The government implements the age 65 and older tax exemption policy through higher standard deductions and tax credits, as noted on the IRS.gov website. In addition, some Social Security benefits are nontaxable.Continue Reading
Social Security benefits are nontaxable if half of the benefits plus other income is lower than $25,000 per year for singles and $32,000 for married couples, notes DailyFinance.com. If income levels lie between $25,000 and $34,000 for singles and $32,000 and $44,000 for married couples, only 50 percent of benefits are taxable. People or couples who earn income figures exceeding these ranges can have up to 85 percent of the Social Security benefits taxed.
Different states have different tax laws regarding Social Security benefits for seniors. Some states do not charge state taxes on Social Security benefits, whereas others partially tax benefits. Seniors can find free resources and assistance on state and federal guidelines through the IRS or groups, such as AARP.
The standard tax deduction is higher for people age 65 and older than it is for younger people. Seniors should be sure not to itemize their deductions as this usually results in a higher deduction. Standard deductions for seniors are $7,750 for single people and $14,800 for couples, which is significantly lower than the standard deduction figures for younger taxpayers.
Taxpayers age 65 and older may be eligible for the Credit for the Elderly or Disabled when they file their taxes using For 1040 or Form 1040A. To be eligible for the credit, they must have an income lower than $17,500 for singles or $25,000 for couples and the nontaxable portion of their Social Security benefits must not exceed $5,000 for singles or $7,500 for couples.Learn more about Income Tax