Who must pay taxes in the US?
Who pays taxes in the U.S.? The simple answer is that everyone pays taxes. The reality of who pays how much is more complicated. The amount of taxes an individual pays is highly dependent on where they live, how much they earn, what they buy, and what they own, among other factors.
Most U.S. citizens or permanent residents who work in the U.S. have to file a tax return. Generally, you need to file if: Your gross income is over the filing requirement. You have over $400 in net earnings from self-employment (side jobs or other independent work)
Congress has delegated to the IRS the responsibility of administering the tax laws known as the Internal Revenue Code (the Code) and found in Title 26 of the United States Code. Congress enacts these tax laws, and the IRS enforces them.
Taxes provide revenue for federal, local, and state governments to fund essential services--defense, highways, police, a justice system--that benefit all citizens, who could not provide such services very effectively for themselves.
If your income is less than your standard deduction, you generally don't need to file a return (provided you don't have a type of income that requires you to file a return for other reasons, such as self-employment income).
The minimum income amount depends on your filing status and age. In 2023, for example, the minimum for Single filing status if under age 65 is $13,850. If your income is below that threshold, you generally do not need to file a federal tax return.
Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.
Tax revenue pays for things like Social Security and Medicare, education, national defense, infrastructure and other goods and services intended to benefit the community. Federal, state and local governments may levy three main types of taxes: income-based taxes, wealth-based taxes and consumption-based taxes.
The failure to pay penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty won't exceed 25% of your unpaid taxes.
Economic Instability: Governments would be forced to print more money or seek external loans to cover their expenses, leading to hyperinflation and economic instability. This, in turn, could result in a lower standard of living for citizens and increased unemployment.
Does everyone pay taxes in the US?
While nearly all Americans pay taxes, the composition of the type of taxes paid is very different for taxpayers at various points in the income distribution. Affluent Americans pay a larger share of their income in individual income taxes, corporate taxes, and estate taxes than do lower-income groups.
In the U.S., federal income tax rates for individuals are progressive, meaning that as taxable income increases, so does the tax rate. Federal income tax rates range from 10% to 37% as of 2024 and kick in at specific income thresholds. 3 The income ranges to which the rates apply are called tax brackets.
- 22 % Social Security.
- 14 % National Defense.
- 14 % Health.
- 13 % Net Interest.
- 12 % Medicare.
- 9 % Income Security.
- 4 % Veterans Benefits and Services.
- 3 % Education, Training, Employment, and Social Services.
For his entire life, a U.S. citizen is legally obligated to pay U.S. taxes on his global income every year regardless of his residence.
Currently billionaires effectively pay far less personal tax than other taxpayers of more modest means because they can park wealth in shell companies sheltering them from income tax, the group said in its 2024 Global Tax Evasion Report.
If you qualify for tax credits, such as the Earned Income Tax Credit or Additional Child Tax Credit, you can receive a refund even if your tax is $0. To claim the credits, you have to file your 1040 and other tax forms.
Though some Americans with low income are technically not required to file tax returns, the IRS generally expects you to submit a return if you meet the earnings criteria. If you're supposed to file a 2022 tax return but don't, the consequences can be costly.
1. It's illegal. The law requires you to file every year that you have a filing requirement. The government can hit you with civil and even criminal penalties for failing to file your return.
You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.
| IF your filing status is . . . | AND at the end of 2022 you were* . . . | THEN file a return if your gross income** was at least . . . |
|---|---|---|
| Married filing separately | any age | $5 |
| Head of household | under 65 65 or older | $19,400 $21,150 |
| Qualifying widow(er) | under 65 65 or older | $25,900 $27,300 |
How much can a retired person earn without paying taxes in 2023?
| IF your filing status is. . . | AND at the end of 2023 you were . . .* | THEN file a return if your gross income** was at least. . . |
|---|---|---|
| single | 65 or older | $15,700 |
| head of household | under 65 | $20,800 |
| 65 or older | $22,650 | |
| married filing jointly*** | under 65 (both spouses) | $27,700 |
If you have income below the standard deduction threshold for 2023, which is $13,850 for single filers and $27,700 for those married filing jointly, you may not be required to file a return.
At What Age Can You Stop Filing Taxes? Taxes aren't determined by age, so you will never age out of paying taxes. Basically, if you're 65 or older, you have to file a tax return in 2022 if your gross income is $14,700 or higher. If you're married filing jointly and both 65 or older, that amount is $28,700.
Origin. The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses.
As with many modern innovations, the Greeks were responsible for taking the idea of taxation and spreading it throughout the developed world, as they expanded their realm and civilization evolved.
