It is mandatory to pay taxes to the government on your earnings. However, there are a lot of permutations and combinations that decides the taxation of income. Moreover, there is a certain threshold under which you do not have to pay taxes. Many users reached out to us with how much money they have to make to avoid paying income tax. We have shared all the details on this page.
Before you move ahead, it should be noted that the taxable income depends on the five factors listed below.
- Gross Income
- Filing Status
- EyeSight Disability
We will cover each of these factors in the points below.
Gross Income, Filing Status & Age
Everyone must be aware that the income tax depends on the money you are earning. You can check out the table below, giving you a clear picture of the maximum money you can make without paying any taxes.
|Single||< 65||$ 10,400|
|Single||>= 65||$ 11,950|
|Married (Jointly)||< 65 (Both Partners)||$ 20,800|
|Married (Jointly)||>= 65 (One Partner)||$ 22,050|
|Married (Jointly)||>= 65 (Both Partners)||$ 23,300|
|Married (Separately)||Any||$ 4,050|
|Head of House||< 65||$ 13,400|
|Head of House||>= 65||$ 14,950|
|Widower||< 65||$ 16,750|
|Widower||>= 65||$ 18,000|
In case of a Dependent
The income tax rules are slightly complicated, and you would need to dig in further if you are claiming to be a dependent. There is altogether a different set of rules applicable to the dependents. As per the definition, the dependents can be the children who are below the age of 19, whereas the age limit is 24 in the case of students. The disabled relative is also considered to be a dependent. You also need to consider the unearned income (Passive Income from stock dividends or Interest Earnings). For more information, check out the points below
- For Single dependents (<65 years old or blind), the unearned income can be less than $1,050, and the earned income can be less than $12,000.
- For Single dependents (>=65 year old or blind), the unearned income can be less than $2,650, and the earned income can be less than $13,600. If both of you are older than 65 then the unearned income is capped at $4,250 & earned income is capped at $15,200.
- For Married dependents (<65 years old or blind), the unearned income can be less than $1050, and the earned income can be less than $12,000.
- For Married dependents (>=65 year old or blind), the unearned income can be less than $2,650, and the earned income can be less than $13,300. If both of you are older than 65 then the unearned income is capped at $3,650 & earned income is capped at $14,600.
What about the taxable income of small businesses?
If you own a small business or work as a freelancer, you will have to pay taxes irrespective of your profits or losses. You can later claim the tax refunds. If you are the proprietor, you will have to submit the Personal Tax Return and Schedule C. The freelancers are also supposed to pay taxes when they have earned over $400.
Reducing the Taxable Income
It is possible to reduce the taxable income by increasing the investment in the IRA for retirement. You can also increase the Health Savings Account or Flexible Spending Accounts to reduce the taxable income. Even if you can reduce your taxable income to 0, it is highly advisable to file taxes & get a refund check issues.