Do Seniors Ever Stop Paying Taxes? (2024)

When you retire or reach a certain age, there might be certain things you no longer have to do. You might get to skip the commute or qualify for some great discounts. But no matter your age, you don’t get to opt out of taxes. It’s important to understand why seniors are still taxed, the common taxes seniors pay and how to minimize your tax bill.If you want individualized help preparing for retirement or creating a tax strategy, you can bring on a financial advisor.

At What Age Can You Stop Filing Taxes?

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. If you’re married filing jointly and only one of you is 65 or older, that amount is $29,200.

That said, there is one situation in which you can kiss taxes goodbye. If your only income is Social Security payments, you won’t owe taxes and you probably won’t need to file a tax return.

Common Taxes Seniors Pay

If you’re 65 or older, you might also be retired or partially retired and taking distributions from your retirement savings. Retirement savings and investments can have more complex tax rules than income, where you often get taxes deducted automatically from each paycheck and a W-2 at the end of each year. Here are some of the more common taxes retirees face and how they work.

Social Security Taxes

If you have significant retirement income other than Social Security, you might have to pay income tax on your Social Security benefits. The percentage of your Social Security benefits that are taxable depends on your combined income. Combined income is defined as your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.

If you file taxes separately and your combined income is $25,000-$34,000, you may owe income taxes on 50% of your Social Security benefits. If your combined income is higher than $34,000, up to 85% of your benefits may be taxed.

If you file a joint return and you and your partner’s combined income is $32,000-$44,000, you may owe income taxes on 50% of your Social Security benefits. If that number is more than $44,000, 85% of your benefits may be taxed.

Common Retirement Accounts

IRAs, 401(k) plans and other popular retirement savings vehicles have different tax treatments. Generally speaking, some are pre-taxed and some are taxed at withdrawal. For example, IRAs that are funded by money that was already taxed—say you take $1,000 from a paycheck and put it in a Roth IRA—won’t be taxed when you withdraw that money in retirement as long as you meet IRS requirements.

On the other hand, 401(k) plans are usually funded with pre-tax money, so you’ll usually owe income tax on withdrawals in the year that you take them.

Pension Taxes

Like 401(k) plans, pensions are usually funded by pre-tax money, so you’ll owe federal income taxes on withdrawals in the year you take them. If you take a lump-sum payment rather than annual or periodic payments, you will owe the total tax bill in the year you receive that payment.

In many cases, your employer through which you have the pension will withhold taxes as your pension payments are disbursed, which can help mitigate the tax bill.

How to Minimize Taxes as a Senior

While seniors don’t get to dodge taxes altogether, there are several ways for you to save on your taxes once you reach a certain age. Here are a few.

  • Take advantage of the tax credit for the elderly: The Credit for the Elderly and Disabled is worth between $3,750 and $7,500. You can use the IRS’s tool to see if you qualify and how large a credit you might get. Generally speaking, you have to be 65 or older and make less than $17,500 in adjusted gross income if you’re filing singly or as head of household—that limit rises to $20,000 if you’re married filing jointly and only one spouse is 65 or older and $25,000 if you’re married filing jointly and both 65 or older.
  • Use your bigger standard deduction: If you’re 65 or older and you don’t itemize deductions, you are entitled to a higher standard deduction. A single filer over 65 gets an extra $1,850 deduction, a couple filing jointly gets an extra $1,500 for each partner who is 65 or older. So if only one spouse is 65 or older, the extra deduction amount is $1,500, but if both are 65 or older, it’s $3,000.
  • People 50 or older can make “catch-up” contributions to their retirement accounts: The 2024 contribution limit for a traditional or Roth IRA is $7,000, up from $6,500 in 2023, but if you’re 50 or older you get an extra $1,000. The 2024 contribution limit for a 401(k) plan is $23,000, up from $22,500 in 2023 and those 50 and older get an extra $7,500, which remains the same in 2023. Contributing to a tax-deferred retirement account reduces the amount of income tax you owe—and sets you up for a more secure retirement.
  • You’re not alone:If navigating tax credits or understanding changing catch-up limits feels overwhelming, you don’t have to go it alone. Take advantage of free IRS tax assistance for those 60 and older or free AARP tax assistance for those 50 and older who have a low or moderate income.

Bottom Line

Unless you have no income outside of Social Security payments, you’ll probably have to keep filing taxes. The good news is that there are tax credits and other strategies you can use to help you keep that tax bill low. You may want to work with a financial advisor in order to make sure you have a clear tax strategy during retirement.

Tips for Saving on Taxes in Retirement

  • A financial advisor can help you build a retirement income plan. Finding a financial advisor doesn’t have to be hard.SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you canhave a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Use SmartAsset’s retirement calculator to make sure your retirement savings will carry you through—or learn how you need to adjust your saving strategy to make your plan work.
  • Taxes aren’t the only surprise expense in retirement—be sure to account for your Medicare costs as you plan out your retirement income too. Check out SmartAsset’s guide to Medicare Part A, Part B, Part C and Part D.

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Do Seniors Ever Stop Paying Taxes? (2024)

FAQs

Do Seniors Ever Stop Paying Taxes? ›

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.

Does a 70 year old pay taxes on Social Security? ›

Though there are some rumors on the internet that the government stops taxing Social Security payments once you reach a certain age, such as 70, this is simply not true. Social Security payments are taxable from the moment you start receiving them until you die.

At what age do you stop paying Social Security taxes? ›

The Bottom Line. When do you stop paying Social Security tax? As long as you're employed, the answer is almost always "never." But there are exceptions to every rule, and if one of those discussed above seems to apply to you, be sure to check it out. Social Security Administration.

How much money can a 70 year old make without paying taxes? ›

For retirees 65 and older, here's when you can stop filing taxes: Single retirees who earn less than $14,250. Married retirees filing jointly, who earn less than $26,450 if one spouse is 65 or older or who earn less than $27,800 if both spouses are age 65 or older. Married retirees filing separately who earn less than ...

How can senior citizens avoid taxes? ›

Seniors can earn more income than younger workers before submitting a tax return. People age 65 and older can earn a gross income of up to $15,700 before they are required to file a 2023 tax return, which is $1,850 more than younger workers.

Can I get a tax refund if my only income is Social Security? ›

You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.

How do you get the $16728 Social Security bonus? ›

Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.

Do you still pay Social Security tax after age 65? ›

Everyone working in covered employment or self-employment regardless of age or eligibility for benefits must pay Social Security taxes. However, there are narrow exceptions to paying Social Security taxes that apply at any age, such as an individual who qualifies for a religious exemption.

What is the 5 year rule for Social Security? ›

The Social Security five-year rule is the time period in which you can file for an expedited reinstatement after your Social Security disability benefits have been terminated completely due to work.

Why is it better to take Social Security at age 66 instead of 70? ›

If you start receiving benefits at age 66 you get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase. The chart below explains how delayed retirement affects your benefit.

Who is exempt to senior citizens from filing tax returns? ›

If the only income you receive is your Social Security benefits, then you typically don't have to file a federal income tax return.

Does Social Security count as income? ›

You report the taxable portion of your social security benefits on line 6b of Form 1040 or Form 1040-SR. Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.

Do I have to pay taxes on my Social Security if I'm still working? ›

You will pay federal income taxes on your benefits if your combined income (50% of your benefit amount plus any other earned income) exceeds $25,000/year filing individually or $32,000/year filing jointly. You can pay the IRS directly or have taxes withheld from your payment.

Does IRS go after senior citizens? ›

Although it is rarely done, the IRS can garnish 15% of a senior's social security for past due income taxes. The IRS will almost never garnish pensions and other retirement income. Garnishment of 15% of social security will never happen without the senior being first notified.

What state does not tax seniors? ›

Alaska, Florida, Nevada, New Hampshire*, South Dakota, Tennessee, Texas, Washington, and Wyoming do not tax income.

What tax breaks do you get when you turn 65? ›

Increased Standard Deduction

Basically, it is money that you do not have to pay taxes on. In the tax year you reach age 65, you get an increase in the standard deduction, which results in lower taxes. The amount of the increase depends on your tax filing status.

At what age can I earn unlimited income while on Social Security? ›

How much can you earn and still get benefits? later, then your full retirement age for retirement insurance benefits is 67. If you work, and are at full retirement age or older, you may keep all of your benefits, no matter how much you earn.

How do I figure how much of my Social Security is taxable? ›

You report the taxable portion of your social security benefits on line 6b of Form 1040 or Form 1040-SR. Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.

What is the average Social Security check for a 70 year old? ›

The average monthly Social Security benefit for retired workers is about $1,298 at age 62 and $2,038 at age 70. Workers born in 1960 or later can increase their retirement benefit 77% by claiming Social Security at age 70 rather than age 62.

What is the maximum Social Security benefit at age 70? ›

Q: What's the Biggest Possible Social Security Check a Retiree Can Receive? A: For 2024, it's $4,873 per month1 if you retire at age 70—far more than the national average of $1,907. But very few people qualify for the maximum benefit.

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