Lifestyle • June 9th, 2020

Tips for filing taxes when you're over 65

Gail Kellner

Key Takeaways
  • You might not need to file taxes at all if Social Security was your only source of income.
  • Claim the elderly or disabled tax credit if you can.
  • Don’t forget to take required minimum distributions from your IRA (or face penalties).

Seniors over 65 are entitled to several tax breaks and tax credits in 2020. The deadline to file your taxes has been extended to July 15th, 2020. If you haven’t filed yet, there’s still time. You’ll need to gather up your documents and read on.

Determine if you need to file

If Social Security was your only source of income in 2019, you probably don’t owe taxes. However, if you received income from other sources, you’ll need to add one-half of your Social Security income to any other income, including tax-exempt interest. Compare this amount to the base amount. If this amount is more than the base amount, then some of your benefits are taxable.

These are the standard deductions for seniors for 2020 (tax year 2019):

  • $25,000 if you are single, head of household, qualifying widow or widower with a dependent child or married filing separately if you lived apart from your spouse
  • $32,000 if you are married filing jointly
  • $0 if you are married filing separately and you lived with your spouse at any time during the year

For 2020, the IRS has a tax form just for seniors, Form 1040 SR, or “U.S. Tax Return for Seniors.” It makes things simpler, and the print is bigger. It’s similar to the old form 1040EZ. To use form 1040 SR, you must have turned 65 or older by December 31, 2019.

Utilize the elderly or disabled tax credit

You may also qualify for the elderly or disabled tax credit. This is an extra deduction you can claim if you are a senior over 65 or disabled. You qualify if you are:

  • aged 65 or older OR retired on permanent and total disability AND received taxable disability income for the tax year; AND
  • with an adjusted gross income OR the total of nontaxable Social Security, pensions annuities or disability income under specific limits.

The credit ranges between $3,750 and $7,500. In addition, you must meet certain income requirements:

IF your filing status is...Then, even if you qualify, you can’t take the credit if...
Your adjusted gross income is equal to or more than...OR the total amount of your non-taxable social security and other non-taxable pension(s), annuities or disability income is equal to or more than...
Single, head of household, or qualifying widow (er)$17,500$5,000
Married filing jointly and only one spouse qualifies in Figure A$20,000$5,000
Married filing jointly and both spouses qualify in Figure A$25,000$7,500
Married, filing separately and you lived apart from your spouse for all of 2019$12,500$3,750

You can claim this credit on Schedule R, Credit for the Elderly or the Disabled.

A special rule for deducting medical expenses

For 2019, anyone can deduct medical expenses that totaled more than 7.5% of their adjusted gross income (this will increase to 10% for 2020).

What expenses can you deduct?

  • Preventative care
  • Surgeries
  • Treatments
  • Dental
  • Vision
  • Psychiatrists and Psychologists
  • Qualified long-term care

You can even deduct the costs of travel for medical care.

What can’t you deduct? You can’t claim any medical expense that you were reimbursed for already. You also can’t deduct the costs of over-the-counter drugs or anything that could be considered cosmetic, such as teeth whitening.

Required Minimum Distributions from retirement accounts

Due to changes in the laws, if your 70th birthday is July 1st 2019 or later, you don’t have to take required minimum distributions (RMD) from your traditional retirement accounts, such as IRAs and 401(k)s, until you turn 72.

Your RMDs must be withdrawn every year by December 31st. Don’t forget to take them, because if you do, the IRS will impose a 50% penalty on the amount not distributed as required. Make sure you know about every retirement account you have.

Use free IRS tax return preparation resources

Due to Covid-19, the IRS is not able to offer live telephone tax help as of April 2020 (in normal circumstances, they can provide help over the phone).

The IRS offers Volunteer Income Tax Assistance (VITA) programs. These offer help to those who make $56,000 a year or less, people with disabilities or those who speak limited English. They are often found in community centers, libraries, shopping malls and other places that are convenient to access.

Tax Counseling for the Elderly (TCE) is another government program that offers free assistance to anyone, particularly anyone over 60. However, due to the pandemic, all TCE centers and some (but not all) of the Volunteer Income Tax Assistance centers have closed. Find the closest VITA center. They also offer help online at irs.gov.

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Author

Gail Kellner

Gail Kellner lives with her husband, two sons, and various fur-children. She writes about personal finance and insurance mostly, with a little bit of parenting thrown in. She also writes YA Fantasy fiction in her spare time, and her first YA novel will be published later this year.