Do I still need to file my taxes if I only earn less than $3000 a year?

Question

I'm a full-time married student, and I only worked for about a month for the summer of 2006. My employer gave me the option to either take taxes out of my paycheck already, or I get 100% salary--I believe it's called a 1099--where I manually have to collect and pay the taxes in tax season, and I chose the SECOND option. I only earned about $1500, and people have been telling me that if I earn less than $3000 I don't need to file taxes. Also, my wife didn't work at all for 2006 since she's a full-time student too. So, is non-filed tax thing true, and if it's true or not, please explain =(. Thank you in advance.

Answer 1

Yes, you must file because you are considered 'self-employeed'. If you were a W-2, you would be considered an employee. 1099 employees are essentially independant contractors who are hired by their employees (similar to how a homeowner may hire a contractor to do work on their home). Now that you are self employeed, you also need to pay your social security taxes on your own. You will owe about $350-$400 based on your figure of $3,000. On the other end, you are now able to write off any expenses directly related to your job. Did you have to buy new clothes? Did you have to buy any supplies? Did you drive to work? You get a deduction of 40.5 cents for every mile you drove to and from work. That will lower your tax liability.

As well, the IRS is giving a refund of the Telephone excise tax (this year only). You get a refund of all long distance excise taxes charged to you by the federal government from Feb 2003 to Aug 2006, plus interest. If you do not know how much you paid in the tax over the past 3 years, then you can get $40 from this credit (automatically).

To sum it up, you will have to file a return, as an independant contractor. Since no taxes were taken out, you will probably owe some money. If you can find business expenses, then you can reduce the amount you owe. And if you take the telephone excise tax credit, then you tax bill goes down even more.

check in your community, you should be able to find a Free-File tax advisor that will look at and prepare your taxes for free.

Answer 2

I hope you got a higher rate of pay for choosing a 1099 status instead of a W-2 where taxes were taken out - otherwise you got shafted.

If you had made that amount on a W-2, no, you would not have to file taxes. But since it was a 1099, you do, and you'll have to pay self-employment tax (social security and medicare) even though you won't owe income tax on that amount. If you had worked as an employee, getting a W-2, your employer would have had to pay half of your social security and medicare tax - on a 1099, you have to pay both halves, so you'll be paying almost twice as much as you would have if you'd had it deducted and worked on a W-2. On around $1500, that would come to a little over $200. Sorry to have to tell you this.

The responders who said you won't owe anything, and those who said you don't have to file, were basing their answers on if you'd worked on a W-2 and had taxes deducted - they are answering wrong for your situation.

Answer 3

You may need to file but you probably won't owe anything.

Get a 1040-EZ form and fill it out. See for yourself. It costs you nothing to fill out the form. The deduction for you will eliminate taxes right then and there.

As for a 1099, that's if your not an "official employee" but often used for contracting, temp work, and so on.

Answer 4

Actually, you do not have to file a return.

Here is some information on it, but you may want to consult with a tax professional. Many schools and libraries offer free basic tax advice, so check into that.

http://finance.yahoo.com/how-to-guide/taxes/16232

You still need to check to see if you are required to file State or local income taxes.

Answer 5

No

Answer 6

affraid so