According to the rules of the Internal Revenue Service (IRS), the amount of the standard deduction is essential to determine who should or should not file taxes for 2022 and 2023
If there’s one thing Uncle Sam is known for, it’s that he doesn’t forgive you for not paying him his share of your winnings. However, despite the fact that the vast majority must file taxes, there is a group of taxpayers who are not required to file their return with the Internal Revenue Service (IRS) in 2023.
We are about to finish another fiscal period (year) and it is time to put in order the invoices, receipts and profits that we had all this time. The IRS receives more than 160 million individual tax returns each year. Despite that number, there are some people who may be exempt from filing their return.
Who is not required to declare taxes in 2023?
The government and the IRS have the figure of the annual standard deduction, which is a part of the income that is not subject to income tax. In this sense, if your annual income is less than the figure determined within the standard deduction for your filing status, you generally do not owe taxes, that is, you do not have to file a declaration.
The standard deduction is taken before taxable income is calculated, so someone who earns less than that amount doesn’t owe taxes. When a taxpayer earns more than that, he can take this standard deduction, when he is not required to itemize his return.
Each year, the IRS adjusts the amount of the standard deduction, so you should not file taxes for 2022 and 2023 if:
• You are a single or married taxpayer filing separately and earned less than $12,950 in 2022 and less than $13,850 in 2023.
• You are a head of household taxpayer and earned less than $19,400 in 2022 and less than $20,800 in 2023.
• You are married filing jointly or a widow and earned less than $25,900 in 2022 and less than $27,700 in 2023.
For tax year 2022, if you are at least 65 years old, you have an additional $1,750 added to your standard deduction if you file as single or head of household. If you file jointly with a spouse, married separately, or as a qualifying widow(er), your standard deduction increases by $1,400 for each person age 65 or older. Similar standard deduction increases apply to blind taxpayers.
Who should file taxes despite the standard deduction?
There are a number of circumstances under which people, whether they are US citizens or resident aliens, and even when applying for the standard deduction, must file taxes if:
• You are married but filing separate returns and earned at least $5 in gross income
• You collected unemployment income
• You were self-employed and earned at least $400
• You owe excise taxes, including Alternative Minimum Taxes (AMT) or Household Employment Taxes
• You or your spouse or dependent received advance payments of the Premium Tax Credit or Health Coverage Tax Credit
• You or your spouse (if filing jointly) received distributions from a health savings account, Archer MSA, or Medicare Advantage MSA
While non-resident foreigners must declare taxes if:
• You were a nonresident alien engaged in a trade or business in the US.
• You represented a deceased person, estate, or trust who had to file Form 1040-NR
Also people who are claimed as adults or dependent children will have to file a tax return, based on the amount of earned or unearned income the person had during the tax year.
Earned income includes wages, tips, professional fees, and scholarships, while unearned income is the combined earnings that equal gross receipts.
Dependent children who exceed $12,950 in 2022 will need to file taxes. Even if your income is less than that, it might be a good idea to file a return if income taxes were withheld from your paycheck.
In the case of dependent seniors, they must file taxes if they had unearned income of more than $2,200 in 2022. These types of income include taxable interest, ordinary dividends, and capital gains distributions. It also includes unemployment compensation, taxable Social Security benefits, pensions, annuities, and distributions of unearned income from a trust.
Even if you’re not required to file taxes on income below the standard deduction, it’s still a good idea to file, especially since that same issue may qualify you for different refundable tax credits, such as the Child Tax Credit or the Credit. Work Income Tax. It is essential that the IRS have your personal information updated, and it can be obtained if you file your tax return.