As you probably know, the tax code is a tiered system. By this, I mean that it taxes people at different rates based on their earnings. The more your earnings, the higher your tax rate in general. Ah, but what about those that do not earn much during a particular year? Well, you might not have to file at all.
The IRS sets a minimum income level that must be met before a person or persons have to file. As you might guess, the minimums are pretty low. Following are the earning limits for 2006.
Let's assume you are filing with a singe status. If you are under the age of 65, you do not need to file a tax return if your earnings were less than $8,450 in 2006. 65 or older? Then you must file a tax return only if your earnings were equal to or over $9,700.
Many married couples file returns jointly. There IRS has set minimums for you as well. If both individuals are under 65, the minimum is $16,900. If one of the spouses is over 65, then the number bumps up to $17,900. If both spouses are equal to or over the age of 65, then no tax return is needed unless you earned over $18,900.
For those that are married, but filing separately, a tax return is required if you earned over $3,300. If you are claiming head of household filing status, the magic number is $16,500 if you are under 65. If you are 65 or older, the number bumps up to $14,600.
Assuming you fit any of these definitions, should you take advantage of your right not to file a tax return? Probably not. Why? Well, there are a couple of reasons. First, the IRS may wonder why you didn't file. This could lead to an audit, particularly if you make decent money in the years before and after the year you don't file.
Another reason you should file is you may be able to get a large refund. The tax code has sections that help people who have had a bad year. You may be able to claim the earned income credit, child tax credit, health coverage tax credit as well as other credits available to you.
During Abraham Lincolns presidency in the 1860s, were first legally required to pay income taxes. The President and Congress created the Commissioner of Revenue and enacted a Federal Income Tax law in order to fund the costly Civil War.
The original deadline for submitting your income taxes was March 1, not April 15. It was in 1918 when the Congress pushed the date out to March 15. Then in 1954, the date was once again moved, this time to April 15, the date we still know as tax day.
If you are an individual taxpayer, you are required to file either a return or an extension (Form 4868) by April 15. Corporate and other legal group entities must file their tax return or an extension by March 15. The extension merely gives you extra time to file your tax return, not extra time to pay if you owe.
For some years after World War 2, the tax burden was shared relatively equally by the corporate world and the individual taxpayer. Today, the shift seems to be toward the individual carrying the load of the tax burden.
An interesting event that occurred during formation of income taxation laws in America occurred during 1918. Up until then, a lot of revenue for government funding came from alcoholic beverage sales. Then came Prohibition.
In 1919, Congress passed an amendment to the Constitution that made it illegal to manufacture or sell alcohol. In order to replace that lost revenue, income tax was the proposed solution, and despite the repeal of Prohibition, we have been paying income taxes ever since.
When the Revenue Act of 1942 was passed and the New Deal era was begun, government control and expenditures has continued to increase exponentially, and today the American taxpayer supports a multi-trillion dollar National Debt.
Currently, all the tax regulations for this country are under the management of the Internal Revenue Service, in which there are four major division: Wage and Investment, Small/Business Self-Employed, Large and Midsize Business, and Tax Exempt and Government. Each division governs the taxpayers and the laws as they are relevant to their particular department.
Both Richard A. Chapo & Kenneth Scott are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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