However, you will never pay taxes on more than 85% of your Social Security income. If you file as an individual with a total income that’s less than $25,000, you won’t have to pay taxes on your social security benefits in 2020, according to the Social Security Administration.
You may or may not be free from paying income tax after age 70, depending on your circumstances. No matter what age you are, you may not have to file or pay income taxes, especially if you don’t earn a dollar of income during the tax year.
At 65 to 67, depending on the year of your birth, you are at full retirement age and can get full Social Security retirement benefits tax-free.
When seniors must file at least 65 years of age, and. your gross income is $14,050 or more.
Social Security benefits do not count as gross income. However, the IRS does count them in your combined income for the purpose of determining if you must pay taxes on your benefits.
For the year you are filing, earned income includes all income from employment, but only if it is includable in gross income. Earned income does not include amounts such as pensions and annuities, welfare benefits, unemployment compensation, worker’s compensation benefits, or social security benefits.
The standard deduction for 2020 is $12,400 for singles and $24,800 for married joint filers. There is also an “additional standard deduction,” for older taxpayers and those who are blind. A married filer who is blind or aged 65 and over can claim $1,300 for themselves.
For 2019, the additional standard deduction amount for seniors or the blind is $1,300. The additional standard deduction amount increases to $1,650 for unmarried taxpayers.
The IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free basic tax return preparation to qualified individuals.
In 2020, the yearly limit is $18,240. During the year in which you reach full retirement age, the SSA will deduct $1 for every $3 you earn above the annual limit. For 2020, the limit is $48,600. The good news is only the earnings before the month in which you reach your full retirement age will be counted.
The maximum amount of earnings subject to the Social Security tax will increase from $132,900 in 2019 to $137,700 in 2020. To be fair, this increase affects just 11.8 million of the 171 million workers who are covered under Social Security.
5 Ways to Avoid Taxes on Your Social Security Benefits Buy a QLAC. You can invest up to $125,000 from your IRA or 401(k) in a special version of a deferred-income annuity called a Qualified Longevity Annuity Contract (QLAC). Withdraw money from tax -free Roths. Be careful with income investments. Put your tax moves into perspective.
When you turn 65, the IRS offers you a gift in the form of a bigger standard deduction. For 2020 returns, for example, a single 64-year-old gets a standard deduction of $12,400 (it will be $12,550 for 2021). A single 65-year-old gets $14,050 in 2020 (and $14,250 in 2021).
Credit for the Elderly or the Disabled at a Glance The credit ranges between $3,750 and $7,500.
That means it’s most likely that Social Security beneficiaries who are single will get a total of $600 if their income is not too high while married senior couples will get $1,200 in combined stimulus money. Retirees should consider carefully how best to spend their stimulus funds.