Definition of Income

• Earned income is wages, salaries, tips and income received from self-employment. Unearned income is distributions from retirement and 401k plans, investment income, Social Security, SSI and disability. Other income includes cash, gifts and the fair market value of property, goods and services received during the year. Your gross income is the total of your earned and unearned income.
  
  Deductions such as alimony paid to a former spouse, contributions to individual retirement arrangements and self-employment retirement plans, contributions to health savings accounts, the self employment health insurance deduction and one-half of the self-employment tax paid combine to reduce your total income, resulting in your Adjusted Gross Income (AGI). The AGI determines your eligibility for other tax deductions and credits.These are direct deductions from your income that you do not have to itemize on Form 1040 Schedule A.
  
  

Single Filing Status

• If you are single and under 65, your income tax threshold is $9,350. If you are single and over 65 or blind, the threshold is $10,750. If you are single, over 65 and blind, your tax threshold is $12,150. The tax threshold is the point where you start owing income tax. These figures are based on your gross income.
  
  

Married Filing Status

• If you are married filing jointly and both of you are under 65, your tax threshold is $18,700. If one of you is over 65 or blind, the tax threshold is $19,800. If both of you are over 65 or are blind, your tax threshold is $20,900. Finally, if both of you are over 65 and blind, your tax threshold is $22,000. If you are married and file separately, then the threshold to file is $3,650, regardless of age. If your spouse died during the year, and you did not remarry before December 31, 2010, you may still claim your deceased spouse as a qualifying widow or widower. In this case, the tax thresholds are $15,050 and $16,150 if you were under 65 and over 65, respectively.
  
  

Head of Household

• To file for head of household, you must have provided more than half of the income within the household. You must have been considered unmarried through the last day of the year, and your spouse must not have lived with you in the last six months of the year. Any dependents such as stepchildren, children and foster children must have lived with you for half of the year except for temporary absences (illness, education, business, vacation or military service), and you must reasonably assume this person will return. The income thresholds for a head of household are $12,050 (under 65) and $13,450 (over 65).
  
  

Dependent Status

• If someone can claim you as a dependent, then the rules change. If you are single under 65, your income threshold is $5,700, including $950 of unearned income. If you are single over 65 or blind, your threshold is $7,100 (including $2,350 of unearned income). If you are single, over 65 and blind, your income threshold is $8,500 including $3,750 unearned income. If you are married, and both of you are under 65 and not blind, then the threshold is $5,700 (including $950 unearned). If both of you are over 65 or blind, then the threshold is $6,800 (including unearned income of $2,050). If both of you are over 65 and blind, then the threshold is $7,900 (including $3,150 unearned income).