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Tuesday, March 11, 2025

Tax Tips for Seniors

 



Haven't yet filed for 2024? We have the key numbers that taxpayers over 65 need to know. 


Here we find ourselves again, in the height of tax season. The good news is that when you or your spouse is over 65, and when you meet certain income requirements, the tax benefits start to pile up. Here are some of the key tax tips seniors should know this year, particularly those reporting low incomes. 

Your standard deduction increases.

If you don’t itemize your deductions, your standard deduction jumps up after 65. In 2024, the standard deductions for adults under 65 are:

  • Single: $14,600
  • Married Filing Jointly: $29,200
  • Head of Household: $21,900

For seniors, the additional standard deduction is $1,550 for unmarried seniors, and $1,950 for married seniors and qualifying widows or widowers.

Your filing threshold rises.

If your income is low, you may not need to file a tax return. The IRS defines “low income” differently for seniors. In 2024, a single adult under 65 should file a return if their gross income was over $13,850. Seniors have to file if their gross income was over $15,700. For married couples, those numbers are $27,700 and $29,200, respectively. Even if you don’t need to file a return, you may still want to. Be sure to consult a tax advisor on your particular situation (see below for resources).

You may be eligible for the Elderly or Disabled Tax Credit.

Taxpayers over 65 with low income should determine if they’re eligible for the Elderly or Disabled Tax Credit. In 2024, the income cutoff is $17,000 for single filers, $20,000 for married couples in which one person is over 65, and $25,000 when both spouses qualify. Use a Schedule R form to calculate whether the taxpayer qualifies and how much the credit will be–likely between $3,750 and $7,500.

You may or may not owe tax on your Social Security benefits.

According to the Social Security Administration (SSA), about 40% of people end up owing tax on their Social Security benefits. To do your own calculation, you’ll need to figure out your “combined income,” a figure that includes your adjusted gross income (AGI), plus nontaxable interest, plus 50% of your Social Security benefits. (Find that last number on the Social Security Benefit Statement, Form SSA-1099 or SSA-1042S, mailed to you by the SSA.)

If your combined income is less than $25,000 ($32,000 for a married couple), you won’t owe tax on your Social Security benefits. If your combined income is above that minimum but below $34,000 ($44,000 for a married couple), you might owe tax on 50% of your Social Security benefits. And if your combined income is greater than that threshold, you might owe tax on 80% of the benefits. 

To avoid paying this tax, look at the combined income formula, and talk with an advisor about whether or how you might lower two of the variables: nontaxable interest and AGI. You can look to reduce your taxable income without reducing your total income, for example by moving income-generating assets into an IRA. Just be sure you’re not negating the purpose by incurring a capital gains tax. According to Bankrate, other strategies are to reduce any business income by increasing business deductions, or minimize the taxable amount you’re drawing down from retirement accounts. Often, the math lands on the side of just paying the tax on Social Security income, if you owe it.

You might be able to minimize your Medicare Part B premium.

Medicare premiums for 2025 will depend on the income you reported on your taxes in 2023. Most people pay the standard premium, which in 2025 is $185/month. You’ll pay this amount if you’re an individual with a modified AGI of $106,000 or less, or $212,000 for a married couple. 

If your income jumped up in 2023 and has since dropped, you might be paying a premium above $185/month when your 2025 income doesn’t warrant the surcharge. If that’s the case for you, consider filing a “Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event” or IMRAA form with the SSA (not the IRS). Factors that might have lowered your current year income, and could therefore lower your Part B payment this year, include the death of a spouse, reducing work or stopping work, or having liquidated a retirement account in a previous year. 

For many seniors, $185/month is the valid premium based on their tax return, but it’s a lot to pay. Medicare offers Savings Programs including the Qualified Medicare Beneficiary (QMB) Program, the Specified Low-Income Medicare Beneficiary (SLMB) Program, the Qualified Individual (QP) Program, and the Qualified Disabled & Working Individual (QDWI) Program. 

Of course, all the tax tips you know and love still apply when you’re over 65, too, including charitable deductions and small business expenses. And in certain states, tax laws are advantageous to seniors–particularly in Florida, where you won’t pay state income, inheritance, or estate tax. 

Before April 15 rolls around, be sure to talk with a tax advisor to get the most out of your return. Low-income seniors are eligible for free tax assistance in person through the IRS’s Tax Counseling for the Elderly (TCE) program.




This article is not intended to be a substitute for professional financial advice from a qualified financial advisor.







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