Tax Tips

Who Needs to File a Tax Return?

Not everyone has to file a return, but some low-income workers, retirees and students should file to collect a refund.

By Mary Beth Franklin, Senior Editor, Kiplinger's Personal Finance

February 2, 2010

Once your income reaches a certain threshold, you have to file a federal income-tax return. The income limits depend on your filing status -- single, married, widowed or head of household -- and your age. If you’re 65 or older, the threshold for filing your taxes is higher. (If you turned 65 on January 1, 2010, you are considered 65 for the entire 2009 tax year.) Some dependents with their own income, either from part-time jobs or investment earnings, have tax-filing requirements with thresholds that are lower than most.

But even if you don’t have to file a tax return this year, you might want to in order to collect a refund for federal taxes that were withheld from your paycheck or pension or to claim some of the refundable tax credits available for 2009. These credits include a bigger Earned Income Tax Credit for low-income workers and their families, a credit for first-time or repeat home buyers, and the new American Opportunity Tax Credit for college expenses.

Most workers are eligible for the new Making Work Pay Credit, a refundable credit worth up to $400 for individuals and $800 for married couples, subject to income limits. Although you may have received the money in the form of reduced tax withholding from your paycheck throughout the year, you still have to claim the credit on your tax return to ensure it is counted against your 2009 tax liability. If you don’t, you could end up with a smaller refund or a bigger tax bill.

For 2009, you must file a tax return if you are younger than 65 and your income was at least:

-- $9,350 for single filers.
-- $12,000 for single heads of household with dependents. -- $15,050 if you were widowed in 2007 or 2008 and have a dependent child. -- $18,700 for married couples filing jointly.

If you’re 65 or older, the filing thresholds are higher:
-- $10,750 for single filers. -- $13,400 for heads of household. -- $16,150 if you were widowed in 2007 or 2008 and have a dependent child. -- $19,800 for married couples filing jointly in which one spouse is 65 or older. -- $20,900 for married couples filing jointly in which both spouses are 65 or older.

If you are married filing separately, you must file a tax return if your income is $3,650 or more, regardless of your age.

Dependent children who worked for wages or tips or who collected income from investments in 2009 must file a tax return if:
-- their earned income from a job was at least $5,700. -- their investment income topped $950 (however, parents of children whose sole income was from investments can elect to report the child’s “kiddie tax” liability on their own return).

If a dependent child has both earned and unearned income, he or she must file a tax return if the combined income is $950 or their earned income (up to $5,400) plus $300, whichever is higher.

If you’re self-employed, regardless of whether you’re operating a sideline business or a full-time enterprise, you must file a tax return if your net self-employment income is $400 or more. It’s also a chance to collect the Making Work Pay Credit if you did not reduce your tax withholding throughout the year.

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