J. William Seabrooke CPA P.C.

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

The information in this post was extracted from IRS Publication 17 (“Your Federal Income Tax”) and is available to you, free of charge, using this link:  http://www.irs.gov/publications/p17/index.html   

You must file a federal income tax return if you are a citizen or resident of the United States or a resident of Puerto Rico and you meet the filing requirements for any of the following categories that apply to you.

Individuals in general. (There are special rules for surviving spouses, executors, administrators, legal representatives, U.S. citizens and residents living outside the United States, residents of Puerto Rico, and individuals with income from U.S. possessions.)

1. Dependents.
2. Certain children under age 19 or full-time students.
3. Self-employed persons.
4. Aliens.

The filing requirements for each category are explained in Publication 17.  The filing requirements apply even if you do not owe any taxes.

Gross income.   This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax.  It also includes income from sources outside the United States or from the sale of your main home (even if you can exclude all or part of it). Include part of your social security benefits if:

 1.       You were married, filing a separate return, and you lived with your spouse at any time during 2011; or

2.       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).

 If either (1) or (2) above applies to you, then review the instructions for Form 1040 or 1040A, or Publication 915, “Social Security and Equivalent Railroad Retirement Benefits”, to figure the social security benefits that you must include in gross income.

   Common types of income are discussed in Part Two of Publication 17. 

Community income.   If you are married and your permanent home is in a community property state, half of any income described by state law as community income may be considered yours. This affects your federal taxes, including whether you must file if you do not file a joint return with your spouse. See Publication 555, Community Property, for more information.

Nevada, Washington, and California domestic partners.   A registered domestic partner in Nevada,Washington, orCalifornia (or a person inCalifornia who is married to a person of the same sex) generally must report half the combined community income of the individual and his or her domestic partner (orCalifornia same-sex spouse).  See IRS Publication 555.

Self-employed individuals.   If you are self-employed, your gross income includes the amount on line 7 of  Schedule C (Form 1040), Profit or Loss From Business; line 1d of Schedule C-EZ (Form 1040),  Net Profit From Business; and line 9 of Schedule F (Form 1040), Profit or Loss From Farming. See Self-Employed Persons , of Publication 17 for more information about your filing requirements.

If you do not report all of your self-employment income, your social security benefits may be lower when you retire.

Filing status.   Your filing status depends on whether you are single or married and on your family situation.  Your filing status is determined on the last day of your tax year, which is December 31 for most taxpayers.   See Chapter 2 of Publication 17 for an explanation of each filing status.

 Age.   If you are 65 or older at the end of the year, you generally can have a higher amount of gross income than other taxpayers before you must file. See Table 1-1. You are considered 65 on the day before your 65th birthday. For example, if your 65th birthday is on January 1, 2012, you are considered 65 for 2011.

Table 1-1.2011 Filing Requirements for Most Taxpayers

Surviving Spouses, Executors, Administrators, and Legal Representatives

You must file a final return for a decedent (a person who died) if both of the following are true.

• You are the surviving spouse, executor, administrator, or legal representative.
• The decedent met the filing requirements at the date of death.

For more information on rules for filing a decedent’s final return, see Publication 559, Survivors, Executors, and Administrators.

U.S. Citizens and Residents Living Outside the United States

If you are a U.S. citizen or resident living outside the United States, you must file a return if you meet the filing requirements.  For information on special tax rules that may apply to you, see IRS Publication 54, “Tax Guide for U.S. Citizens and Resident Aliens Abroad”.  It is available online and at most U.S. embassies and consulates. See How To Get Tax Help in the back of Publication 17.

Residents of Puerto Rico

Generally, if you are a U.S. citizen and a resident of Puerto Rico, you must file a U.S. income tax return if you meet the filing requirements. This is in addition to any legal requirement you may have to file an income tax return for Puerto Rico.

If you are a resident of Puerto Rico for the entire year, gross income does not include income from sources within Puerto Rico, except for amounts received as an employee of the United States or a U.S. agency. If you receive income from Puerto Rican sources that is not subject to U.S. tax, you must reduce your standard deduction. As a result, the amount of income you must have before you are required to file a U.S. income tax return is lower than the applicable amount in Table 1-1 or Table 1-2 of Publication 17. For more information, see IRS Publication 570, “Tax Guide for Individuals With Income From U.S. Possessions”.

Individuals With Income From U.S. Possessions

If you had income from Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U.S. Virgin Islands, special rules may apply when determining whether you must file a U.S. federal income tax return. In addition, you may have to file a return with the individual island government. See IRS Publication 570 for more information.

Dependents

If you are a dependent (one who meets the dependency tests in chapter 3), see Table 1-2 to find whether you must file a return. You also must file if your situation is described in Table 1-3 (both tables are in IRS Publication 17).

Responsibility of parent.   Generally, a child is responsible for filing his or her own tax return and for paying any tax on the return.  But if a dependent child who must file an income tax return cannot file it for any reason, such as age, then a parent, guardian, or other legally responsible person must file it for the child.  If the child cannot sign the return, the parent or guardian must sign the child’s name followed by the words “By (your signature), parent for minor child.”

Child’s earnings.   Amounts a child earns by performing services are his or her gross income. This is true even if under local law the child’s parents have the right to the earnings and may actually have received them. If the child does not pay the tax due on this income, the parent is liable for the tax.

Certain Children Under Age 19 or Full-Time Students

If a child’s only income is interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends), the child was under age 19 at the end of 2011 or was a full-time student under age 24 at the end of 2011, and certain other conditions are met, a parent can elect to include the child’s income on the parent’s return. If this election is made, the child does not have to file a return. See Parent’s Election To Report Child’s Interest and Dividends in chapter 30 of the publication.

Self-Employed Persons

You are self-employed if you:

• Carry on a trade or business as a sole proprietor,
• Are an independent contractor,
• Are a member of a partnership, or
• Are in business for yourself in any other way.

Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job.

You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 and Schedule SE (Form 1040), Self-Employment Tax, if:

1. 1.       Your net earnings from self-employment (excluding church employee income) were $400 or more, or
2. 2.       You had church employee income of $108.28 or more. (See Table 1-3.)

Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and Medicare tax withheld from an employee’s wages. For more information about this tax, see Publication 334, “Tax Guide for Small Business”.

Employees of foreign governments or international organizations.   If you are a U.S. citizen who works in the United States for an international organization, a foreign government, or a wholly owned instrumentality of a foreign government, and your employer is not required to withhold social security and Medicare taxes from your wages, you must include your earnings from services performed in the United States when figuring your net earnings from self-employment.

Ministers.   You must include income from services you performed as a minister when figuring your net earnings from self-employment, unless you have an exemption from self-employment tax. This also applies to Christian Science practitioners and members of a religious order who have not taken a vow of poverty. For more information, see Publication 517, “Social Security and Other Information for Members of the Clergy and Religious Workers”.

Additional information on this subject follows:

Do I Need to File a Tax Return This Year? 

You are required to file a federal income tax return if your income is above a certain level, which varies depending on your filing status, age and the type of income you receive. However, the Internal Revenue Service reminds taxpayers that some people should file even if they aren’t required to because they may get a refund if they had taxes withheld or they may qualify for refundable credits.

To find out if you need to file, check the Individuals section of the IRS website at www.irs.gov or consult the instructions for Form 1040, 1040A or 1040EZ for specific details that may help you determine if you need to file a tax return with the IRS this year. You can also use the Interactive Tax Assistant available on the IRS website. The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

Even if you don’t have to file for 2011, here are six reasons why you may want to:

1. Federal Income Tax Withheld You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.

2. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund. To get the credit you must file a return and claim it.

3. Additional Child Tax Credit This refundable credit may be available if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.

4. American Opportunity Credit Students in their first four years of postsecondary education may qualify for as much as $2,500 through this credit. Forty percent of the credit is refundable so even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student.

5. Adoption Credit You may be able to claim a refundable tax credit for qualified expenses you paid to adopt an eligible child.

6. Health Coverage Tax Credit Certain individuals who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a 2011 Health Coverage Tax Credit.

Eligible individuals can claim a significant portion of their payments made for qualified health insurance premiums.

For more information about filing requirements and your eligibility to receive tax credits, visit www.irs.gov.

Links:

• Forms and Publications
• Health Coverage Tax Credit
• 1040 Central