Tax Guide for Seniors: How to Know If You Need to File Taxes
As another tax season starts to pick up, the IRS will process over 140 million individual tax returns this year. While taxes have always been a part of everyday life, not every person who received income last year has to file a federal income tax return. There are many factors that affect whether one has to file, including how much is earned, sources of income, filing status, and age.
Minimum Requirements for Filing
In order to make deciding easier, the IRS provides a number of resources that can help anyone determine whether they need to file. A full, in-depth chart can be found online, but generally you must file a return according to these guidelines:
- Single individual, under age 65, with a gross income of $10,350 or more
- Single individual, 65 or older, with a gross income of $11,900 or more
- Married Filing Jointly, under 65 (both spouses), with a gross income of $20,700 or more
- Married Filing Jointly, 65 or older (one spouse), with a gross income of $21,950 or more
- Married Filing Jointly, 65 or older (both spouses), with a gross income of $23,200 or more
- Married Filing Separately, any age, with a gross income of $4,050 or more
The above is just a snapshot of the most common filing status, age, and gross incomes. Gross income includes salaries/wages, rents, capital gains, investment returns, pension, alimony, and any other monetary gains that are untaxed. However, there are many other situations that can also affect your filing status. You may have to file taxes for other reasons, especially if you’re self-employed or receiving income via investments, rental income, etc.
The Benefits of Filing Taxes
Aside from protecting your assets, filing a tax return offers a number of benefits.
- Seniors are afforded numerous tax deductions and credits that could lead to a larger return. For example, seniors are eligible for a higher standard deduction when they choose not to itemize individual deductions.
- Seniors that are vision-impaired qualify for an even larger standard deduction.
- Those over the age of 65 may also qualify for additional tax credits due to age, healthcare costs, number of dependents, and more.
Tax Credits and Deductions
Surprisingly, some seniors may not have to file a federal income tax return this year. Between deductions and tax credits, many seniors find themselves amazed with their returns.
- Credit for the Elderly and the Disabled – Many qualify, including seniors over the age of 65 and those with disabilities.
- The Health Coverage Tax Credit – This credit covers up to 72.5% of health insurance premiums for those who qualify.
- Medical expenses – The cost of medical and dental services for you, your spouse, and dependents/qualifying relatives may also be deducted.
- The American Opportunity Credit – Helps cover any educational expenses, such as college tuition or continuing education courses
- The Retirement Savings Contributions Credit – Allows you to deduct a percentage of your IRA contributions, depending
Although there is a lot of information and exemptions, knowing what you qualify will depend on a tax professional. Seniors may also deduct business expenses, home improvement costs, nursing home expenses, and much more.
Social Security Exemptions
Many seniors find themselves wondering whether their social security benefits are considered taxable income. Typically, monthly retirement, survivor benefits, and disability benefits are not taxable. However, a portion of your social security benefits may count as income, if:
- You are married, living with your spouse, and filing separately; this rule applies regardless of age.
- One-half of your social security benefits, plus your other gross income, is more than $25,000 or $32,000 if you’re married and filing jointly.
It can be difficult to know which tax exemptions apply. Gross income includes all wages, IRA distributions, pension payments, interest earnings, and investment returns. Seniors filing jointly must combine both gross incomes and both social security benefits.
Truthfully, retirement offers seniors a number of important tax benefits. Seniors qualify for deductions on real estate taxes, healthcare, and even childcare for your grandchildren. Consider a professional tax assistance service to ensure you get the maximum number of credits and deductions. The IRS sponsors free tax assistance services to seniors, leaving you with few excuses not to file!
About the Author: Victoria K. Stickley is a copywriter, editor, and senior content manager based in the Dallas area. Her graduate education in counseling and research has helped immensely in her writing as well as the care she provides for her grandparents. She currently provides support and resources to senior care websites as she learns and experiences senior care first-hand.