Do I need to file a US Income tax return?

This post was originally published on March 2, 2017 and has been updated to reflect current filing thresholds.

Whether you owe taxes, or need to file a tax return at all, will depend on both your income and “filing status”. I’d like to present a brief overview of income and filing status, and how to figure out if you meet the filing threshold for a given year.

Not sure if you need to file a tax return? First, determine your "Gross Income" – add up everything you received worldwide (including goods and services) that was not a gift.

Income includes:

• Salary

• Contract work or Self-employment income (include gross revenue before expenses, if you provide services)

• Investment income and bank interest

• Employer pension contributions and other employment benefits

• Taxable pension distributions

• Social security, in some cases

• Alimony

• Sale of a home (even if income can be excluded)

Next, you need to determine the income threshold that applies to you, based on your "filing status", which is generally your marital status. The IRS recognizes five filing statuses, plus additional circumstances (e.g. whether you are a dependent of another, over 65, or blind). However, I will present a sample of the filing thresholds that apply to MOST people. (See end for additional scenarios.)

Below is a table to assist you in determining if you are required to file a US tax return for the past four years. If you did not realize you needed to file a tax return to report foreign income, you may be eligible to file without penalties through the IRS Streamlined Filing Compliance Procedures. You should discuss this with a US CPA or EA specializing in foreign tax issues, or a US tax lawyer experienced in "Streamlined" filing.

US tax Filing Thresholds in US Dollars:

US tax Filing Thresholds in Israeli Shekels (Rounded):

SINGLE

You are considered "single" if – You guessed it! – you are unmarried or legally separated at the end of the year. If you had children/"dependents" living with you, you may qualify as "Head of Household", below. You will need to file an income tax return if you had gross income over $14,600 in 2024. If you are married outside the US, see below. This applies even if you never registered your marriage in the US, changed your name, or did anything else to let the US know you are married.

MARRIED FILING SEPARATELY

If you were married at the end of the tax year, even if you were married outside the US, you cannot file as single. If you are married to a non-US person (e.g. an Israeli), your default will be to use the "married filing separately" status. However, this status is the most restrictive in terms of deductions, exemptions, and eligibility to claim refundable credits. If you are married and do not qualify as "Head of Household" you will need to file a tax return if you had income over $5 for the entire year.

MARRIED FILING JOINTLY

If you are married to a US person, or have determined that it is beneficial to file with your non-US citizen spouse (who must obtain a US Individual Taxpayer Identification Number or ITIN), this is the status for you. You and your spouse will need to file a tax return if you had combined income over $29,200 in 2024.

HEAD OF HOUSEHOLD

This is the most common filing status for single parents. However, a US Citizen married to a non-American may qualify for this status if they have a "qualifying person" (usually a child with a US social security number) living with them, and the US citizen financially supports their household by paying more than half of the rent or mortgage, utilities, maintenance expenses, groceries, and other household expenses. This is generally a more beneficial filing status than "Married Filing Separately."

Please consult a knowledgeable US accountant to fully understand how the above general guidelines apply to your situation.

Additional notes:

Self-employed individuals must report all income on a tax return if net income from self-employment exceeded $400 (about ₪1,500), even if the individual had no other income.

Someone who can be claimed as a dependent of another (such as some who's parents claim support them financially and therefore claim them as a dependent to the tax return) has different thresholds for unearned income (i.e. investments, interest, dividends, savings plan income, rental income). The thresholds for this changed between 2017 and 2018. Please consult a professional to understand how the new laws may apply.

A "Qualifying Widow[er]" is a filing status that allows an individual with a a dependent child to retain the benefits of the Married Filing Jointly status for two years after the year of a spouse's death.

#1040 #expattax