Myth: You don't have to file taxes if you don't work.
Fact: This is false. Many people without traditional employment income are still required to file tax returns.
Failing to file your taxes is a crime. Refusal to file your taxes can be a form of tax evasion. Nevertheless, those who do not work may not have to file tax returns.
You can choose to forgo filing your tax return if you have little or no income. To be clear, this is not a blanket rule; many people who earn little or no income are still advised to file their taxes.
Who Must File Taxes Even Without Employment Income?
According to IRS Publication 501, the following groups may still be required to file:
- Married individuals filing jointly based on their spouse's income
- Students with taxable grants, stipends, or scholarship income
- Unemployment benefit recipients
- Self-employed individuals earning $400 or more
- Those with unearned income (interest, dividends, investments)
Married Non-Workers
If you are married and do not work, you typically must file a joint return based on your spouse's income. For those who are married and do not work, your combined household income determines your filing requirement.
Students
Students may need to file a tax return to report taxable grants, stipends, or scholarship income. Depending on your situation, you may also need to file for financial aid purposes.
Unemployed Individuals
If you receive unemployment benefits, you must file a tax return, even if you did not work at all during the tax year. By definition, someone who is unemployed is not working. Nonetheless, unemployment benefits are taxable income, and you will need to pay taxes on your unemployment benefits, regardless of whether you worked at all that tax year.
What If You Made A Small Amount Of Income?
The IRS designates a minimum amount of income; should you fall below that amount, you do not need to file a tax return.
This minimum varies for each person and is based on several factors, such as your age and filing status.
For example, if you make at least $400 through any means classified as self-employment, you will need to file a tax return.
Other Instances Where You Should File: Those with Unearned Income
If you have unearned income from investments, you may be required to file a tax return.
What is unearned income?
Unearned income is money received from sources other than employment, such as interest, dividends, capital gains, rental income, and retirement distributions.
In the event that you have unearned income, like interest and dividends from investments, you should file a tax return. Likewise, you should file if you owe the IRS money in the form of back taxes, uncollected Social Security, or Medicare.
One final point of consideration: the IRS recommends that everyone, regardless of whether they need to file, should document any significant financial records.
Don’t Let This Myth Cost You: Take Control of Your Tax Situation
In conclusion, not having a traditional job does not automatically exempt you from filing taxes. Many forms of income, from unemployment benefits to investments or self-employment, can still trigger a filing requirement. Misunderstanding this rule is a common reason people fall behind and end up with unfiled returns and growing IRS debt. If you’re in that situation, TaxRise can help you get back on track by preparing prior-year returns, minimizing penalties where possible, and working directly with the IRS to resolve your tax issues. Taking action early can prevent further complications and put you back in good standing with confidence. Fill out our survey to learn more.
