Taxes on Wages Under $600 on a W-2

If you exceed your filing status’ minimum income threshold for filing taxes, then the IRS expects you to report all wages, regardless of the amount. According to the IRS, it is a widespread misconception that wages under $600 aren’t taxed or do not have to be reported.

While it is true that companies paying independent or self-employed contractors are not required to supply them with a 1099-NEC for jobs less than ​$600​, this has no bearing on whether you report this income to the IRS. Workers who receive a W-2 from a company with less than ​$600​ in wages are still responsible for reporting it, as there is no W-2 minimum amount to file.

The IRS makes it rather easy to determine who has to pay federal income tax or not and there is no minimum income to receive a W-2. Each year, it releases new minimum income filing thresholds adjusted for inflation. These thresholds depend upon filing status, age and marital status, among other criteria. Fortunately, there are interactive tax assistant tools on the IRS' website, that help you figure your filing status, and whether taxes need to be filed.

Here are the income threshold requirements before a worker must file a tax return in 2020:

​Single Filers​

• 65 and under – ​$12,200​
• 65 and older – ​$13,850​

​Married Filing Jointly​

• Both spouses under 65 – ​$24,400​
• One spouse 65 and older – ​$25,700​
• Both spouses 65 years and older – ​$27,000​

​Married Filing Separately Status​

• Any age – ​$5​

​Head of Household Status​

• 65 and under – ​$18,350​
• 65 and older – ​$20,000​

​Qualifying Widow/er Status​

• 65 and under – ​$24,400​
• 65 and over – ​$25,700​

If your total wages from all jobs and all W-2s you received for the year are less than any of these amounts for your filing status, then you do not need to file. However, if your income was from self-employment, then you must file if you earned ​more than $400​ in the year.

Keep in mind, not being required to file doesn’t mean it isn’t a good idea for you to do so. The IRS offers refundable tax credits to assist low and moderate income workers that you might be eligible for – even if you have no tax liability – which could result in a refund for you.

Although you may not be required to file taxes for wages under ​$600​ on a W-2, if that was your only income, you might still qualify for refundable tax credits. There are two types of tax credits – refundable and nonrefundable. Refundable tax credits allow you to keep all or a portion of a credit, even when your tax liability is at zero or has been reduced to zero.

This means if you owe no taxes, but still qualify for one of the fully or partially refundable tax credits, then you will receive the credit in form of a refund, unless you have outstanding obligations such as back child support payments or taxes. However, if you do not file because you are not obligated to, then you will not receive these credits. Uncle Sam is not in the habit of alerting workers that they are due a refund. It is your responsibility to determine what you’re eligible for and claim it.

As to be expected, the IRS has specific rules or tests that determine eligibility before one may claim these tax credits. A quick stop by the IRS’ website provides a complete list of all tax credits and deductions available to taxpayers for various years.