How Much Income Can Be Earned Before You Pay Taxes?

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Making money is gratifying. It lets you pay your bills and maybe do a little discretionary spending besides. But tax day eventually rolls around, and the Internal Revenue Service expects its share of your earnings. Depending on several circumstances, including your age and whether you work for yourself or someone else, different rules determine how much you can earn before you must file a return and pay taxes. Not everyone is required to do so.

You can escape filing a return and paying taxes if your earnings are less than the standard deduction plus one exemption.
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Income Thresholds

The amount you can earn before paying taxes varies each year. It’s hinged to standard deduction and exemption amounts, which are indexed for inflation and increase yearly. If you earn more than the standard deduction plus one exemption, you must file a return and pay taxes. Otherwise, you would report your income and then take these deductions; this would result in a zero or negative balance, so there would be nothing to tax. The standard deduction is $6,200 for a single taxpayer for the 2014 tax year, and personal exemptions are worth $3,950 each. Therefore, you can earn $10,150 before you have to pay taxes. This goes up to $10,300 for the 2015 tax year.

Rules for Dependents

Different rules apply if someone can claim you as a dependent on his tax return. You can’t claim an exemption for yourself if you’re a dependent, so you’re limited to the amount of the standard deduction. You must file a return and pay taxes on income that exceeds $6,200 in 2014 and $6,300 for the 2015 tax year. This rule only addresses earned income, however. If you have unearned income, such as income from interest or investments, speak with a tax professional about the different rules that apply.

Tax Breaks for Seniors

If you’re 65 or older and you’re receiving Social Security retirement benefits, you don’t have to include this income when determining if your overall earnings exceed the standard deduction and one exemption. The income thresholds increase for seniors, too. If you’re unmarried, you can earn up to $11,700 in the 2014 tax year before you’re required to file a return and pay taxes on the excess. But if you’re married, you have to file a joint return with your spouse to get this break. Both you and your spouse must be 65 or older to gain the full benefit of the higher income threshold if you file a joint return.

Tax Brackets

Tax brackets determine what percentage of your income you must pay in taxes. Just like the standard deduction and exemptions, brackets are adjusted for inflation and change yearly. You must pay 10 percent of your first $9,075 in earnings as of 2014, but this is after you subtract any deductions you’re entitled to and take exemptions. The percentage increases with your earnings, topping out at 39.6 percent if you make $406,751 or more. Bankrate publishes a chart showing the exact breakdown, and it also offers a chart detailing the 2015 tax brackets.


If you’re self-employed, you have much less wiggle room when it comes to filing a return. If you earn $400 or more from self-employment during the year, you must pay self-employment tax. This means you have to file a return, even for this negligible income, and you must include Schedule SE, which calculates the tax.




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