Many individuals believe they don’t need to file a federal income tax return simply because their income falls below the required threshold. However, even if you’re not required to file, doing so can still have substantial benefits. In this blog, we’ll explore the filing thresholds for 2024, the potential advantages of filing a tax return even when it’s not mandatory, and the refundable tax credits available—such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC)—that can put money back in your pocket.
2024 Filing Thresholds: Know Where You Stand
The threshold for filing a tax return depends on your filing status, age, and the type of income you earn. Here’s a breakdown of the general filing requirements for 2024:
1. Single Filers:
- Under 65: Income threshold is $14,600.
- 65 or older: Income threshold is $16,550.
2. Married Filing Jointly:
- Both spouses under 65: Income threshold is $29,200.
- One spouse 65 or older: Income threshold is $30,750.
- Both spouses 65 or older: Income threshold is $32,300.
3. Married Filing Separately:
- Income threshold is just $5—no matter your age.
4. Head of Household:
- Under 65: Income threshold is $21,900.
- 65 or older: Income threshold is $23,850.
5. Surviving Spouse with Dependent Child:
- Under 65: Income threshold is $29,200.
- 65 or older: Income threshold is $30,750. (Note: This status applies only in the first two years after the year of a spouse’s death.)
These filing thresholds are adjusted annually for inflation, so it’s always a good idea to double-check the latest figures from the IRS before preparing your taxes.
Why File a Tax Return Even If You Don’t Have To?
Filing a tax return when you’re not required to might seem unnecessary, but it could result in significant benefits. Here’s why it’s worth considering:
1. Refundable Tax Credits
Even if your income is below the filing threshold, you could be eligible for refundable tax credits, which can provide a refund even if you owe no tax. Two major credits to look out for are:
- Earned Income Tax Credit (EITC):
The EITC is designed to help low- to moderate-income workers, especially those with children. It can significantly reduce the amount of tax owed and potentially result in a refund. - Child Tax Credit (CTC):
This credit offers valuable financial assistance to families with qualifying children. It can directly reduce your tax liability or provide a refund if you owe no tax.
2. State Benefits and Programs
Some states offer additional credits or programs that require a filed federal tax return in order to qualify. If you don’t file, you could miss out on these additional state-level benefits.
3. Potential Refunds from Past Tax Years
Did you miss filing in previous years? Tax years 2021, 2022, and 2023 are still open for you to file and claim any refundable credits you’re entitled to. But be mindful: the deadline to claim a refund for 2021 returns expires on April 15, 2025.
Understanding the Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) is a powerful tool for low- to moderate-income workers. Here’s how it works:
- What is Earned Income?
Earned income includes wages, salaries, tips, and other taxable pay. It also includes self-employment income and certain disability benefits, but it does not cover pension income, unemployment benefits, or Social Security. - How Much Can You Receive?
The amount of the EITC depends on your filing status, income, and number of qualifying children. For 2024, the maximum EITC amounts are:- No children: Up to $632
- One child: Up to $4,213
- Two children: Up to $6,960
- Three or more children: Up to $7,830
To qualify, you must meet specific criteria, including having earned income and filing a tax return. The credit amount decreases as your income rises, eventually phasing out at higher income levels.
The Child Tax Credit (CTC)
If you have children under 17, the Child Tax Credit (CTC) could provide substantial financial relief. Here’s how it works:
- How Much is the CTC?
For 2024, the CTC offers up to $2,000 per qualifying child. Of this amount, up to $1,700 is refundable, meaning you can receive a refund even if you owe no tax. - What Makes a Child Qualify?
To qualify for the CTC, a child must meet several conditions:- Be under 17 at the end of the tax year
- Be related to you (biological or adopted)
- Live with you for more than half the year
- Not provide more than half of their own support
- Income Limits for the CTC
For higher-income earners, the CTC begins to phase out. In 2024, it phases out starting at:- $200,000 for single filers
- $400,000 for married couples filing jointly
The credit reduces by $50 for each $1,000 of income above these thresholds.
Final Thoughts on Filing a Tax Return
Even if your income falls below the filing threshold, filing a tax return in 2024 can provide a range of benefits. By filing, you could qualify for valuable credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), potentially resulting in a significant refund. Additionally, filing your taxes for previous years (2021-2023) can still allow you to claim refundable credits.
It’s essential to stay updated on the filing thresholds and credit amounts to maximize your benefits. If you’re unsure about your eligibility or need help with tax preparation, reach out to a professional to help navigate the process and ensure you don’t miss out on any potential refunds.
If you didn’t file a return for previous years, don’t worry! You still have time to file and claim what you’re entitled to, but remember that the statute of limitations for a 2021 refund expires on April 15, 2025.
Reach out today for assistance with your tax return filing, whether it’s for the current year or past years, and let us help you make the most of your tax situation.
