Not all seniors need to file a tax return, but others may incorrectly think they fall in this category – don’t make that mistake.
Retirement Tip of the Week: If you don’t plan to file a tax return this year, make sure you’re not required to do so. Failing to file leads to penalties.
Single seniors need to file a tax return if they’re at least 65 years old and have gross income of $14,250 or more, according to the Internal Revenue Service. For seniors who are married where both spouses are 65 or older, they must file a return if their gross income was at least $27,800, and for couples where only one spouse is 65 or older, that amount is $26,450. Qualifying widowers who are 65 or older must have gross income of at least $26,450 to file a return, and for heads of household, the threshold is $20,500.
Gross income includes any money that isn’t exempt from taxes. It is important to know what retirement income is taxable – for example, Social Security benefits may be taxable depending on your total income, and withdrawals from traditional IRAs are taxable whereas those from Roth IRAs are typically not (if distributions are qualified). Generally, retirees do not need to file a tax return if Social Security benefits are their sole source of retirement income, the IRS said.
If you’re still unsure, the IRS can help. The agency has a tool on its site for individuals to know if they need to file a tax return. It asks questions about filing status, gross income and federal income tax withheld.
There may be instances where retirees who don’t normally file a tax return might want to do so this year. Those who did not receive their third economic impact payment (also known as a stimulus check), for example, may want to file a tax return this year to receive the credit they’re owed, the IRS said.