Taxable Income Limits

Congress sets taxation rules for federal income taxes.

Congress sets taxation rules for federal income taxes.

With some luck, you may not owe any federal income taxes. The Internal Revenue Service has minimum limits for taxable income depending on your status, age and the source of your income. If your income is low enough, you might not have to file a tax return. If your income is high enough, you'll stop paying Social Security taxes when you reach the maximum earned income limit each year.

Tax Filing

Your taxable income includes all of your money, property and services unless they're exempted by law. You report it, along with some nontaxable income, on the Internal Revenue Service's Form 1040. If your taxable income is below the filing requirements, you don’t have to file a tax return or pay federal taxes. You may choose to file a tax return if you had taxes withheld and qualify for a refund.

Minimum Filing Requirements

The IRS bases tax-filing requirements partially on whether someone claims you as a dependent. The source of your income -- earned or unearned -- also affects filing requirements. Earned income comes from work; unearned income comes from interest or other sources. The IRS does set higher income limits for blind individuals, and people of a certain age. That won't concern you for some time since it only kicks when you reach 65. The final factor is how much money you make.

Minimum Income Limits

If you file as a married couple, you don't have to file a tax return if your gross income is below $19,000. However, if you're married and filing separately, you must file a tax return if the gross income is more than $3,700. The IRS changes these figures occasionally and reports current minimum income limits in Publication 17.

Exclusion Limits

Some income is excluded from taxation until it reaches a threshold amount. For example, if your employer pays for your life insurance, you don’t have to count it as income unless the base amount exceeds $50,000. If your employer pays for educational assistance, you can exclude up to $5,250 a year. The W-2 shows exactly what this excess income comes to and if it calls for you to pay taxes.

Social Security Limits

Federal Insurance Contributions Act taxes include Social Security and Medicare. FICA has a contributions limit for Social Security, but none for Medicare. Your employer stops withholding Social Security taxes when your income reaches the $110,100 mark for the year. General fund income taxes and Medicare continue through the year. This figure changes when the national average wage index requires a cost-of-living increase for Social Security. If you’re self-employed or operate a business, you don't have to pay these taxes if your net income is below $400 after you’ve subtracted all allowable expenses.


About the Author

Linda Richard has been a legal writer and antiques appraiser for more than 25 years, and has been writing online for more than 12 years. Richard holds a bachelor's degree in English and business administration. She has operated a small business for more than 20 years. She and her husband enjoy remodeling old houses and are currently working on a 1970s home.

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