Monday, October 26, 2015

WHO MUST FILE A 2016, or 2015, TAX RETURN?

FYI, based on the new inflation adjustments recently announced by the Internal Revenue Service, you do not have to file a 2016 Form 1040, or 1040A, unless your “gross income” is at least -

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

The numbers for tax year 2015 are –

Single = 10,300

Single, Age 65 or Older = 11,850 
Head of Household (with one dependent) = 17,250

Married Couple = 20,600

Family of 4 = 28,600

Married Couple, Both 65 or Older = 23,100

The only differences between 2016 and 2015 for single and married filers involve the $50 increase ($4,000 to $4,050) to the personal exemption amount.  The standard deduction amount for Head of Household filers did increase by $50 ($9,250 to $9,300)

“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 –

·         unearned income is more than $1,050,

·         earned income is more than $6,300, or

·         gross 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).

These same numbers also apply to tax year 2015.

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 distributions,
·   you 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 income, or
• 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 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.  

Would you like to know the IRS inflation and COLA adjustments for 2016?  Email me at, with “What’s New in Taxes for 2016” in the subject line, and I will send you as a pdf email attachment my report.


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