Do seniors have to file federal taxes?
For tax year 2020, for which the deadline to file in 15 April 2021, many seniors over the age of 65 do not have to file a tax return. If Social Security is your sole source of income, then you don't need to file a tax return, says Turbo Tax.
The exceptions to this are as follows, if you are over 65 and…
- you are unmarried and your gross income is $14,050 or more - social security is not included in income
- you are married, filing jointly and your combined gross income is $27,400 or more - social security is not included in income.
- if your spouse is under 65 years old, then the threshold amount decreases to $26,100
If any of the above apply to you, then you do need to file a tax return.
If you’re a senior and do need to file a tax return, Turbo Tax advise that there are ways you can reduce the amount of tax you have to pay on your taxable income.
#FYI - Senior Citizen's - Social Security / Federal Benefits - Find out if you missed any first- or second-round economic stimulus payments and how to get a rebate credit when you file your federal income tax form. - //t.co/BT80btDOh7
— Smith A D (@and3435) February 15, 2021
As long as you are at least 65 years old and your income from sources other than Social Security is not high, then the tax credit for the elderly or disabled can reduce your tax bill.
What is "IRS Free File?"
The IRS Free File Program provides two ways for taxpayers to prepare and file their federal income tax online for free:
Traditional IRS Free File provides free online tax preparation and filing options on IRS partner sites. IRS partners are online tax preparation companies that develop and deliver this service at no cost to qualifying taxpayers. Please note, only taxpayers whose Adjusted Gross Income (or AGI) is $72,000 or less qualify for any IRS Free File partner offers.
Free File Fillable Forms are electronic federal tax forms you can fill out and file online for free. If you choose this option, you should know how to prepare your own tax return. Please note, it is the only IRS Free File option available for taxpayers whose AGI is greater than $72,000.
Required documentation to file your tax return
Personal information
- A copy of last year's tax return in order to access your Adjusted Gross Income (AGI)
- Valid Social Security numbers for yourself, your spouse, and any dependent, if applicable
Proving your AGI: income and receipts
- Social Security benefits documentation
- Unemployment Compensation documentation
- All receipts pertaining to your small business, if applicable
- Income receipts from rental, real estate, royalties, partnerships, S corporation, trusts
Senior citizens who are 60 years and above do not have to pay income tax if their income is less than Rs 3 lakh per annum. Individuals who are of the age of 80 years and above are liable to pay income tax if their income exceeds Rs 5 lakh.
It’s that time of the year again when you need to gear up for endless calculations, documentation and trips to the accountant – The Income Tax Returns filing season. One may reasonably wonder, till when does the return needs filing? Is there a specific age when you can stop filing income tax returns? We answer all this and more in this post.
Who needs to file ITR and till what age?
- Tax filing, independent of age – An income tax return is compulsory for all residents earning beyond a prescribed threshold. Based on the financial year 2019-20, if your gross total income (excluding deductions) exceeds the basic exemption limit of ₹2.5 lacs worth of income, above which tax is charged, you need to file ITR. While income till ₹5 lacs per annum becomes tax-free, a return would still need to be filed if the income is between Rs.2 – 5 lacs. These returns have to be filed online, however, the department allows senior citizens aged above 80 to file paper returns.
- New expenditure conditions introduced – There are several other conditions introduced by the Budget 2020, such as paying an electricity bill exceeding 1 lacs a year, or incurring expenditure exceeding 2 lac rupees on a foreign holiday, or withdrawing more than 1 crore from one’s bank account.
Thus, regardless of the age, if the earnings or expenditure or gains from selling an asset are beyond the government prescribed threshold, a tax return needs to be filed.
don’t forget to file your itr now
Erroneous beliefs about ITR filing
- A minor doesn’t need to file returns: True, in most cases as minors aren’t employed and do not earn a taxable income. However, in several cases, such as where a minor may be a child artist, earning on his or her own account based on his or her own talent, the tax will have to be paid in their own name.
- Interest income for minors is not taxable: Even if you open savings or fixed deposits as a parent in the name of your child, the earning from the same is taxable. Moreover, this income will be clubbed in the income of the parent with higher income.
- No need for a return if your employer deducts tax via Form 16: Even in case your employer deducts tax at source and issues Form 16, you’d still have to file a return in your name. This is necessary to ensure that the returns tally and that the tax paid is accurate. You can claim a refund in case excess tax has been deducted.
- Tax returns are dependent only on income or gains: This is untrue. Irrespective of your salary, if you want to claim a tax refund or want to carry forward a loss, filing ITR is mandatory. Further, this financial year onwards, a high expenditure on electricity or foreign holiday would also attract tax.