The Internal Revenue Service doesn't require everyone to file an income tax every year. You file only when you make a certain amount of money or meet certain other criteria. Usually, $700 isn't going to be enough to require you to file an income tax return. However, you might have to file in some cases and might want to in others.
The IRS sets a threshold each year for how much income you can make before you're required to file a tax return. These vary by filing status, but all are significantly larger than $700. For example, for the 2013 tax year, you can make up to $10,000 if you're single or $20,000 if you're filing a joint return. However, if your parents -- or anyone else -- claim you as a dependent, you must file if your unearned income exceeds $1,000, your earned income exceeds $6,100 or your total income exceeds the larger of $1,000 or your earned income plus $350. For example, if you're still a dependent and you had $700 from working and $400 in investment income, you would need to file because your total income of $1,100 exceeds your earned income plus $350.
In some cases, you might have to file if you owe certain taxes or penalties. For example, early distributions from retirement plans, like individual retirement accounts and 401(k)s, are hit with a 10 percent early distribution penalty regardless of how much income you have. If your $700 of income was a withdrawal from a 401(k) after you left the company, you must file because you owe the $70 penalty. You're also required to file a return if you or your spouse received any health savings account distributions.
If you're self-employed, you'll need to file an income tax return for that $700, because you need to pay self-employment taxes on the money. As of the 2013 tax year, you must file a return and pay self-employment taxes if you have more than $400 of self-employment income or more than $108.28 as a church employee. For example, say you worked as an independent contractor doing freelance photography to earn the $700; you must file an income tax return.
Return Required for Refund
If you only earned $700 working as an employee, chances are you won't owe income taxes -- assuming that's your only income. However, you might have had taxes withheld from your paycheck on that income. If you want that money refunded, the only way to get it back is to file a tax return. Also, you might qualify for refundable tax credits, such as the earned income credit, or, if you're in college, the American opportunity credit, which could get you some money back even if you didn't have any income taxes withheld.
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