<p><img src="https://static1.businessinsider.com/image/5c65a164262898712c053683-2338/ap070501014933.jpg" border="0" alt="american flag patriotic" data-mce-source="AP Photo/Nam Y. Huh"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><ul class="summary-list"><li><strong>Some Americans don't owe taxes on their income because it is too low.</strong></li><li><strong>Even if you are not required to file a tax return, you may want to so you can claim refundable credits.</strong></li><li><strong>Many people who don't pay federal income tax do work and owe payroll taxes.</strong></li><li aria-level="1">This article was reviewed for accuracy and clarity by<a href="https://folafinancial.com/" target="_blank" rel="noopener" data-analytics-module="summary_bullets" data-analytics-post-depth="0" data-uri="5dde9c402e381d4d7f0b260c47816fd6">Sheneya Wilson</a>, an expert on Personal Finance Insider's<a href="https://www.businessinsider.com/personal-finance/tax-review-board-experts" data-analytics-module="summary_bullets" data-analytics-post-depth="0" data-uri="f489bbf65a3947f4cfc3c57db86b29df">tax review board</a>.</li><li><a href="https://www.businessinsider.com/what-is-best-tax-software" target="_blank" rel="noopener" data-analytics-module="summary_bullets" data-analytics-post-depth="0" data-uri="c6a7d8c1f3d3f4097c772944b5095089">See Personal Finance Insider's picks for the best tax software </a></li></ul><p>It was Benjamin Franklin who <a href="https://constitutioncenter.org/blog/benjamin-franklins-last-great-quote-and-the-constitution/" target="_blank" rel="noopener">famously wrote</a> in 1789, "In this world, nothing is certain except death and <a href="https://www.businessinsider.com/personal-finance/when-to-file-taxes" target="_blank" rel="noopener">taxes</a>."</p><p>While the first part remains true today (we have yet to crack the code on eternal life), taxes on income are not certain for every American.</p><p>According to <a href="https://www.taxpolicycenter.org/model-estimates/tax-units-zero-or-negative-income-tax-liability-september-2018/t18-0128-tax-units" target="_blank" rel="noopener">estimations</a> from the nonpartisan Urban-Brookings Tax Policy Center, 75.5 million Americans, or about 43% of total <a href="https://www.taxpolicycenter.org/model-estimates/tax-units-zero-or-negative-income-tax-liability-september-2018/t18-0128-tax-units" target="_blank" rel="noopener">tax units</a> (one unit is equal to either a single filer or one <a href="https://www.businessinsider.com/personal-finance/should-i-file-taxes-jointly-or-separately-married" target="_blank" rel="noopener">married couple filing jointly</a>) are expected to have a zero or negative income tax bill for the 2020 tax year.</p><p>"The large percentage of people who don't owe federal income tax is a feature, not a bug, of the revenue code," <a href="https://www.taxpolicycenter.org/taxvox/tcja-increasing-share-households-paying-no-federal-income-tax" target="_blank" rel="noopener">write the Tax Policy Center's Philip Stallworth and Daniel Berger</a>. "By design, the federal income tax always has excluded a significant fraction of households through a combination of personal exemptions, the standard deduction, zero bracket amounts, and more recently, tax credits."</p><p>According to the Tax Policy Center's 2018 estimation, nearly 99 million Americans were expected to file a tax return in 2020. That figure may increase due to the pandemic, however, since people are being asked to file a tax return to <a href="https://www.businessinsider.com/personal-finance/claim-stimulus-check-on-2020-taxes-2020-12" target="_blank" rel="noopener">claim unpaid stimulus checks</a>, even if they aren't required to based on income.</p><div><iframe src="https://smartasset.com/captivate/frame/ucznodjd" width="100%" height="650px" scrolling="auto" style="border: none;"></iframe></div><h2><strong>How much do you have to make to file taxes'</strong></h2><p>Not "losing" a portion of your paycheck to taxes may sound nice to some, but it's not a luxury. Millions of Americans don't owe taxes on their income because they don't earn enough money.</p><p>As a benchmark, if you're under age 65 and earned less than the standard deduction, you won't have to file a federal tax return, though there are a few exceptions. The standard deduction is taken <em>before</em> taxable income is calculated and can wipe out your total <a href="https://www.businessinsider.com/personal-finance/what-is-tax-liability" target="_blank" rel="noopener">tax liability</a> if you didn't earn enough.</p><aside class="breakout-box headline-regular"><h2>If any of the following apply, you must file a federal tax return for 2020:</h2><ul><li>You earned more than the standard deduction for your age and filing status</li><li>You collected <a href="https://www.businessinsider.com/personal-finance/unemployment-benefits-fraud-filing-taxes-1099-g-2021-1" target="_blank" rel="noopener">unemployment income</a></li><li>You were self-employed and earned at least $400</li></ul></aside><p>Here are the standard deduction amounts for 2021 and 2020.</p><table style="border-collapse: collapse; width: 100%; height: 105px;" border="1"><tbody><tr style="height: 21px;"><td style="width: 33.3333%; height: 21px; text-align: left;"><strong>Filing status</strong></td><td style="width: 33.3333%; height: 21px; text-align: left;"><strong>2021</strong></td><td style="width: 33.3333%; height: 21px; text-align: left;"><strong>2020</strong></td></tr><tr style="height: 21px;"><td style="width: 33.3333%; height: 21px; text-align: left;">Single and married filing separately</td><td style="width: 33.3333%; height: 21px; text-align: left;">$12,550</td><td style="width: 33.3333%; height: 21px; text-align: left;">$12,400</td></tr><tr style="height: 21px;"><td style="width: 33.3333%; height: 21px; text-align: left;">Head of household</td><td style="width: 33.3333%; height: 21px; text-align: left;">$18,800</td><td style="width: 33.3333%; height: 21px; text-align: left;">$18,650</td></tr><tr style="height: 21px;"><td style="width: 33.3333%; height: 21px; text-align: left;">Married filing jointly and qualifying widow/er</td><td style="width: 33.3333%; height: 21px; text-align: left;">$25,100</td><td style="width: 33.3333%; height: 21px; text-align: left;">$24,800</td></tr></tbody></table><p>If you're over 65, there's an additional $1,650 added to your standard deduction if you file as single or head of household (the same is true if you're legally blind). If you file jointly with a spouse, your standard deduction increases by $1,300 for each person over the age of 65 (again, the same is true if you're legally blind).</p><aside class="quick-tip headline-regular"><p><strong>NOTE:</strong> People with a zero or negative tax bill aren't required to file, unless they want to claim refundable credits, such as the<a href="https://www.businessinsider.com/what-is-the-earned-income-credit-refundable-tax-credit" target="_blank" rel="noopener"> earned income tax credit (EITC)</a>, the child tax credit (CTC), or the recovery rebate credit (commonly known as a stimulus payment), or had tax withheld by their employer throughout the year and want to get a refund.</p></aside><h2><strong>How a negative tax bill could turn into a refund</strong></h2><p>Consider this example of a woman who doesn't owe federal income tax and will likely end up with a refund:</p><p>Amy is a single mother who earned $20,000 in 2020. The standard deduction for head of household of $18,650 as a single parent reduces her taxable income to $1,350, which places her in the 10% <a href="https://www.businessinsider.com/what-tax-bracket-am-i-in-federal-income-tax" target="_blank" rel="noopener">tax bracket</a> ($0 to $9,525). Her tax bill comes out to $135.</p><p>If she qualifies for the earned income tax credit (EITC), a subsidy for low-income working families, she can reduce her tax bill by up to $3,584, the maximum for a family with one child in the 2020 tax year. She may also claim the child tax credit (CTC), which allows her to apply a credit of up to $2,000 to her tax bill.</p><p>Amy will end up with a negative final tax bill, and since EITC and CTC are refundable, she'll receive the credits as cash.</p><p>But while Americans who earn too little don't pay income taxes, those who hold a job are still subject to<a href="https://www.businessinsider.com/personal-finance/what-is-payroll-tax" target="_blank" rel="noopener"> payroll taxes</a>, which support Social Security, Medicare, and unemployment insurance. And some taxes are certain for everyone, regardless of income, including <a href="https://www.businessinsider.com/how-to-calculate-sales-tax-united-states" target="_blank" rel="noopener">sales taxes</a>, excise taxes, and property taxes.</p><ul class="read-more-links"><li><bi-shortcode id="related-content-module" class="mceNonEditable" data-type="more-tax-coverage" data-sheetname="More Tax Coverage">Related Content Module: More Tax Coverage</bi-shortcode></li></ul><p><a href="https://www.businessinsider.com/personal-finance/how-much-do-you-have-to-make-to-file-taxes#comments">Join the conversation about this story »</a></p>
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