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Senior Citizen on Filing Taxes on Social Security

Courtesy/By: AYUSHI TYAGI | 2020-05-04 09:25     Views : 210

Senior Citizen on Filing Taxes on Social Security

OVERVIEW

The IRS requires the senior citizens to file a tax return when the gross income exceeds the sum of the standard deduction for their filing status and exemption amount. These filing rules apply to citizens whosoever has been living on Social Security benefits. If you are a senior, however, you don’t count your Social Security income as gross income but if Social Security is your sole source of income then there is no need to file a tax return.

When should seniors really must file?

For this tax year, you will have to file a return, if you are unmarried, above 65 years of age, and your gross income is $13,850 or exceeding it. However, you don't include this in gross income if you live on Social Security benefits. And if this is the only income you receive, then your gross income equals to zero and there is no need to file a federal income tax return. However, if you do earn other not tax-exempt income, then every year you have to determine whether the total income exceeds $13,850.

For prior tax years, the amounts are based on the standard deduction of that year including the exemption amount and filing status for your age. In 2018, only standard deductions are used as exemptions are removed from calculating the taxable income under the new law passed in 2017.

If you are married then file a joint return with the spouse who is also 65 or older, and you should file a return if the combined gross income is $27,000 or above.

If your spouse is below 65 years old, then the threshold amount decreases to $25,700. These income thresholds only apply to the specified tax year and increase slightly each year.

Social Security in gross income

There are specific situations where seniors are required to include their Social Security benefits in their gross income. If you’re married but you file for a separate tax return and live with your spouse at any given time during that year, then 85% of your Social Security benefits will be considered your gross income and you may require filing tax return. Adding to this, a portion of your Social Security benefits are included in your gross income, regardless of your filing status, in any year the sum of half your Social Security plus all other income, including interest which is exempted from tax, exceeds $25,000 or if you are married and filing jointly, it’s $32,000.

Tax credit

There are ways you can reduce the amount of tax you have to pay to some extent on your taxable income. As long as you are 65 years old and income from sources other than Social Security is not high enough, then the tax credit for the disabled or elderly can reduce your tax bill on every dollar basis. However, this tax credit is only comes handful when you owe tax to the IRS.

Courtesy/By: AYUSHI TYAGI | 2020-05-04 09:25