How Does Tax and Tax Exemption Work?
The US operates on a “progressive tax system”. In simple terms this means that the more you earn, the more tax you pay. If your income remains below a given annual threshold, you are exempt from paying tax.Who Needs to File a Tax Return?
- Anyone who is single, aged under 65, who is not blind, if their unearned income (income derived from things like dividends and interest) is greater than $1,050, if their earned income is greater than $12,000, or if their gross (earned plus unearned) income was greater than the larger of $1,050 or, for earned income, up to $11,650 plus $350.
- Anyone who is single, aged 65 years or above, or who is blind, if their unearned income is greater than $2,650, or if their earned income was greater than $13,600.
- Couples or the blind, aged 65 or over, if their unearned income is over $4,250 or their earned income is above $15,200.
- Married couples younger than 65 and not blind, with unearned income over $1,050 or earned income over $12,000, or if their gross (earned plus unearned) income was greater than the larger of $1,050 or, for earned income, up to $11,650 plus $350.
- Married dependents who are 65 or older (or blind) when their gross income is above $5 (if the spouse itemizes deductions), whose unearned income is over $2,350 ($3,650 if both are over 65 or blind), whose earned income is $13,300 ($14,600 if both are over 65) or whose gross income is greater than $2,350 or earned income is greater than $11,650 plus $1,650 ($3,650 and $2,950 respectively if both aged over 65 or blind).
What About the Tax Rules for Small Businesses?
I Want to Reduce my Taxable Income – What can I do?
There are several options available to you if you want to reduce your taxable income. Paying more into your retirement savings via IRAs and 401(k)s is one way. Another is to contribute extra to a Flexible Spending Account or Health Savings Account. 
Billwaze
Jeff Liebov is the CEO & Founder of BILLWAZE. Jeff envisioned a simpler way out of the complicated world of accounting apps and created BILLWAZE. As a tool, BILLWAZE makes things easy for those who want to get things done fast, without all the hassle. Jeff and the team are continuously improving the platform and are passionate about making the entire billing process simpler than ever.
Relevant Blog
5 Ways To Improve Your Business’s Financial Health
Published on April 10, 2023 by Stephanie MilneFor small and midsized businesses (SMBs), a healthy financial situation can be make or break. Unlike larger businesses, smaller enterprises often have fewer resources or less resilience to resist external pressures, such as disrupted supply chains or economic uncertainty. Therefore, assessing all aspects of your business to identify areas for improvement is crucial to reduce […]