Are Senior Citizens Exempt From Filing Income Tax?

Many Americans mistakenly believe that they are no longer required to file income taxes once they reach retirement age. But whether or not a taxpayer is required to file a tax return is based on income as well as age. Even though seniors are not exempt from filing returns, it may be unnecessary to file if their income is below the limit set by the IRS.

Filing Requirements

Filing requirements for tax year 2009 are: You are required to file a return if you earn more than $9,350 if single, $12,000 if head of household, $18,700 if married filing jointly, $3,650 if married filing separately, and $15,050 if you are a qualifying widow or widower. Taxpayers over age 65 are allowed to earn more income before they are required to file taxes. Elderly taxpayers can earn $10,750 if single, $13,400 if head of household, $20,900 if married filing jointly, or $19,800 if only one spouse is 65 or older, and $16,150 if you are a qualifying widow or widower.

Considerations

Even if you do not meet the requirements to file an income tax return, it may be in your best interest to file if you had federal tax withheld from your income or you meet the qualifications for one of the IRS' refundable credits. For example, if you are eligible for the earned income credit, you should file a return because EIC, being a refundable credit, can reduce your tax below zero. This means that you could possibly receive a refund greater than the amount you paid in income tax during the year.

Filing

You can determine if you meet the filing requirements by comparing your total income to that of the IRS limits. Gather your W-2s and 1099s and calculate the total amount of your income for the tax year in question. If you determine that you are required to file a return, use IRS Form 1040 or 1040A . You cannot use IRS Form 1040EZ if you are including Social Security benefits on your return. Allow 10 days for processing electronically filed returns and six to eight weeks for mailed returns.

Penalties and Interest

If you are required to file an income tax return and fail to do so, the IRS may assess penalty and interest charges on any tax you owe. The failure-to-file penalty is 5 percent of the unpaid tax and the failure-to-pay penalty is one-half of 1 percent of the unpaid tax for each month the tax remains unpaid. The interest rate is based on the quarterly rate.

Warning

Social Security benefits can be taxable, depending on whether or not you earn income in addition to your monthly Social Security benefit amount. To determine if your Social Security benefits are taxable, complete Worksheet A in Publication 915. If, based on Worksheet A, you determine that your benefits are taxable, you will need to complete Worksheet 1, also found in IRS Publication 915.

References

• Internal Revenue Service: Seven Facts About Social Security Benefits
• Social Security Administration: Taxes and Your Social Security Benefits
• Internal Revenue Service: Do You Need to File a Federal Income Tax Return?
• Internal Revenue Service: Publication 915