There are a few specific things to keep in mind when filing taxes for seniors. First, you may be able to claim a higher standard deduction if you are over 65 years old. Additionally, you may be able to take advantage of certain tax credits and deductions available specifically to seniors.
Finally, be sure to plan and start gathering your tax documents well in advance of the filing deadline.
The U.S. Tax Return for Seniors is dubbed Form 1040-SR
If you are 65 or older, you have the option of using Form 1040-SR: U.S. Tax Return for Seniors rather than the standard Form 1040 when you file your taxes.
The IRS now uses Form 1040 and its equivalent form, the 1040-SR, regardless of whether or
not you itemize deductions. The Bipartisan Budget Act of 2018 introduced Form 1040-S and revised, simplified, and codified the form. That eliminated the 1040EZ, which was meant for simple tax situations, and the 1040A, which was confusingly similar to the old 1040.
What You Need to Know About Form 1040-SR
The redesign of the 1040-SR is meant to be more readable and highlight tax benefits tailored for seniors.
Seniors who do not itemize their deductions will benefit most from this change. A higher standard deduction is now available to those aged 65 or older who do not itemize their deductions. The new form 1040-SR also includes a chart that specifies the additional standard deduction amount for taxpayers who are 65 years old or older.
If at least age 65 by the end of 2020, taxpayers may add at least $1,300 to the basic deduction. The chart shown in Form 1040-SR is limited to combined deduction amounts according to filing status and other eligibility criteria.
Form 1040-EZ, as previously revised, only allowed the reporting of income from wages, salaries, and tips; however, the new Form 1040-SR provides for the reporting of money from a variety of other sources.
Who is eligible to use Form 1040-SR?
There are several distinctions between the old Form 1040-EZ and 1040-SR, outlined in detail below.
- You must be 65 or older by the end of the tax year for which you are filing to use 1040-SR.
- You don’t have to be retired.
- The amount of your overall income for a given year is unrestricted in Form 1040-SR.
- The IRS Form 1040-SR can be used to report a variety of sources of payment in addition to those allowed on Form 1040-EZ.
- You may also report Social Security benefits and distributions from qualified retirement plans, among other things.
- Form 1040-SR can be used to take the standard deduction or itemize deductions.
The introduction of Form 1040-SR and the revised Form 1040 are baby steps in the right direction for simplifying tax filing requirements.
If you have questions about filing your tax returns or need help preparing your tax documents, give us a call at The Oasis Firm.