In general, if you receive money, you have to pay taxes on that money. There are certain situations where you receive money and you won't have to pay taxes. These include some disability insurance payments, health savings accounts (HSA), employer-provided insurance, life insurance payments, financial donations, and inheritances. They all come with certain caveats and stipulations, so it's important to review the law or work with a tax advisor.
Section 501 (c), 3 of the Internal Revenue Code states that any organization that qualifies to be classified under this section is exempt from paying income taxes of any kind. You generally don't have to pay taxes if your income is lower than the standard deduction, if you have a certain number of dependents relative to your income, if you work abroad and are below the required thresholds, or if you are an eligible nonprofit organization. However, even when your income is below the limit level and you don't have to pay taxes, you must report them to get a refund check. This includes both formal work arrangements (for example, a 1099 contract, independent consulting work, driving for Uber, or income from a small business) and more “occasional” income (such as cash payment for babysitting services or dog walks).
If your income is equal to or higher than the taxable threshold for your marital tax status and age, you will need to file your taxes. The federal income tax return depends on a variety of factors, such as your age, marital status, your dependence on other taxpayers, and your gross income. To determine if you need to file taxes, you'll first need to determine your gross income, the total amount of income you have, before any tax deduction. All businesses are required to file a tax return, even if the company doesn't generate any income for the tax year.
If you earn at or above the income threshold for your age and marital tax status, you'll have to file taxes. Low-income families with dependent children may not have to pay taxes if they qualify for the earned income tax credit. Once you turn 65, you don't have to file taxes unless your non-Social Security income exceeds a certain threshold. If your income is below the minimum limit specified by the IRS, you may not need to file taxes, however, regardless of your income and whether you're required to file taxes, it's generally a good idea to do so.
As with the other categories, if you earn equal to or more than the income requirements as a dependent, you will have to file it; if you earn less, you are not required to file taxes. While it's not always wise to let the tax tail shake your financial dog, reducing your income below the taxable threshold will always be good when it comes time to pay taxes. There are also some other variables that affect your tax reporting requirements, such as whether you owe special taxes (such as domestic employment taxes, recovery taxes or the alternative minimum tax, or AMT); if you (or your spouse, if you file the joint return) received distributions from an account of Health Savings Account (HSA), Medicare Advantage MSA or Archer Savings Account; or you, your spouse, or a dependent received an advance payment of the health coverage tax credit or the premium tax credit.
