including any of the following.

a.

Alternative minimum tax. (See Form 6251.)

b.

Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. (See Publication 590, Individual Retirement Arrangements (IRAs), and Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.) But if you are filing a return only because you owe this tax, you can file Form 5329 by itself.

c.

Social security or Medicare tax on tips you did not report to your employer (see Publication 531, Reporting Tip Income) or on wages you received from an employer who did not withhold these taxes (see Form 8919).

d.

Write-in taxes, including uncollected social security, Medicare, or railroad retirement tax on tips you reported to your employer or on group-term life insurance and additional tax on health savings accounts. (See Publication 531, Publication 969, and the Form 1040 instructions for line 60.)

e.

Household employment taxes. But if you are filing a return only because you owe these taxes, you can file Schedule H by itself.

f.

Recapture taxes. (See the Form 1040 instructions for lines 44, 59b, and 60.)

2.

You (or your spouse, if filing jointly) received Archer MSA, Medicare Advantage MSA, or health savings account distributions.

3.

You had net earnings from self-employment of at least $400. (See Schedule SE (Form 1040) and its instructions.)

4.

You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. (See Schedule SE (Form 1040) and its instructions.)

Who Should File

Even if you do not have to file, you should file a tax return if you can get money back. For example, you should file if one of the following applies.

  1. You had income tax withheld from your pay.
  2. You made estimated tax payments for the year or had any of your overpayment for last year applied to this year’s estimated tax.
  3. You qualify for the earned income credit. See Publication 596, Earned Income Credit (EIC), for more information.
  4. You qualify for the additional child tax credit. See the instructions for the tax form you file (Form 1040 or 1040A) for more information on this credit.
  5. You qualify for the refundable American opportunity education credit. See Form 8863, Education Credits.
  6. You qualify for the health coverage tax credit. For information about this credit, see Form 8885, Health Coverage Tax Credit.
  7. You qualify for the refundable credit for prior year minimum tax. See Form 8801, Credit for Prior Year Minimum Tax — Individuals, Estates, and Trusts.
  8. You qualify for the first-time homebuyer credit. See Form 5405, First-Time Homebuyer Credit and Repayment of the Credit.
  9. You qualify for the credit for federal tax on fuels. See Form 4136, Credit for Federal Tax Paid on Fuels.

10.  You qualify for the adoption credit. See IRS Form 8839, Qualified Adoption Expenses.