2021 Federal Tax Return Requirements: When Do I Have to File?

Misunderstanding the requirements for filing a federal tax return can lead to several complications, including missed credits, refunds, and even identity theft. This article aims to clarify when you are required to file a tax return for the 2021 tax year, regardless of your current employment status.

Do I Have to File a Tax Return if I Made Over a Certain Amount?

If your annual income in 2021 exceeded approximately $6,400, you are required to file a federal tax return. This applies to salary, freelance income, and any other sources of income. However, if your income was below this threshold, you do not have to file. It's important to note that even if you didn't make the threshold amount, if you paid any estimated taxes or had side income, you may still be eligible to file for a potential refund.

Unemployment Benefits and Tax Filing

Even if you received unemployment benefits, you are required to file a tax return. The reason is that these benefits are considered taxable income. Filing a return allows you to claim any credits or deductions you may be eligible for, which can offset the tax burden. Additionally, you may qualify for credits such as the Earned Income Tax Credit (EITC) and additional child tax credits, depending on your specific circumstances.

Current Employment Status and Tax Filing Obligations

Your current employment situation does not affect your tax filing obligation. For instance, if you received a substantial income in 2021 but were fired in December, rendering you unemployed, you still need to file your return. Filing is necessary to claim credits and to prevent identity theft. If you were low-income and qualified for the EITC, failing to file could mean forfeiting that benefit.

Additional Credits and Refunds Through Filing

There are particular refundable tax credits that the IRS will pay you even if no taxes were withheld from your income. You can only claim these credits if you file a return. For example, if you had no taxes withheld but are eligible for the EITC, you must file to receive the refund.

Similarly, any federal income taxes you paid last year can be refunded if you file a return and did not owe any taxes for 2021. This is especially important if you worked multiple jobs or had irregular income. If you don't file, you miss out on these refunds.

State Tax Returns and Credits

In addition to federal requirements, many states also have their own income tax system. You may be required to file a state tax return, irrespective of your federal filing status, especially if you earned income in those states. In some states, there are refundable state tax credits that you can only claim by filing a return with your state.

Conclusion: Filing for Everyone, Unless You’re Listed as Dependent

In general, just about everyone over the age of 18 and with an income over $6,400 is required to file a federal tax return if they had income in 2021. If you are under 65 and single with a net income of $12,550 or more, you are legally required to file. Even if you are currently unemployed, receiving unemployment benefits, or working remotely, these factors do not exempt you from filing.

Forgetting to file can result in missed credits, delays in refunds, and even identity theft. It's always better to file, even if just to confirm that the IRS doesn't owe you anything. Stay informed and comply with tax regulations to avoid potential pitfalls.