Having made less than 10000 dollars last year‚ you may be wondering if you need to file taxes. What are the requirements and what benefits are available to you?
Standard deduction
Getting a Standard deduction if you made less than $10k was a bit of a challenge in the past‚ but that’s no longer the case. Thanks to the Tax Cut and Jobs Act (TCJA) and other tax reforms‚ the government is making it easier to keep your hard earned dollars in your pocket. Depending on how you file‚ you can claim up to $24‚800 in tax deductions for your household. The TCJA has increased the standard deduction by almost one-fifth‚ from $9‚350 to $19‚400. Getting a Standard deduction if you make less than $10k means you may not be eligible for as many tax breaks as you might have hoped.
There are other tax breaks you can claim‚ but the TCJA has done the heavy lifting for you. Aside from the standard deduction‚ you can claim an additional $1‚650 if you are an unmarried person without a surviving spouse. You can also claim an additional $1‚300 if you are a senior citizen.
Tax-exempt income
Whether you are self-employed‚ working for an employer or you just made a buck in the stock market‚ you will need to file a tax return to get your money’s worth. However‚ you don’t have to pay the IRS if you make less than the tax-exempt limit. As a matter of fact‚ you might qualify for an exemption on your W-4 form. Getting a tax break for your accomplishments is just another benefit of employment.
The IRS has a plethora of tax forms‚ each designed to fit a specific tax situation. You may be eligible for a tax break on your W-4 form if you have a qualifying financial hardship. The IRS recommends that you fill out this form to the best of your abilities. The IRS can then recommend a tax withholding arrangement that is most appropriate for you. It is important to remember that the IRS can change its mind about tax withholding at any time. If you think you have been wrongly denied a tax refund‚ you can dispute the decision with the IRS.
Unemployment benefits
Unless you are filing an amended return‚ unemployment benefits are taxable income. For instance‚ a claimant receiving $3‚800 per week would owe taxes on that amount. A taxpayer who earned less than $150‚000 per year would qualify for an exemption.
Some states‚ such as Tennessee‚ Alaska‚ and New Hampshire‚ do not tax unemployment benefits. However‚ other states do tax them. In addition‚ the federal government taxes these benefits. For example‚ the District of Columbia taxes them.
The American Rescue Plan‚ passed in early March‚ waives taxes on up to $10‚200 of unemployment benefits for taxpayers with an adjusted gross income of less than $150‚000. This tax exemption is similar to the tax break provided during the Great Recession. However‚ Congress has not yet passed legislation to offer a similar tax break for benefits paid in 2021.
In 2020‚ the average unemployed worker received $14‚000 in unemployment benefits. Most states tax the benefits. However‚ a few states only tax a portion of the benefits. In Nevada‚ for instance‚ there is no state income tax.
Filing requirements for dependents
Whether you make less than $10‚000 a year or are a single taxpayer‚ there are certain filing requirements for dependents. There are also credits available for qualifying children‚ parents‚ and relatives. These credits may be claimed on Form 1040. You should read the instructions for Form 1040 for more information.
The rules for filing requirements for dependents are different than those for filing the standard deduction. The amount you are eligible to deduct depends on the amount of gross income and earned income. The standard deduction is a benefit for taxpayers who do not itemize their deductions. There are certain thresholds that apply for dependents who are blind or 65 or older. These thresholds can also be different for dependents who have both earned and unearned income.
In order to claim your child or qualifying relative as a dependent‚ you must provide proof of their birth or death by an official document. For children under age 18‚ you must provide their Social Security number. If you claim a child with a valid SSN‚ they must live with you for the entire year. In addition‚ you must meet certain residency and citizenship tests.
