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1.3 Who Must File (Income Thresholds)

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Enrolled Agent EA

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1 Part 1, Chapter 1: Tax Return Basics & Filing Requirements

1.1 Form 1040 Overview & Structure 1.2 Form 1040-SR for Seniors 1.3 Who Must File (Income Thresholds) 1.4 Filing Deadlines & Extensions (Form 4868) 1.5 Penalties: Failure to File vs. Failure to Pay 1.6 Sources of Tax Information (W-2s, 1099s, K-1s) 1.7 Preparer Due Diligence Requirements 1.8 Amended Returns (Form 1040-X)

2 Part 1, Chapter 2: Filing Status & Dependents

2.1 Single & Married Filing Jointly 2.2 Married Filing Separately 2.3 Head of Household Requirements 2.4 Qualifying Surviving Spouse 2.5 Qualifying Child Test (5 Tests) 2.6 Qualifying Relative Test (4 Tests) 2.7 SSN, ITIN & Residency Status

3 Part 1, Chapter 3: Wages & Employee Compensation

3.1 W-2 Income & Withholding 3.2 Employee vs. Independent Contractor 3.3 1099-NEC, 1099-MISC & 1099-K Reporting 3.4 Fringe Benefits (Taxable vs. Non-Taxable) 3.5 Stock Options (ISO vs. NQSO) 3.6 Special Categories (Clergy, Military, Foreign)

4 Part 1, Chapter 4: Interest, Dividends & Other Income

4.1 Taxable vs. Tax-Exempt Interest 4.2 US Savings Bonds & OID 4.3 Ordinary vs. Qualified Dividends 4.4 Schedule B Requirements 4.5 Rental & Royalty Income Basics 4.6 Alimony, Gambling & Other Income 4.7 Cancelled Debt & Form 1099-C 4.8 Net Operating Loss (NOL)

5 Part 1, Chapter 5: Capital Gains & Property Transactions

5.1 Capital vs. Non-Capital Assets 5.2 Cost Basis Calculation 5.3 Inherited & Gifted Property Basis 5.4 Short-Term vs. Long-Term Gains 5.5 Capital Gains Tax Rates (0%, 15%, 20%) 5.6 Netting & the $3,000 Loss Limit 5.7 Wash Sales & Related Party Rules 5.8 Sale of Primary Residence (Section 121) 5.9 Installment Sales (Form 6252) 5.10 Like-Kind Exchanges (Section 1031)

6 Part 1, Chapter 6: Adjustments to Income

6.1 Educator Expenses & HSA Contributions 6.2 Self-Employment Tax Deduction 6.3 IRA Contributions (Traditional) 6.4 Student Loan Interest Deduction 6.5 Alimony Paid (Pre-2019 Divorces) 6.6 Other Adjustments & New OBBBA Deductions (Tips, Overtime, Auto Loan, Senior Bonus)

7 Part 1, Chapter 7: Deductions (Standard & Itemized)

7.1 Standard Deduction by Filing Status 7.2 Medical & Dental Expenses (7.5% Floor) 7.3 State & Local Taxes (SALT $40K Cap) 7.4 Mortgage Interest Deduction 7.5 Charitable Contributions 7.6 Casualty & Theft Losses 7.7 QBI Deduction (Section 199A)

8 Part 1, Chapter 8: Tax Calculation & Credits

8.1 Tax Tables & Rate Schedules 8.2 Alternative Minimum Tax (AMT) 8.3 Self-Employment Tax Calculation 8.4 Child Tax Credit & Additional CTC 8.5 Earned Income Tax Credit (EITC) 8.6 Education Credits (AOC & LLC) 8.7 Child & Dependent Care Credit 8.8 Other Credits (Saver's, Premium Tax)

9 Part 1, Chapter 9: Retirement Accounts & Social Security

9.1 Traditional vs. Roth IRA 9.2 401(k), 403(b) & TSP Basics 9.3 SEP-IRA & SIMPLE IRA 9.4 Required Minimum Distributions (RMDs) 9.5 Early Withdrawal Penalties & Exceptions 9.6 Social Security Taxation

10 Part 1, Chapter 10: Specialized Individual Returns

10.1 Estate Tax (Form 706) 10.2 Gift Tax (Form 709) 10.3 Foreign Income (Form 2555) 10.4 FBAR & FATCA Reporting 10.5 Farm Income (Schedule F) 10.6 Disaster Area Rules

11 Part 2, Chapter 11: Business Entity Types

11.1 Overview of Entity Types 11.2 State Law vs. Tax Classification 11.3 Entity Selection: Reasonable Comp & QBI 11.4 Form 8832 & Rev. Proc. 2009-41 11.5 LLC Deep Dive: Spouses & EINs 11.6 Changing Status: The 60-Month Rule

12 Part 2, Chapter 12: Starting a Business

12.1 Hobby vs. Business (Profit Motive) 12.2 Employer Identification Number (EIN) 12.3 Tax Year Selection 12.4 Recordkeeping Requirements 12.5 Statute of Limitations 12.6 Related Party Transactions 12.7 Start-Up Costs, Entity Choice & OBBBA Business Changes (2025)

13 Part 2, Chapter 13: Worker Classification & Payroll

13.1 Employee vs. Independent Contractor 13.2 Common Law Test (Behavioral, Financial, Relationship) 13.3 Statutory Employees & Non-Employees 13.4 Form 941 & Payroll Deposits 13.5 Trust Fund Recovery Penalty 13.6 FUTA & Unemployment Taxes

14 Part 2, Chapter 14: Accounting Methods & Income

14.1 Cash vs. Accrual Method 14.2 Hybrid Methods & Changes 14.3 Inventory & COGS 14.4 Gross Receipts & Income Recognition 14.5 Constructive Receipt 14.6 Form 1099 Reporting Requirements 14.7 §163(j) Business Interest Expense Limitation 14.8 §174 Research & Experimental Expenditures

15 Part 2, Chapter 15: Depreciation & Asset Treatment

15.1 MACRS Basics & Recovery Periods 15.2 Mid-Month, Mid-Quarter, Half-Year Conventions 15.3 Section 179 Expense Deduction 15.4 Bonus Depreciation 15.5 Listed Property Rules 15.6 Amortization of Intangibles 15.7 Depletion 15.8 Disposition of Business Assets

16 Part 2, Chapter 16: Business Deductions

16.1 Ordinary & Necessary Test 16.2 Business Travel Expenses 16.3 Business Meals (50% Limitation) 16.4 Business Use of Vehicle 16.5 Home Office Deduction 16.6 Business Interest Limitation (163(j)) 16.7 Business Bad Debts

17 Part 2, Chapter 17: Business Credits & Fringe Benefits

17.1 General Business Credit Overview 17.2 R&D Credit & Disabled Access Credit 17.3 Small Employer Health Insurance Credit 17.4 Fringe Benefit Rules 17.5 Cafeteria Plans (Section 125) 17.6 Achievement Awards & Other Benefits

18 Part 2, Chapter 18: Sole Proprietorships

18.1 Schedule C Overview 18.2 Calculating Net Profit/Loss 18.3 Self-Employment Tax (Schedule SE) 18.4 Estimated Tax Payments 18.5 Hobby Loss Rules

19 Part 2, Chapter 19: Partnerships

19.1 Partnership Formation 19.2 Partner's Basis Calculation 19.3 Form 1065 Overview 19.4 Schedule K-1 (Partner's Share) 19.5 Guaranteed Payments 19.6 Partnership Distributions 19.7 At-Risk & Passive Activity Rules 19.8 Partnership Termination & Liquidation

20 Part 2, Chapter 20: C Corporations

20.1 Form 1120 Overview 20.2 Corporate Tax Rate (21%) & CAMT 20.3 Accumulated Earnings Tax 20.4 Dividends Received Deduction 20.5 Earnings & Profits (E&P) 20.6 Corporate Distributions, Dividends & Stock Redemptions 20.7 §351 Transfers, §1032, §1202 QSBS & Other Corporate Provisions 20.8 Corporate Liquidation

21 Part 2, Chapter 21: S Corporations

21.1 S Election Requirements (Form 2553) 21.2 Form 1120-S Overview 21.3 Shareholder Basis Calculation 21.4 Reasonable Compensation 21.5 S Corporation Distributions 21.6 Built-In Gains Tax & Termination

22 Part 2, Chapter 22: Specialized Business Returns

22.1 Trusts & Estates (Form 1041) 22.2 Simple vs. Complex Trusts 22.3 Distributable Net Income (DNI) 22.4 Tax-Exempt Organizations (Form 990) 22.5 Retirement Plans (Form 5500) 22.6 Qualified Retirement Plans Overview 22.7 Farm Taxation 22.8 Rental Real Estate Activities

23 Part 3, Chapter 23: Practice Before the IRS

23.1 What is Practice Before the IRS? 23.2 Who Can Practice (Full Rights) 23.3 Limited Practice Rights (AFSP, Unenrolled) 23.4 Special Relationships (Family, Employees) 23.5 PTIN Requirements 23.6 Circular 230 Overview 23.7 Office of Professional Responsibility (OPR)

24 Part 3, Chapter 24: Becoming & Maintaining EA Status

24.1 Two Paths to EA (Exam vs. IRS Experience) 24.2 Application Process (Form 23) 24.3 Background & Compliance Checks 24.4 Renewal Requirements (Form 8554) 24.5 Continuing Education Requirements 24.6 Inactive Status & Termination

25 Part 3, Chapter 25: Practitioner Duties (Circular 230)

25.1 Due Diligence Requirements 25.2 Knowledge of Client's Omission 25.3 Conflict of Interest Rules 25.4 Fee Requirements (Contingent, Unconscionable) 25.5 Advertising & Solicitation Rules 25.6 Tax Return Position Standards 25.7 Written Advice Standards 25.8 Sanctions & Penalties for Violations

26 Part 3, Chapter 26: Power of Attorney & Authorization

26.1 Form 2848 (Power of Attorney) 26.2 CAF (Centralized Authorization File) 26.3 Form 8821 (Tax Information Authorization) 26.4 Third-Party Designee 26.5 Signing Returns for Taxpayers 26.6 Client Confidentiality & Privilege 26.7 Representing Clients in Audits (Examination) 26.8 Appealing IRS Decisions 26.9 Collection Representation

27 Part 3, Chapter 27: Legal Authority & Research

27.1 Hierarchy of Tax Authority 27.2 Internal Revenue Code 27.3 Treasury Regulations 27.4 Revenue Rulings & Procedures 27.5 Court Cases & Precedent 27.6 Statutes of Limitations

28 Part 3, Chapter 28: Specific Representation Issues

28.1 Trust Fund Recovery Penalty (TFRP) 28.2 Innocent Spouse Relief (Form 8857) 28.3 Injured Spouse Allocation (Form 8379) 28.4 Penalty Abatement (FTA & Reasonable Cause) 28.5 Taxpayer Advocate Service (TAS) 28.6 Freedom of Information Act (FOIA)

29 Part 3, Chapter 29: Final Review & Exam Strategy

29.1 Exam Structure & Logistics (2026-2027) 29.2 The "Clock" of Representation (Master Deadlines) 29.3 Ethics vs. Law (Sanctions & Penalties) 29.4 Final Mock Review & Exam Strategy

30 Part 3, Chapter 30: Filing Process & E-File

30.1 E-File Requirements (The "More Than 10 Returns" Rule) 30.2 ERO Responsibilities 30.3 EFIN & Application Process 30.4 Form 8879 (Signature Authorization) 30.5 Record Retention & Data Security (WISP) 30.6 Preparer Penalties (Filing Specific)

1.3 Who Must File (Income Thresholds)

Key Takeaways Explain This Topic AI

Filing requirements are based on gross income, filing status, and age (under 65 vs. 65 or older)

Self-employed individuals must file if net earnings from self-employment reach $400 or more, regardless of total income

Dependents have separate filing thresholds for 2025: greater of $1,350 or earned income + $450 (capped at the regular standard deduction)

Married Filing Separately has the lowest threshold at just $5 of gross income

Some situations require filing regardless of income: receiving advance premium tax credits, HSA distributions, or owing special taxes

Last updated: October 2026

Understanding who must file a federal tax return is fundamental knowledge for the EA exam and tax practice. The requirement to file depends on several factors: gross income, filing status, age, and special circumstances. This section covers the 2025 tax year thresholds (post-OBBBA) that apply to the 2026-2027 EA exam.

The Basic Rule

If you are a U.S. citizen or resident of the United States or Puerto Rico and you meet the filing requirements, you must file Form 1040 (or Form 1040-SR for seniors). The filing requirements are primarily based on minimum income thresholds , though some situations require filing regardless of income.

Understanding Income Types

Before examining the thresholds, you must understand how income is categorized:

Gross Income includes all income received in the form of money, goods, property, and services that is not exempt from tax. This includes:

  • Income from sources inside and outside the United States
  • Taxable portion of Social Security benefits
  • Business gross income (but not losses)
  • Capital gains (but not capital losses)

Gross income breaks down into two categories:

Earned Income:

  • Salaries, wages, tips
  • Professional fees
  • Business income from self-employment
  • Taxable scholarships and grants

Unearned Income:

  • Taxable interest and dividends
  • Capital gains
  • Unemployment compensation
  • Taxable Social Security and pensions
  • Annuities and trust distributions
  • 2025 Filing Thresholds for Most Taxpayers (post-OBBBA)

The following table shows the minimum gross income required to file a return based on filing status and age for tax year 2025:

  • Filing Status Under 65 65 or Older
  • Single $15,750 $17,750
  • Married Filing Jointly $31,500 $33,100 (one spouse 65+) / $34,700 (both 65+)
  • Married Filing Separately $5 $5
  • Head of Household $23,625 $25,625
  • Qualifying Surviving Spouse $31,500 $33,100

Key Insight: These thresholds correspond to the standard deduction amounts. If your income is below your standard deduction, you generally owe no income tax and are not required to file.

Exam Tip: Notice that Married Filing Separately has a threshold of only $5. This effectively means anyone using this status must file a return.

Filing Requirements for Dependents

Individuals who can be claimed as dependents on someone else's return use different thresholds. For single dependents under age 65 , a return is required if:

  • Unearned income exceeds $1,350 , OR
  • Earned income exceeds $15,750 , OR

Gross income exceeds the larger of :

  • $1,350, or
  • Earned income + $450

For single dependents age 65 or older or blind , the thresholds increase:

  • Unearned income over $3,350
  • Earned income over $17,750
  • Gross income over the larger of $3,350 or earned income + $2,450

Married dependents follow similar rules, with one critical addition: if gross income is $5 or more AND their spouse files separately with itemized deductions, they must file.

Special Filing Requirements (Regardless of Income)

Certain situations require filing Form 1040 even if gross income is below the normal thresholds:

1. Self-Employment Income ($400 threshold) If net earnings from self-employment are $400 or more , you must file.

The calculation: Net Earnings from Self-Employment = Net Self-Employment Income x 0.9235 (92.35%)

2. Special Taxes Owed:

  • Alternative Minimum Tax (AMT)
  • Additional tax on qualified plan distributions (early withdrawal penalties)
  • Household employment taxes (paying domestic employees)
  • Unreported Social Security/Medicare tax on tips
  • Recapture taxes (such as depreciation recapture)

3. Health-Related Accounts:

  • Distributions from a Health Savings Account (HSA)
  • Distributions from an Archer MSA or Medicare Advantage MSA

4. Premium Tax Credits:

Received advance payments of the Premium Tax Credit (health insurance marketplace)

5. Church Employees: Wages of $108.28 or more from a church or church-controlled organization exempt from employer Social Security/Medicare taxes.

Why File Even If Not Required?

Even when not required to file, taxpayers may want to file to:

Claim a refund of withheld taxes

Claim refundable credits such as:

  • Earned Income Credit (EIC)
  • Additional Child Tax Credit
  • American Opportunity Credit
  • Premium Tax Credit
  • Start the statute of limitations on IRS assessment
  • Document income for loan applications or other purposes
  • Real-World Application

Example 1: Joey, age 21, is single and not a dependent. He earned $11,500 from a part-time job and had $2,500 in dividends and $1,000 in interest. Total gross income: $15,000.

Result: Joey is NOT required to file because $15,000 is less than the $15,750 threshold for single filers. However, if federal income tax was withheld from his wages, he should file to get a refund.

Example 2: Monica, age 21, is single and not a dependent. She earned $11,500 from her grass-cutting business and had $2,500 in dividends and $1,000 in interest. Total gross income: $15,000.

Result: Monica MUST file because her self-employment net earnings exceed $400. She may not owe income tax, but she will owe self-employment tax.