Tax Forgiveness and Relief for Seniors
- Seniors age 65 or older may qualify for several tax benefits provided by the IRS. Find out about tax relief and forgiveness options for seniors in this article from Health Advisor.
Seniors and retirees who are age 65 or older benefit from several tax breaks that are only available through retirement. Tax breaks, deductions and exemptions are just a few of the benefits seniors may qualify for. Find out more about tax forgiveness and relief for seniors.
Tax Forgiveness for Seniors
Tax forgiveness for seniors might imply that seniors don't have to pay taxes at all, but this is typically not the case. While Social Security income is not taxed under a certain threshold, some forms of additional income may be taxed, such as retirement income from an IRA. Find out whether your benefits are taxable on the IRS website.
Tax Breaks and Relief for Seniors
If you collect income from sources other than Social Security, such as from a part-time job, retirement account or pension, these forms of income are generally taxed. However, the IRS also offers several tax benefits for seniors to help them keep more of their income.
Larger Standard Deduction
When you turn 65, the IRS lets you take an additional standard deduction when filing your taxes. For tax year 2020, if you're 65 or older, you can take an additional $1,650 deduction off your taxes if you're filing as a single person or head of household. If you're married and filing a joint return, you can add $1,300 for your spouse as long as they're age 65 or older.
Higher Tax Filing Threshold
In 2020, single filing taxpayers are required to file taxes when they've earned $12,400 — this is also the amount of the typical standard deduction. But if you're 65 or older, you can earn up to $14,050, which is the standard deduction plus the extra $1,650. The amounts are even higher if you're married and filing jointly:
- If only one spouse is age 65 or older, the threshold is $26,100.
- If both spouses are age 65 or older, the threshold is $27,400.
Social Security Taxable Income
Whether your Social Security income is taxed depends on your individual financial circumstances and how much you earn from other sources. The IRS has an online tool to help you determine if your Social Security income is taxed, and, if it is, how much of your income you can expect to be taxed on.
Credit for the Elderly or Disabled
The IRS's Tax Credit for the Elderly or Disabled provides tax relief for seniors who may otherwise end up owing the IRS. The tax credit could be between $3,750 and $7,500 and depends on a number of factors, such as your adjusted gross income, Social Security benefits and other income you collect, such as pensions or annuities.
The IRS provides a tool that lets you check whether or not you qualify for this tax credit.
As with any matter related to finances and taxes, it's a good idea to consult the services of a professional tax advisor or financial planner if you're not sure about the deductions you qualify for.