Senior discounts are commonplace in restaurants, but there's one for taxes too. It's called the extra standard deduction, exclusively for people who are 65 years and older by the end of the tax year.
Everyone knows about the standard deduction, which is a flat dollar amount determined by the IRS that lowers your taxable income without having to itemize deductions like mortgage interest and charitable donations. That one is available to everyone, but older adults get an additional one on top of the standard deduction.
A larger overall deduction for older adults further reduces their taxable income, and that means a smaller tax bill and more money in your pocket.
Taxpayers who are 65 years or older.Theamount of the additional standard deductionvaries depending on filing status; whether you or your spouse is at least 65 years old;and whether you or your spouse is blind.
For tax year 2023, you're considered 65 if you were born before Jan. 2, 1959, the IRS said. If you or your spouse were also legally blind by year's end or have a doctor's note explaining why you should be considered blind, you can claim an even larger additional deduction. You also can’t be claimed as a dependent or itemize your taxes, among other things.
People who are blind and under 65 receive the additional standard deduction, not the larger one.
How much is the additional standard deduction?
For tax year 2023, the additional standard deduction amounts for taxpayers who are 65 and older or blind are:
$1,850 for single or head of household
$1,500 for married taxpayers (per qualifying person) or qualifying surviving spouse(a married couple of two 65+ adults would take a total deduction of $27,700 (standard deduction) + $1,500 for one 65+ adult + $1,500 for second 65+ adult = $30,700)
If you are 65 or older and blind, the extra standard deduction is:
$3,700 if you are single or filing as head of household
$3,000 per qualifying individual if you are married, filing jointly or separately
The above amounts are in addition to the regular standard deductions of:
$13,850 if single or married filing separately
$20,800 ifhead of household
$27,700 ifmarried filing jointly or qualifying surviving spouse
Should I itemize or take the standard deduction?
Nearly 90% of Americans take the standard deduction, IRS data from tax year 2020 show.
However, whether you should itemize or not depends on whether the total of your itemized deductionstops your standard deduction or whether you must itemize deductions because you can't use the standard deduction, the IRS says.
Hints to whether you may benefit from itemizing, without doingdetailed calculations, could lie in whether youhad a major life event like buying or selling a home; incurred significant medical expenses; or made sizable donations.
How much is the additional standard deduction? For tax year 2023, the additional standard deduction amounts for taxpayers who are 65 and older or blind are: $1,850 for single or head of household.
Note: If you are at least 65 years old or blind, you can claim an additional 2023 standard deduction of $1,850 (also $1,850 if using the single or head of household filing status).
Additional standard deduction – You're allowed an additional deduction if you're age 65 or older at the end of the tax year. You're considered to be 65 on the day before your 65th birthday (for tax year 2023, you're considered to be 65 if you were born before January 2, 1959).
If another taxpayer can claim you as a dependent, your standard deduction is limited. For 2023, the standard deduction for dependents is limited to the greater of $1,250 or your earned income plus $400—but the total can't be more than the normal standard deduction available for your filing status.
The standard deduction for 2023 is: $13,850 for single or married filing separately. $27,700 for married couples filing jointly or qualifying surviving spouse. $20,800 for head of household.
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
A portion of the Child Tax Credit is refundable for 2023. This portion is called the Additional Child Tax Credit (ACTC). For 2023, up to $1,600 per child may be refundable.
Taxes aren't determined by age, so you will never age out of paying taxes. Basically, if you're 65 or older, you have to file a return for tax year 2023 (which is due in 2024) if your gross income is $15,700 or higher. If you're married filing jointly and both 65 or older, that amount is $30,700.
Health insurance premiums are deductible if you itemize your tax return. Whether you can deduct health insurance premiums from your tax return also depends on when and how you pay your premiums: If you pay for health insurance before taxes are taken out of your check, you can't deduct your health insurance premiums.
To qualify for the Senior Tax Credit, you must be 65 years of age or older by the end of the tax year. If they are younger, you must: Be a retiree on permanent and total disability.
The person must have less than $4,700 in taxable income (for 2023). Social Security benefits and other tax-free income don't count for this purpose, but interest, dividends, and taxable pensions do. You must provide over half of their support.
The maximum credit amount is $500 for each dependent who meets certain conditions. This credit can be claimed for: Dependents of any age, including those who are age 18 or older.Dependents who have Social Security numbers or Individual Taxpayer Identification numbers.
Key Takeaways. The Child Tax Credit is up to $2,000. The Credit for Other Dependents is worth up to $500. The IRS defines a dependent as a qualifying child (under age 19 or under 24 if a full-time student, or any age if permanently and totally disabled) or a qualifying relative.
For 2023, the additional standard deduction amounts for taxpayers who are 65 and older or blind are: $1,850 for Single or Head of Household (increase of $100)$1,500 for married taxpayers or Qualifying Surviving Spouse (increase of $100)
This means, to claim the EIC without a qualifying child in 2023, you must be at least age 25 but under age 65 at the end of 2023. If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2023.
How do I get a 10,000 tax refund? You could end up with a $10,000 tax refund if you've paid significantly more tax payments than you owe at the end of the year.
For 2023, the maximum limit on earnings for withholding of Social Security (old-age, survivors, and disability insurance) tax is $160,200.00. The Social Security tax rate remains at 6.2 percent.
The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2022. There is no wage base limit for Medicare tax. Social security and Medicare taxes apply to the wages of household workers you pay $2,600 or more in cash wages in 2023.
Looking to the new year, the 2023 IRS standard deduction for seniors is $13,850 for those filing single or married filing separately, $27,700 for qualifying widows or married filing jointly, and $20,800 for a head of household.
Health insurance premiums can be tax deductible when you retire, but it depends on several factors such as your age, the type of health insurance plan that you have and whether you are self-employed or not.
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