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When should you file your Tax Return?

When to File Form 1040

When to File Form 1040 (Individual Tax Return)?

Tax time can be scary and stressful for a lot of people. Some of that stress can be taken away by knowing when you need to File Your Tax Returns. When certain conditions are met, you must file a tax return for 2023. In the event that your gross income goes over a certain IRS limit, you may need to file a tax return using Form 1040. If you have income from self-employment, unemployment benefits, or owe taxes on your retirement accounts, you need to file a tax return using Form 1040. This article goes into a lot of detail about these conditions so that you know everything or are ready.

Gross Income Threshold Limit for Year 2024

Filing Form 1040 becomes mandatory if your gross income exceeds the following limit based on your filing status:

Filing StatusAge Under 65 YearsAge 65 Years or Older
Head of Household$20,800$22,650
Married Filing Jointly$27,700$29,200
Married Filing Separately$5 (Always)$5 (Always)
Qualifying Surviving Spouse$27,700$29,200

These limits are for filing Form 1040 for the year 2024. See our blog post “Threshold Limit for Filing Tax Return” for more information, where we stated the threshold limits for filing FORM 1040 for the previous five years.

You Owe Special Taxes

Filing Form 1040 is usually necessary if you owe any special taxes, such as, but not limited to:

  • Alternative Minimum Tax (AMT): The AMT is designed to ensure that individuals who benefit from certain exemptions, deductions, and credits pay at least a minimum amount of tax. If you are subject to the Alternative Minimum Tax (AMT), filing Form 1040 to report income and pay the required amount accurately is essential. Failure to do so could result in penalties and interest charges from the IRS.
  • Additional Tax on Tax-Favored Accounts: Accurate income reporting from tax-favored accounts on your Form 1040 is important to avoid penalties and interest charges. This includes taxes on IRAs and other qualified plans. For instance, you might have to pay extra taxes if you take any distribution out of your IRA before you turn 59½.
  • Household Employment Taxes: If you employ someone to work in your home, such as a nanny or housekeeper, you’re responsible for paying employment taxes. If you’re responsible for paying employment taxes, then you must file Form 1040, else you could attract penalties and interest charges from the IRS
  • Social Security and Medicare Taxes on Tips and Group-Term Life Insurance: If you reported tips to your employer but the Social Security and Medicare taxes weren’t collected, if you received wages without these taxes withheld, or if you owe additional taxes on group-term life insurance, you’ll need to file Form 1040. Workers in the service industry should be aware of this condition. It’s crucial if you receive wages without these taxes withheld.
  • Recapture Taxes: If you received certain tax benefits, such as the first-time homebuyer credit, and then later on if you no longer meet the requirements for claiming such credits, then, recapture taxes may apply. Understanding the implications of recapturing taxes and fulfilling your obligations is important. In this scenario as well, you will need to file your Form 1040.

Distributions from Health Accounts

You have to file a tax return when you receive distributions from a Health Savings Account (HSA), an Archer Medical Savings Account (MSA), or a Medicare Advantage MSA. Most of the time, these payments are tax-free as long as they are used for qualifying medical costs, but they have to be reported by filing Form 1040.

Net Earnings from Self-Employment

If your net earnings from self-employment were at least $400, filing a tax return is necessary. Reporting net earnings from self-employment ensures that you are fulfilling your tax obligations and avoiding any penalties. It’s important to accurately report all income earned through self-employment to comply with tax laws. This includes income from freelancing, consulting or running a business.

Wages from a Church or Church-Controlled Organization

Another condition requiring a tax return is earning $108.28 or more from a church or church-controlled organization exempt from employer social security and Medicare taxes. This is a specific case that often gets overlooked. This income must be reported on your tax return to ensure compliance with IRS regulations. Failure to report this income could result in penalties or fines from the IRS.

Advance Payments of the Premium Tax Credit

If the Marketplace gave you, your spouse, or your dependent advance money for the premium tax credit, you need to file a return. You should make sure that the advance payments you make match the premium tax credit you are actually eligible for. If there are any differences, you could end up owing the IRS money. This ensures that the correct amount of credit is claimed for health insurance expenses. To keep things smooth with the IRS in the future, you must include this information on your tax return.

Inclusion of Income under Section 965

Section 965 of the US tax code deals with a one-time tax called the Transition Tax. It applies to earnings that were not taxed before and held by some foreign companies that US shareholders own. Individuals required to include amounts in income under Section 965 or those paying a net tax liability under this section in instalments must file a return. This is a complex area relating to foreign earnings and requires careful attention.

If you know the exact circumstances under which you need to File a Tax Return, you can avoid unnecessary stress and possible legal problems. If you’re not sure what you need to do to file your taxes, talk to a tax expert like us. We have a lot of experience with complicated tax situations and can help you follow IRS rules. It’s important to be proactive about your tax obligations, and if you’re not sure what to do, talking to a tax professional can help you understand and feel better. Contact us today at info@busacta.com to schedule a consultation and get on track with your taxes.

Read More:

1. When to file | Internal Revenue Service (irs.gov)

2. Instruction 1040 (irs.gov)

3. Check if you need to file a tax return | Internal Revenue Service (irs.gov)

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