Do I Need to Pay Federal Taxes? (Tax Basics 2/3)

Meet Ray. Ray is an incoming senior at State University
who just finished up a summer internship at Corporate Co. Ray had a great experience,
and made a lot of money, so he thinks he might have to submit a tax return. There’s just one problem. Ray has no idea where to start. What should he do? Well, for starters, Ray needs to figure out
whether or not he even needs to file a tax return. While this sounds complicated, it’s actually
quite simple. If Ray’s income exceeds a certain threshold,
he’ll need to file a tax return. Otherwise, he generally won’t. So what’s the threshold? Well, as of 2015, single, independent individuals
with gross income above $10,300 must file tax returns. While that may seems sizeable, keep in mind
gross income includes every major form of income, such as earned income, like from wages
and self- employment, and unearned income, like from investments and interest, so almost
everyone will clear the threshold. But that’s not the only criteria. If you have $400 worth of net earnings from
self-employment, you’ll have to file a tax return, even if you don’t meet the overall
income threshold. Finally, we come to dependents. They must also file a tax return, so long
as they exceed one of the following criteria as of 2015: $6,300 in earned income $1,050
in unearned income, $400 in net earnings from self employment, or, wait for it, gross income
that exceeds the larger of these two criteria: • $1,050
• Or earned income, up to a limit of $5,950, plus $350. We know this may all seem overwhelming. But don’t worry. The IRS actually has a great “Do I Need
to File” Tool that will walk you step by step through this entire process, even covering
scenarios too complex to explain here. But let’s get back to Ray. Where does he fall? Well, Ray is an independent with $30,000 in
gross income, so he’ll definitely have to file a federal and state tax return. The due date for this is usually April 15th,
but Ray can generally start as soon as mid to late January. Finally, even if Ray didn’t meet the income
threshold, he may still want to file a tax return. That’s because if he worked as a traditional
employee throughout the course of the year, income would have been withheld from his paycheck
by his employer, and the only way to get that money back would be by filing a tax return. Hopefully you and Ray now better understand
whether or not you need to file a tax return. Be sure to check out our next video, where
you’ll learn how to actually pay your taxes, and be sure to check out our website, where
you can find more educational material and free recommendations for great tax-filing

8 comments on “Do I Need to Pay Federal Taxes? (Tax Basics 2/3)”

  1. Julia Ketelhut says:

    This is so helpful as a student in this position, thank you

  2. Julia Siewert says:

    i wish my internship gave me 30,000…

  3. Maria Garcia says:

    How does this only have 139+ likes its so helpful and i understand!👌

  4. Anthony Leachman says:

    Thank you MoneyCoach

  5. Joe says:

    Ever going to publish another video?

  6. Christian Elvinia says:

    To sum it up, yes you do

  7. Bikechanic says:

    We want you to come back!!

  8. Gene Smolko says:

    We know this may seem overwhelming

    The overwhelming part to me is understanding exactly what all these terms mean. For example, what exactly is gross income? Is it earned income, unearned income and self-employed income before taxes all together? It seems earned income is income from wages and salaries, but it's confusing because isn't income from self-employment income also earned? If it's not self-employment income, a better term would be wage/salary income.

    Another confusing part is at 1:42. What's this $5,950 + $350 part about? Why isn't it just $6,300? Since it isn't, it seems there is some significance here I'm missing here which could be crucial.

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