One of the great things about retirement is that you don’t have to endure many of life’s hassles, such as struggling through rush hour traffic every day or putting up with a grumpy boss. Unfortunately, filing a tax return will stay on your list of things to do if you have enough retirement income. The IRS rules for retired people are similar to those affecting other taxpayers, but there are some things you should be aware of. Check IRS Publication 17 for current figures, as they are frequently updated.
If you turn 65 by December 31 and you are single, you have to file a federal tax return when your gross income reaches $10,750. For married taxpayers filing a joint return, the limit is $19,800 if one spouse is 65 and $20,900 if both are 65. If you are married and file a separate return, the limit at which you must file is $3,650. Qualifying widows or widowers with a dependent child have a limit of $15,150. Finally, if you can claim head of household, you don’t have to file until your gross income reaches $13,450.
Sometimes a retired individual age 65 or older is claimed as a dependent by a child or other family member. In that case, if you are single you must file when you have unearned income totaling $2,350 or earned income of $7,100. If you are married, the figures are $2,050 for unearned income and $6,800 for earned income. Add $1,400 if you are blind and single or $1,100 if you are blind and married.
You do not include Social Security benefits when you calculate your gross income to determine if you must file. If you have enough retirement income other than Social Security, some of your Social Security benefits may be taxable. The IRS says that you can determine if this is the case by adding half of your Social Security benefits to your total income, including tax-free interest and other excluded income. If you are single and the total is $25,000 or more, you must pay taxes on part of your Social Security benefits. If you are married, the limit is $32,000.
There are some situations in which you must file a tax return regardless of your age or amount of income. You have to file if you owe uncollected Social Security, Medicare, Alternative Minimum and certain other taxes. You also must file if you owe additional tax on a qualified plan, such as an IRA. Finally, you have to file if you have $400 or more in self-employment income or at least $108.28 in wages from church employment.