americans delay retirement

Federal tax filing

Although, there may be some associated downsides to aging there can also be some associated upsides as well such as, no longer having to file a federal tax return. This feeling is new to those who have been filling returns for the past 50 or 60 years. Many times individuals are not expecting to learn that they are now suddenly off the hook when it comes to filing federal tax returns this year. So exactly who is no longer responsible for filing? Most retired individuals whose only source of income is derived from social security are typically no longer responsible for filling federal taxes as they are not taxable. Additionally, even individuals with an additional taxable source of income while also on social security, may still be exempt.

Limited taxation

The nature of limited taxation on social security combined with other retirement incomes can help many seniors reach a tax free status at the end of the year. If you are retired and your only source of income is social security you will likely not have to file a tax return. Additionally, even individuals with taxables incomes streaming from their 401(k)s or IRAs can be exempt from tax liability when you consider their standard deductions. All taxpayers 65 and over also get an additional standard deduction minimizing their tax liabilities even further. Married individuals filing jointly are exempt given their combined social security incomes fall below $32k. This means that individuals could have combined incomes of 31k in social security as well as 31k from their Roth IRA and still owe no taxes.

When seniors must file

If however, your gross income does exceed the amount of your standard deduction and one exemption amount, you will still be responsible for your federal tax filing. Keep in mind that social security is not calculated as part of gross income for seniors. You are also responsible for filing this year in the case that, you are 65 or over and unmarried with a taxable gross income of over $13,850 ( gross income excludes social security and tax exempt retirement funds). In some cases you must include 85% of your social security in your gross income in the event that you are married but filing separate while living together at any point that year. Another situation to include social security in gross income is when half of the sum of your social security combined with all other income exceeds $25,00(single) or $32,000 (jointly).

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