Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.
Friday, January 13, 2017
WHO MUST FILE A 2016 TAX RETURN?
Do you have to file a 2016 tax return?Let’s review.
Generally, you do not
have to file a federal 2016 Form 1040, or 1040A, unless your “gross income” is at
Single = 10,350
Single, Age 65 or Older = 11,900
Head of Household (with one dependent) = 17,400
Married Couple = 20,700
Family of 4 = 28,800
Married Couple, Both 65 or Older = 23,200
“Gross income” means –
“All income you received
in the form of money, goods, property, and services that is not exempt from
tax, including any income from sources outside the United States or from the
sale of your main home (even if you can exclude part or all of it). Do not
include any social security benefits unless (a) you are married filing a
separate return and you lived with your spouse at any time in 2014 or (b)
one-half of your social security benefits plus your other gross income and any
tax-exempt interest is more than $25,000 ($32,000 if married filing jointly).”
Gross income includes gains, but not losses, reported on Form
8949 or Schedule D.If you are a sole
proprietor filing a Schedule C, gross income is the amount reported on Line 7
of Part 1 – gross receipts less returns and allowances and cost of goods sold
plus “other income”.And if you are a
landlord gross income includes the gross rents reported on Schedule E.
So you see that the filing requirements are not based on actual
"net" taxable income.For any
type of business income or capital gains the income before deducting any
expenses or deducting the cost basis of investments sold is counted.You must file a return to identify the
expenses and cost basis.
You must file a tax return for a dependent if any of the
following applies –
income is more than $1,050
income is more than $6,300, or
income is more than the greater of $1,050 or the sum of $350 and the
individual's earned income (total not more than $6,300).
Regardless of your gross income, you generally must file an
income tax return if
* you had net self-employment income of $400 or more,
* you owe household employment taxes,
* you owe additional taxes on premature retirement plan
failed to take a required minimum distribution from a retirement plan,
* you must repay the 2008 Homebuyer Credit,
* you owe Social Security and Medicare taxes on unreported tip
* you received an advance payment on the Premium Tax Credit.
And, whether or not you are required to do so, you should file a
tax return to get a refund of tax withheld or to take advantage of a refundable
tax credit like the Earned Income Credit or the Additional Child Tax Credit.
Another reason to file a tax return, even if you are not legally required to do so, is to start the
clock running on the normally 3-year statute of limitations for IRS audit or
review of a return.
The numbers for individual state income tax returns differ.You may not have to file a federal return,
but you must, or should, file a state return.For example, the State of Pennsylvania is a gross income tax with no
personal exemptions or standard, or itemized, deductions.You must file a PA-40 and pay the 3.07% flat
state income tax if “you received total
PA gross taxable income in excess of $33”.
Any questions?Ask your,
or a, tax professional.To find a
qualified tax professional in your area go to FIND A TAX PROFESSIONAL.