Even after you retire, there will be situations in which you will be required to file income taxes at the end of the year. Whether or not you have to file will be determined by your income level for the previous year and a few other factors. By understanding how the IRS requires retirees to file, you'll be better prepared to manage your taxable retirement income.
When Do Single Seniors File?
For single seniors who only receive Social Security benefits, that income is not considered taxable. Even if you receive more than the $14,250 threshold for taxable income, you still won't have to file taxes. That changes if you receive any other taxable income within the year. If you do earn money from another source, your Social Security benefits will be calculated in addition to your taxable income. If that total exceeds the $14,250 threshold, you will be required to file.
When Do Married Seniors File?
Married seniors who file joint returns do not need to file if their combined taxable income is under $27,800. If one individual in the marriage is under 65 years of age, that taxable threshold drops to $26,450. For married couples, you won't have to include your Social Security benefits as income as long as you file jointly and don't earn additional income. However, if you have another source of income or file your returns separately, 85% of your Social Security benefits will be taxable. Additionally, you will be required to file if half of your Social Security benefits combined with all other sources of income exceeds $25,000 for individuals or $32,000 for joint filings.
Senior Tax Credits
If you do have to file, you can still reduce how much you're required to pay. For seniors who are over 65, there is a tax credit that reduces what you'll have to pay on each earned dollar. This tax credit applies to seniors who do not earn substantial income from sources other than their Social Security benefits.
If you're uncertain about how this information applies to your situation, you should contact your tax preparer or accountant. They can help you determine whether or not you are required to file. They can also answer any other tax questions you have, so you can better manage your money throughout the year.
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