Do I have to file a tax return?

Barry Dolowich for the Monterey Herald writes:  Question:  After graduating college last spring, I earned about $7,000 during 2014. I also have a little stock income from some money my grandparents gave me years ago. Do I have to bother filing 2014 tax returns?

A A tax return must be filed for each year by a U.S. citizen or a resident alien who has at least a specified minimum amount of gross income. The income levels at which individuals must file income tax returns for 2014, even though no tax is owed, are generally as follows:

If you are under age 65 at Dec. 31, 2014, single individual $10,150; married individual filing separately $3,950; married couples filing jointly $20,300; head of household $13,050; qualifying widow(er) $16,350.

If you are age 65 or older at Dec. 31, 2014, single individual $11,700; married individual filing separately $3,800; married couples filing jointly-one over 65 $21,500; married couples filing jointly-both over 65 $22,700; head of household $14,600; qualifying widow(er) $17,550.

If on Dec. 31, 2014, a married couple did not share the same household or if some other taxpayer is entitled to a dependency exemption for either spouse (e.g., a married student who is supported by a parent). In such a case, a return for 2014 must be filed if gross income equals $3,950 or more.

If someone else can claim you as a dependent, you must file a return if you have any of the following:

• Earned income more than $6,200

• Unearned income more than $1,000

• Gross income more than the larger of $1,000 or earned income (up to $5,850) plus $350

Higher limitations apply if the dependent is age 65 or older, blind or both.

Even if the income levels noted above are not reached, an individual is required to file a return if (1) net earnings from self-employment in 2014 are at least $400, (2) FICA and/or Medicare taxes are due on tip income not reported to the employer or on group life insurance, (3) liability for alternative minimum tax is incurred, (4) tax on an IRA or a qualified retirement plan is due, (5) tax is due from the recapture of an investment credit, a low-income housing credit, etc., or recapture tax on the disposition of a home purchased with a federally subsidized mortgage, or (6) wages of $108.28 or more were earned from a church or qualified church-controlled organization that is exempt from employer FICA and Medicare taxes.

The income-level test applies to gross income and not to adjusted gross income. Also, any person required to file an income tax return must report on that return the amount of tax-exempt interest received during the year.

Tax refund alert — Many people that fall below the gross income levels listed above choose not to file, and thereby inadvertently forfeit potential refunds from Form W-2 withholding taxes or the earned income credit.

Tax filing alert — Many people sell stocks, bonds or mutual funds at a loss and incorrectly assume they may not be required to file a tax return because they do not owe tax. However, the IRS receives information on the sales proceeds and will assume a zero cost basis unless a tax return is filed reporting the sales transaction.