As a young adult, your income generally determines whether you need to file your own tax return. If your gross income is below a certain level, you may not have to. However, you can still choose to file a return even if it’s not required. Consider the factors below when deciding whether to file your first return.
You may be legally required to file on your own
The IRS filing requirements are based on a taxpayer’s dependency and filing status. As an independent, you must file your own income tax return if (for tax year 2021):
- You're filing single and had a gross income of more than $12,550, or
- You're married filing jointly and had a collective gross income of more than $25,100, or
- You sold stock in an investment account
As a dependent, you must file your own income tax return if (for tax year 2021) you were single, or married filing separately, and:
- Stock is sold in an investment account held in your social security number, or
- Your earned income was more than $12,550, or
- Your unearned income was more than $1,100, or
- Your business or self-employment net income was at least $400, or
- Your gross income was more than the larger of:
- $1,100
- Your earned income up to $12,200 plus $350
You might receive certain credits and a refund of any tax withheld
If you have a job and income tax was withheld from your pay, you can file a return to receive a tax refund. You should also consider filing if you qualify for any of the following:
- Earned income tax credit
- Home office deduction
- American opportunity education credit
- Lifetime learning credit
- Health coverage tax credit
You may still need to file as a dependent
The IRS states that if you can be claimed as a dependent, you must file as a dependent and indicate this on your return (whether you’re being claimed or not). Check first if you’re a qualifying child or relative.
Filing as a dependent means you’ll be ineligible for most tax credits, including education credits like the American Opportunity Tax Credit and the Lifetime Learning Credit. However, depending on your parents’ income, they may benefit from those credits by claiming you on their return. Your parents might also qualify for other tax benefits, such as the Child Tax Credit or the Credit for Other Dependents.
