Seniors and Tax Returns

Dear Savvy Senior,
What are the 2005 limits where seniors don’t have to file a federal tax return? I manage a senior citizens center and many of our retirees live on very limited incomes and probably don’t need to bother. Also, can you tell me if Social Security benefits are taxable? I start receiving benefits next year and have heard several conflicting things.
Taxing Tina

Dear Tina,
Depending on your income level, your Social Security benefits may be taxable. To figure this out, add up all of your taxable income, plus any tax exempt interest you earned, plus half of your Social Security.

If these combined amounts are under the required limits ($25,000 if you file as a single, and $32,000 if you file a joint return), then you owe no tax on your Social Security. But, if the total is greater, you will.

For more information, call the IRS (800-829-3676) and ask for their free publication 554 – Older Americans’ Tax Guide.

Filing Requirements
Many older Americans don’t have to file income tax returns because their gross income is under the filing requirements. Gross income includes all the income you received that is not exempt from tax, not including Social Security benefits, unless you are married and filing separately. Here are the 2005 requirements that will help you determine whether or not you need to file a federal tax return.

•Filing as a single: If your 2005 gross income was less than $8,200 ($9,450 if age 65 or older), you don’t have to file.
•Filing as head of household: If your gross income was less than $10,500 ($11,750 if age 65 or older), you don’t have to file.

•Filing married or jointly: You don’t have to file if your gross income was less than $16,400. Add $1,000 for each spouse age 65 or over.
•Married filing separately: At any age, you must file if your income was at least $3,200.

•Filing as a qualifying wi-dow(er) with a dependent child: If your gross income was less than $13,200 ($14,200 if age 65 or older), you don’t have to file.

Savvy Notes: The IRS has rules and exceptions for almost every circumstance, so be sure you check with a tax preparer to be sure you’re doing what you’re required to do. Also, for state income tax requirements check with your state tax agency. For links to state and local tax agencies see www.tax sites.com/state.html.

Tax Help
A great resource to help older taxpayers is the AARP Tax-Aide program.
Sponsored by the IRS and AARP, Tax-Aide is a free, confidential tax preparation and counseling service available to all taxpayers, middle and low income, with special attention to those 60 years and older—and you don’t have to be an AARP member to get help.

From Feb. 1 through April 15, trained and certified Tax-Aide volunteers setup sites in around 7,800 convenient locations around the country, such as malls, libraries and senior centers. They will also visit taxpayers in their homes, if they are physically unable to visit a site. To locate your nearest
Tax-Aide site, call 888-227-7669 or visit www.aarp.org/taxaide.

The IRS also offers the Volunteer Income Tax Assistance (VITA) program, which provides free tax help to low and moderate income ($37,000 and below) people who cannot prepare their own tax returns. To locate the nearest VITA site, call 800-829-1040.

Free File
The IRS also offers a service called Free File, which is a free online tax preparation and electronic filing service provided by commercial companies for taxpayers with an Adjusted Gross Income of $50,000 or less. To learn more visit www.irs.gov.

Savvy Tips: To get help with your tax questions call the IRS help line at 800-829-1040 or visit www.irs.gov. To order free federal tax forms and publications call 800-829-3676. And for extra help with unresolved tax issues contact your Taxpayer Advocate Service at 877-777-4778 or visit www.irs. gov/advocate.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit www.savvysenior.org. Jim Miller is a regular contributor to the NBC Today Show and author of “The Savvy Senior” book.