At What Age Do You Stop Filing Taxes?

Summary:

As taxes are based on your income and not your age, you are never too old to file taxes. However, seniors who live only on Social Security benefits do not have to file a return or pay federal income taxes. If a senior or retiree collects income other than Social Security, then there is a particular calculation used to measure what qualifies as gross taxable income under IRS guidelines.

We’ve all heard the line about how only two things are certain in life: death and taxes. By law, we have no choice but to pay our share. As taxes can be a pain to file, you might wonder if there is an age when you will stop owing taxes. Unfortunately, the answer is no age, as the taxes you owe are based on your income and not your age. Even if people were immortal, they would still be on the hook with the IRS if they made enough money. But some seniors and retirees with certain income levels won’t have to pay taxes. The IRS looks at a combination of factors, such as Social Security, additional non-exempt income, and some exempt income, to determine if your income is high enough to warrant taxation.

Combined gross income and taxes on seniors

Fortunately, some seniors don’t have to file a federal income tax return. When the IRS looks at your taxable income, they look at what they deem “gross income.” Combined gross income and adjusted gross income include your wages, dividends, capital gains, business income, retirement distributions as well as other income. Income that is deemed tax-exempt by the IRS is not fully included in the gross income calculation. The IRS has special provisions and methodology related to how it taxes senior citizens and those over age 65.

The standard deduction for people age 65+

Most people know about the standard deduction that everyone receives when filing their taxes with the IRS. What they might not know, however, is that the standard deduction is even greater for people aged 65+. Below are the standard deductions for seniors (for tax year 2023) and how they compare to the general standard deduction.

Type of filerStandardAge 65+
Single filer$13,850$15,350
Joint filer$27,700$29,550

If a senior aged 65+ makes less than $15,350 (for a single filer) or $27,700 (for joint filers), then they don’t have to pay federal income taxes or even file a return. In fact, if their only income is Social Security, even if they are below the age 65+ standard deduction threshold, they still do not need to file a return.

Pro Tip

The IRS has a further standard deduction for those who are blind. The Revenue Act of 1943 created tax breaks for blind people, allowing them a greater standard deduction. If you are both 65+ and blind, your standard deduction could be even greater than what’s listed above.

Social Security + other income

If a senior’s gross income consists of Social Security plus other income sources and amounts to more than $25,000, they are liable for taxes. There is actually an equation for this that we break down below.

Gross income > $25,000 or

(Social Security income x .5) + (tax-exempt interest and dividends) > $25,000

If this equation comes out to more than $25,000, then you will need to pay taxes on your income, including Social Security benefits. However, the IRS taxes Social Security benefits differently, depending on the amount of your gross income.

Individuals

If you are filing as an individual and your income is between $25,000-$34,000, then 50% of your Social Security benefits are taxed. If your income exceeds the $34,000 income threshold, then 85% of your Social Security benefits are taxed.

Married filing jointly

If your filing status is married filing jointly, and your income ranges from $32,000 to $44,000, 50% of your benefits are taxed. However, if your income is above $44,000, then 85% of your benefits are taxed.

Paula’s example

To illustrate how this works, we will use the example of 71-year-old Paula. Paula receives Social Security, in addition to a bit of income from her side work as a book editor, and interest from her Roth 401(k). Let’s break it down.

Social Security: $40,000
Editing job: $24,000
Roth 401(k) interest + dividend: $10,000
Total: $74,000

So what does this look like when we put it into the above equation?

$20,000 (Social Security x .5) + $24,000 + $10,000 = $54,000

So as you can see, Paula must file and pay taxes on this income as it’s greater than the $25,000 threshold. Furthermore, because her income is greater than $44,000, she needs to pay tax on 85% of her Social Security benefits. Remember, however, that although her tax-exempt interest was used to calculate whether or not she had to pay taxes, it doesn’t need to be taxed because of its tax-exempt designation.

Here is how Paula’s taxable income would be calculated.

Social Security: $34,000 ($40,000 x .85)
Editing job: $24,000
Total: $58,000
Subtract standard deduction of $15,350
Total taxable income: $42,650

You can see that 85% of Paula’s Social Security benefits are taxed, her tax-exempt interest is left out, and her side job has been included in full. We then subtract her standard deduction, and Paula is liable to pay taxes on $42,650 of income.

Additional tax credit for seniors

The IRS also gives certain tax credits for seniors and the disabled. To qualify, the IRS states:

  1. You must have been permanently and totally disabled before you retired.
  2. You must receive taxable disability income during the year.
  3. You must be younger than your employer’s mandatory retirement age before the beginning of the tax year.

The best way to plan for retirement is to work with a financial advisor who can structure your retirement to get the best return and tax benefits. Below are some options.

FAQ

At what age can you stop having to file taxes?

There is no age limit, as taxes are based on your income, not your age. However, for those who are 65+ and are living on Social Security benefits, your taxable income is calculated differently and you may have a lower tax burden.

Does an 80-year-old have to file a tax return?

If they live only on Social Security benefits, then no. If they have other income, and the combined income exceeds $25,000, they do.

Who is exempt from filing a tax return?

If your only income is from Social Security benefits or it is below the standard deduction threshold, you do not need to file a tax return. However, you may want to file a return just in case you are due a refund.

 

Key takeaways

  • As the taxes you owe are based on your income and not your age, you are never too old to file and pay federal taxes.
  • Seniors living only on Social Security benefits or living on an income below the standard deductions for seniors 65+ do not have to file or pay income tax returns.
  • Single filers whose combined gross income ranges from $25,000-$34,000 need to pay tax on 50% of their Social Security benefits. Above $34,000, they need to pay tax on 85% of their Social Security benefits. This is calculated along with other variables and deductions to determine taxable income.
  • Joint filers whose combined gross income ranges from $32,000-44,000 need to pay tax on 50% of their Social Security benefits. Above $44,000, they must pay tax on 85% of their Social Security benefits. This is calculated along with other variables and deductions to determine taxable income.
View Article Sources
  1. Must I pay taxes on Social Security benefits? – Social Security Administration
  2. Taxability of Social Security Benefits – IRS.gov
  3. IRS Provides Tax Inflation Adjustments for Tax Year 2023 – IRS.gov
  4. IRS Provides Tax Inflation Adjustments for Tax Year 2023 – IRS.gov
  5. 7 Tax Relief Options for Seniors – SuperMoney
  6. IRS Notice 703: Social Security Income Form – SuperMoney