Whether you owe taxes, or need to file a tax return at all, will depend on both your income and “filing status”. I’d like to present a brief overview of income and filing status, and how to figure out if you meet the filing threshold for a given year.
Not sure if you need to file a tax return? First, determine your "Gross Income" – add up everything you received worldwide (including goods and services) that was not a gift.
Contract work or Self-employment income (include gross revenue before expenses, if you provide services)
Investment income and bank interest
Employer pension contributions and other employment benefits
Taxable pension distributions
Social security, in some cases
Sale of a home (even if income can be excluded)
Next, you need to determine the income threshold that applies to you, based on your "filing status", which is generally your marital status. The IRS recognizes five filing statuses, plus additional circumstances (e.g. whether you are a dependent of another, over 65, or blind). However, I will present a sample of the filing thresholds that apply to MOST people. (See end for additional scenarios.)
Below is a table to assist you in determining if you are required to file a US tax return for the past four years. If you did not realize you needed to file a tax return to report foreign income, you may be eligible to file without penalties through the IRS Streamlined Filing Compliance Procedures. You should discuss this with a US CPA or EA specializing in foreign tax issues, or a US tax lawyer experiences in "Streamlined" filing.
You are considered "single" if – You guessed it! – you are unmarried or legally separated at the end of the year. If you had children/"dependents" living with you, you may qualify as "Head of Household", below. You will need to file an income tax return if you had gross income over $10,350 in 2016.
MARRIED FILING SEPARATELY
If you were married at the end of the tax year, even if you were married outside the US, you cannot file as single. If you are married to a non-US person (e.g. an Israeli), your default will be to use the "married filing separately" status. However, this status is the most restrictive in terms of deductions, exemptions, and eligibility to claim refundable credits. If you are married and do not qualify as "Head of Household" you will need to file a tax return if you had income over $4,050 in 2016.
MARRIED FILING JOINTLY
If you are married to a US person, or have determined that it is beneficial to file with your non-US citizen spouse (who must obtain a US Individual Taxpayer Identification Number or ITIN), this is the status for you. You and your spouse will need to file a return if you had combined income over $20,700 in 2016.
HEAD OF HOUSEHOLD
This is the most common filing status for single parents. However, a US Citizen married to a non-US person may qualify for this status if they have a qualifying person (usually a child with a US social security number) living with them. Unlike the Married Filing Separately status, taxpayers that qualify as Head of Household may claim refundable credits, such as Child Tax Credits, and education credits for themselves or children. Discuss with your accountant whether this is the appropriate filing status for you. A "Head of Household" will need to file an income tax return if he or she has income over $13,350.
Please consult a knowledgeable US accountant to fully understand how the above general guidelines apply to your situation.
Self-employed individuals must report all income on a tax return if net income from self-employment exceeded $400 (about ₪1,500), even if the individual had no other income.
Someone who can be claimed as a dependent of another (such as parents or adult children) must report income if he or she had earned income (i.e. wages) over $6,300 (₪24,000) or unearned income (i.e. investments, interest, dividends, savings plan income, rental income) over $1050 (₪4,000) in 2016.
A "Qualifying Widow[er]" is a filing status that allows an individual with a a dependent child to retain the benefits of the Married Filing Jointly status for two years after the year of a spouse's death.