Senior Lounge
Find answers to common tax questions unique to seniors and retirees while learning more about the special tax benefits available to the elderly.
New Tax Return Version for Seniors
(Form 1040-SR)
In 2019, the IRS introduced a new version of the income tax form for individuals age 65 and older. The form is the same as the Form 1040 (U.S. Individual Income Tax Return), but it features larger font and an easy to read table that lists the various standard deduction amounts. These new features attempt to increase awareness of the higher standard deduction amount available to seniors age 65 and older.
Higher Standard Deduction
The normal standard deduction amount for an individual filing as single in 2020 is $12,400. However, there is a higher standard deduction amount for individuals who are 65 years of age and older, and for individuals who are blind. If you satisfy the age or blindness condition, then you may claim the higher standard deduction amount of $14,050. If you satisfy both the age and blindness conditions, then you may claim $15,700. Note also that the higher standard deduction amount varies based on your filing status and, if applicable, whether your spouse qualifies based on one or both conditions. For more information, see the FAQ on this topic below.
Required Minimum Distribution
& Retirement Accounts
Unfortunately, federal law does not allow you to keep retirement funds in your account indefinitely without taking any withdrawals from the account. The required minimum distribution (RMD) is the minimum amount you must withdraw from your retirement account each year to avoid penalties. For more information, see the FAQs below.
Social Security Benefits: Taxable?
Your social security benefits may be taxable if the total of one-half of your benefits, plus all of your other income (including tax-exempt interest) is greater than the base amount for your filing status. The base amount for your filing status is:
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$25,000 if you are single, head of household, or qualifying widow(er);
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$25,000 if you are married filing separately and lived apart from your spouse for the entire year;
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$32,000 if you are married filing jointly; or
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$0 if you are married filing separately and lived with your spouse at any time during the tax year.
Use the IRS's Interactive Tax Assistant tool to quickly determine whether your benefits are taxable. For more information, see the FAQ on this topic below.
Seniors: Frequently Asked Tax Questions
General
Social Security: I retired last year and started receiving social security payments. Do I have to pay taxes on my social security benefits?
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$25,000 if you are single, head of household, or qualifying widow(er);
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$25,000 if you are married filing separately and lived apart from your spouse for the entire year;
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$32,000 if you are married filing jointly; or
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$0 if you are married filing separately and lived with your spouse at any time during the tax year.
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Are My Social Security or Railroad Retirement Tier I Benefits Taxable? -
Instructions for Form 1040 (U.S. Individual Income Tax Return) -
IRS Publication 915 (Social Security and Equivalent Railroad Retirement Benefits)
My children receive social security survivor benefits, are these benefits considered taxable income?
It depends.
How long do I have to file a claim for a tax credit or refund?
Generally, you have either 3 years or 7 years, depending on your situation.
Do I need to file a separate return if a relative (or someone else) can claim me as a dependent on their tax return?
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Your unearned income was over $2,750 ($4,400 if 65 or older and blind); -
Your earned income was over $13,850 ($15,500 if 65 or older and blind); or -
Your gross income was more than the larger of: -
$2,750 ($4,400 if 65 or older and blind), or -
Your earned income (up to $11,850) plus $2,000 ($3,650 if 65 or older and blind).
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Your unearned income was over $2,400 ($3,700 if 65 or older and blind); -
Your earned income was over $13,500 ($14,800 if 65 or older and blind); -
Your gross income was at least $5 and your spouse files a separate return and itemizes deductions; or -
Your gross income was more than the larger of -
$2,400 ($3,700 if 65 or older and blind), or -
Your earned income (up to $11,850) plus $1,650 ($2,950 if 65 or older and blind).
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Pensions & Annuities: Do I have to pay tax on the pension or annuity income I receive?
Probably.
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You did not contribute anything or are not considered to have contributed anything for your pension or annuity; -
Your employer did not withhold contributions from your salary; or -
You received all of your contributions (your investment in the contract) tax-free in prior years.
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Distributions made as a part of a series of substantially equal periodic payments that begins after your separation from service; -
Distributions made because you are totally and permanently disabled; -
Distributions made on or after the death of the plan participant or contract holder; or -
Distributions made after your separation from service and in or after the year you reached age 55.
Higher Standard Deduction: Do I qualify for a different standard deduction amount if I am 65 years or older?
Yes.
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A married individual filing as married filing separately whose spouse itemizes deductions; -
An individual who was a nonresident alien or dual status alien during the year (see below for certain exceptions); -
An individual who files a return for a period of less than 12 months due to a change in his or her annual accounting period; or -
An estate or trust, common trust fund, or partnership.
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A nonresident alien who is married to a U.S. citizen or resident alien at the end of the tax year and makes a joint election with his or her spouse to be treated as a U.S. resident for the entire tax year; -
A nonresident alien at the beginning of the tax year who is a U.S. citizen or resident by the end of the tax year, is married to a U.S. citizen or resident at the end of such tax year, and makes a joint election with his or her spouse to be treated as a U.S. resident for the entire tax year; and -
Students and business apprentices who are residents of India and are eligible for benefits under paragraph 2 of Article 21 (Payments Received by Students and Apprentices) of the United States-India Income Tax Treaty.
Retirement
What does the term "required minimum distribution" mean? How do I know if it applies to me and my retirement account?
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For IRAs (including SEP and SIMPLE IRAs), the begnning date of your first RMD is: -
April 1 of the year following the calendar year in which you reach age 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020).
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For 401(k), profit-sharing, 403(b), or other defined contribution plan, the beginning date of your first RMD is: -
Generally, April 1 following the later of the calendar year in which you retire or reach age 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020).
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An April 1 withdrawal (for the year you turn 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020), and -
An additional withdrawal by December 31 (for the year following the year you turn 72 (or 70 ½ if you turned age 70 ½ prior to January 1, 2020)).
Credits
Credit for the Elderly or Disabled: Are there any tax credits available exclusively for the elderly?
Yes.
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You are a qualified individual; and -
Your income is below the threshold limit.
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You were age 65 or older at the end of 2019; or -
You were under age 65 or older at the end of 2019 and all three of the following conditions are true: -
You retired on permanent and total disability; -
You received taxable disability income for 2019; and -
On January 1, 2019, you had not reached mandatory retirement age.
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Single -
AGI must be equal to or less than $17,500 AND nontaxable SSPAD must be less than $5,000
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Married Filing Jointly (and one spouse is a qualified individual) -
AGI must be equal to or less than $20,000 AND nontaxable SSPAD must be less than $5,000
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Married Filing Jointly (and both spouses are qualified individuals) -
AGI must be equal to or less than $25,000 AND nontaxable SSPAD must be less than $7,500
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Married Filing Separately (and you lived apart from your spouse all year) -
AGI must be equal to or less than $17,500 AND nontaxable SSPAD must be less than $5,000
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Health Coverage Tax Credit: What is this and who qualifies?
The Health Coverage Tax Credit (HCTC) is a tax benefit that subsidizes the costs of private health insurance coverage for certain individuals. The credit equals 72.5% of the health insurance premium costs paid by an eligible individual. The HCTC was originally set to expire at the end of 2020, which resulted in all participants being removed from the HCTC Advantage Monthly Program. However, in December 2020, Congress extended the HCTC through the end of 2021.
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Filing Form 14095 (HCTC Reimbursement Request) once they've submitted a payment through the program for 2021; or -
Filing Form 8885 (Health Coverage Tax Credit) to claim reimbursement on their annual Federal income tax return.
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Filing Form 8885, Health Coverage Tax Credit, with their annual Federal tax return.
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Individuals eligible for Trade Adjustment Assistance (TAA) or Alternative TAA (ATAA/RTAA) allowances because of a qualifying job loss; and -
Individuals between 55 and 64 years of age whose defined-benefit pension plans were take over by the Pension Benefit Guaranty Corporation (PBGC). -
The Family member of one of these two eligible groups of individuals who is deceased or who finalized a divorce with the individual.
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You can be claimed as a dependent on another person’s federal income tax return; -
You are enrolled in Medicare, Medicaid, the Children’s Health Insurance Program, or the Federal Employees Health Benefits Program or are eligible to receive benefits under the U.S. military health system (TRICARE); or -
You are enrolled in an Affordable Care Act Marketplace insurance.
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Submitting a new Form 13441-A (Health Coverage Tax Credit Monthly Registration and Update); or -
Providing all required documentation including a copy of the health insurance bill reflecting their 2021 insurance rates.
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Mail to the address on the form; -
Fax to 855-250-1731 (include your HCTC PIN or last four of your SSN on each page you fax); or -
Email to wi.hctc.stakehldr.en@irs.gov (include a cover sheet with the date, your name, and either your HCTC PIN or last four of your SSN).