Does every NRI in the US need to file their Income Tax? Everyone in the US is not required to file their Income Tax return every year. In case, your total income for a year does not exceed a particular threshold then you would need to file a federal tax return. The amount of income which you would be able to earn before you are needed to file a tax return would be based on the type of income, the age of the NRI and the filing status of the NRI. Gross Income Thresholds Most taxpayers are eligible to claim the Standard Deduction. As an NRI, the Standard Deduction amount for which you would be eligible for is mainly determined by your age and your filing status. The Government usually decides this amount before the tax filing season arrives and this amount would increase for inflation each year. By the help of Standard Deduction and other deductions, your income can be reduced to determine your taxable income. In general, if your income is less than your Standard Deduction then you do not need to file a federal tax return. You would not need to file a federal income tax return if the below-mentioned criteria are true.
- If you are below the age of 65 years
- If you are filing your tax returns with the Single status
- If you do not have any other special conditions which would require you to file the tax returns such as income obtained from self-employment
- If your income is less than $12,400 i.e. the Standard Deduction in the year 2020 for a taxpayer.
- You can add one-half of your Social Security Income to all other types of income which you are receiving including the income which is tax-exempt.
- After that, the amount obtained can be compared to the base amount for determination of your filing status.
- In case, the total will be more than the base amount then some of your Social Security benefits would be taxable.
- For instance, if you are an NRI who is a taxpayer with a single filing status and earns $2500 during a particular year and $300 is being withheld from your paycheck then you can obtain a refund of $300 as your income is less than Standard Deduction.
- If you have a refund due then the IRS would not automatically issue the refund. You would have to file a tax return so as to obtain your refund which is due.