How Much Money Can I Make Without Paying Federal Taxes?

In 1918 in the midst of World War I, only five percent of the population paid income taxes, according to the U.S. Treasury website. Federal income taxes funded one-third of the war expenses. The Bureau of Internal Revenue was renamed the Internal Revenue Service in 1953, and by 1959 had become the largest accounting and forms-processing operation in the world.

History

Inflation, interest rates and major expenses like wars make a difference in taxation. Since 1916, income is taxable whether "lawful" or not. Bootleggers and similar occupations made taxable income and could not hide behind the Fifth Amendment to avoid tax evasion charges. The ordinary citizen now had to report to the government, changing the relationship that had existed prior to 1916.

Significance

Whether you must file a return depends on your gross income, your filing status and your age. Gross income includes all forms of income, whether made in the United States or not. Your filing status is determined on the last day of the filing period, usually December 31. If you are 65 during the tax year or on January 1 of the following year, your gross income can be higher than those under age 65, before you have to file a tax return.

Effects

Figures change from year to year. As of 2009, single dependents with unearned income over $950 must file; so must those with earned income over $5,700. Married dependents have the same limitations, but if your spouse files a separate return, any gross income over $5 requires filing a tax return by you. Net earnings of more than $400 in self-employment require filing a tax return. Different figures apply to those over age 65.

Considerations

If you have taxes withheld and make below the amount for filing, you may want to file a tax return to get a refund of the amounts withheld. Some years there are tax rebates or bonuses, and you must file to take advantage of the rebate or bonus. If you are not a dependent, your personal exemption for 2009 was $3,650.

Solution

Taxable income from Line 43 of the federal income tax determines taxes owed. Taxation begins at $5 in 2009. If you make between $5 and $15 in taxable income (after subtracting the personal exemption of $3,650 and standard deduction of $5,700 from your total income), you owe $1 in taxes, whether you are single, married or head of household. It goes up from there. Fill in a Form 1040 and see if you owe taxes and how much you owe. In general, if you have to file a tax return, you owe taxes.

References

• U.S.Treasury: History of the U.S.Tax System
• Internal Revenue Service: Form 1040
• Internal Revenue Service: Tax Calculator
• Internal Revenue Service: Publication 17 - Your Federal Income Tax