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Tax Return

Learn who is required to file a tax return in the U.S.

In order to discover which tax form to use, begin by determining your tax filing status. [©Shutterstock, 2010]
©Shutterstock, 2010
In order to discover which tax form to use, begin by determining your tax filing status.

When individuals exceed certain minimum income limits it becomes necessary to file a tax return in the U.S. Many first-time filers are college students who begin working part-time or full-time. Even foreigners attending school in the United States may need to file a tax return.

The first step in filing a tax return is determining filing status. Then, one of three income tax forms must be filed by the deadline, which is normally midnight on April 15. Even if income earned is below the requirement, a student may need to file a tax return in certain situations. The tax return contains information about the taxpayer's income for the previous year and allows the Internal Revenue Service (IRS) to assess if the taxpayer overpaid, underpaid or paid the correct amount of income tax.

Who Should File a Tax Return

According to the IRS, the possible filing statuses are single, head of household, married filing jointly, married filing separately and qualifying widow or widower with a dependent child. Each filing status has a different income limit that dictates whether a tax return must be filed. In 2008, the minimum gross income requirements for each filing status were:

  • Single: $8,950 if under 65, and $10,300 if 65 or older
  • Head of household: $11,500 if under 65, and $12,850 if 65 or older
  • Married filing jointly: $17,900 if both spouses were under 65, $18,950 if one was at least 65, and $20,000 if both spouses were 65 or older
  • Married filing separately: $3,500
  • Qualifying widow or widower with a dependent child: $14,400 if under 65, and $15,450 if 65 or older

Occasionally, a taxpayer does not meet the income requirement to complete a tax return but should still file in order to receive a tax refund. A tax return should be completed regardless of income if income tax was withheld from pay, if the taxpayer qualifies for the earned income tax credit or if the taxpayer qualifies for the child tax credit. A student or first-time filer with a part-time job may be included in one of these exceptions.

Determining Which Tax Form to Use

The form to use for filing a tax return is dependent on income and filing status. The three documents that are available when filing a tax return are the 1040EZ, the 1040A and the 1040. The following criteria determine which tax form to use:

  • Use the 1040EZ if taxable income is less than $100,000, if the filing status is "single" or "married filing jointly," if the taxpayer does not claim any dependents, if the taxpayer and spouse are both under 65 and not blind and if the taxpayer's income from interest is $1,500 or less.
  • Complete the 1040A if taxable income is less than $100,000, if the taxpayer claims certain tax credits, if the taxpayer has capital gain distributions or if the taxpayer claims deductions for IRA contributions, student loan interest or college tuition and fees.
  • File the 1040 if the taxable income is $100,000 or more, if the taxpayer is claiming itemized deductions, if the taxpayer has self-employment income or if the taxpayer is reporting income from the sale of real estate.

Tax returns can be prepared either by the taxpayer or by a professional tax preparer, such as a certified public accountant or representative for a business that specializes in tax preparation. Once the tax return is prepared, it can be submitted to the IRS either through mail or filed online.

Tax Return Deductions and Credits

According to tax preparation company H&R Block, most taxpayers qualify for the standard deduction, which is a set amount that lowers the amount of taxed income. The total standard deduction varies depending on filing status. If the total amount of itemized deductions exceeds the amount of the standard deduction, the taxpayer will receive a larger tax refund by itemizing the tax return.

Itemized deductions include interest, taxes and certain insurance premiums related to owning a home, state and local income taxes, medical expenses, charitable contributions and casualty losses. Deductions that do not require itemization are referred to as "above-the-line deductions." They include student loan interest, tuition and fees for higher education, work-related moving expenses, paid alimony, traditional IRA contributions, travel expenses for military reservists that are not reimbursed and contributions to health savings accounts.

Tax credits decrease the amount of taxes owed. They include the child tax credit, which can be claimed for each dependent child younger than 17; the earned income credit, which was designed to offset the expense of Social Security taxes for low-income earners; and education credits.

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