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Wednesday, March 31, 2021

Tax Information For Senior Citizens from the IRS Website

The IRS requires you to file a tax return when your gross income exceeds the sum of the standard deduction for your filing status plus one exemption amount. These filing rules still apply to senior citizens who are living on Social Security benefits. If you are a senior, however, you don't count your Social Security income as gross income. If Social Security is your sole source of income, then you don't need to file a tax return.

When seniors must file

For tax year 2020, you will need to file a return if:

  • you are unmarried,
  • at least 65 years of age, and
  • your gross income is $14,050 or more.

However, if you live on Social Security benefits alone, you don't include this in gross income.  If this is the only income you receive, then your gross income equals zero, and you don't have to file a federal income tax return.

But if you do earn other income that is not tax-exempt, then each year you must determine whether the total exceeds $14,050.

  • For tax years prior to the 2018 tax year (filed in 2019), these amounts are based on the year's standard deduction plus the exemption amount for your age and filing status.
  • Beginning in 2018, only your standard deduction is used since exemptions are no longer part of calculating your taxable income under the new tax law passed in late 2017.

For the 2020 tax year,

  • If you are married and file a joint return with a spouse who is also 65 or older, you must file a return if your combined gross income is $27,400 or more.
  • If your spouse is under 65 years old, then the threshold amount decreases to $26,100.
  • Keep in mind that these income thresholds only apply to the 2020 tax year, and generally increase slightly each year.

When to include Social Security in gross income

There are certain situations when seniors must include their Social Security benefits in gross income. If you are married but file a separate tax return and live with your spouse at any time during the year, then 85% your Social Security benefits are considered gross income which may require you to file a tax return.

In addition, a portion of your Social Security benefits are included in gross income, regardless of your filing status, in any year the sum of half your Social Security plus all other income, including tax-exempt interest, exceeds $25,000, or $32,000 if you are married filing jointly.

Tax credit for seniors

Even if you must file a tax return, there are ways you can reduce the amount of tax you have to pay on your taxable income. As long as you are at least 65 years old and your income from sources other than Social Security is not high, then the tax credit for the elderly or disabled can reduce your tax bill on a dollar-for-dollar basis.

Itemized Deductions

Some individuals should itemize their deductions because it will save them money. Others should itemize because they don't qualify for the standard deduction. See the discussion under Standard Deduction , earlier, to decide if it would be to your advantage to itemize deductions.

Medical and dental expenses, some taxes, certain interest expenses, charitable contributions, casualty and theft losses, and certain other expenses may be itemized as deductions on Schedule A (Form 1040).

Reminders

Form 1040-SR. Form 1040-SR, U.S. Tax Return for Seniors, was introduced in 2019. You can use this form if you are age 65 or older at the end of 2020. The form generally mirrors Form 1040. However, the Form 1040-SR has larger text and some helpful tips for older taxpayers. See the Instructions for Forms 1040 and 1040-SR for more information.

Tax return preparers. Choose your preparer carefully. If you pay someone to prepare your return, the preparer is required, under the law, to sign the return and fill in the other blanks in the Paid Preparer's area of your return. Remember, however, that you are still responsible for the accuracy of every item entered on your return. If there is any underpayment, you are responsible for paying it, plus any interest and penalty that may be due.

Third party designee. You can check the "Yes" box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, a family member, or any other person you choose. This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. It also allows your designee to perform certain actions. See your income tax return instructions for details.

Employment tax withholding. Your wages are subject to withholding for income tax, social security tax, and Medicare tax even if you are receiving social security benefits.

Social security benefits information. Social security beneficiaries may quickly and easily obtain various information from SSA’s website with a my Social Security account, including getting a replacement SSA‐1099 or SSA‐1042S. For more information, go to SSA.gov/myaccount. See Obtaining social security information , later.

Return preparation assistance.

 The IRS wants to make it easier for you to file your federal tax return. You may find it helpful to visit a Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), or American Association of Retired Persons (AARP) Tax-Aide site near you.

Volunteer Income Tax Assistance and Tax Counseling for the Elderly.

 These programs provide free help for low-income taxpayers and taxpayers age 60 or older to prepare and file their returns. For the VITA/TCE site nearest you, contact your local IRS office. For more information, see Preparing and filing your tax return under How To Get Tax Help.

AARP Tax-Aide.

 AARP Foundation Tax-Aide offers free tax preparation and has more than 5,000 locations in neighborhood libraries, malls, banks, community centers, and senior centers annually during the filing season. Visit AARP.org/TaxAide or call 888-OUR-AARP (888-687-2277) for more information.

For More Information from the IRS Website click here https://www.irs.gov/publications/p554



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