Simplified Taxes For Seniors
Did you know that there is now a new, simplified tax form for those who are already 65 or older; or for those who may turn 65 this year? Known as the 1040SR, it’s provided for in section 41106 of the Bipartisan Budget Act of 2018, or BBA, a two-year budget agreement passed by Congress and signed by the President in February of last year. In fact, there were several changes to tax policies related to retirement that were included in the BBA, and it’s important not to confuse these with the Tax Cuts and Jobs Act that was passed in 2017. We’ll look in a little more detail at Form 1040SR:
Similarities and differences between the new form and Form 1040EZ: For seniors with uncomplicated finances, the 1040SR will be very similar to Form 1040EZ and should be much simpler. The new form will also allow for income to be documented from other, specified sources, and listed below are a few of the other small differences between the old and new form: â—?
Only for those who are 65 and older
While Form 1040EZ is only available to those under the age of 65 who meet the income and filing requirements, Form 1040SR is for those who are aged 65 and above by December 31st 2019, or by the end of the tax year for which you will be filing.
Being retired isn’t necessary and if you’re still working at 65 and otherwise qualify for a 1040SR, then you can still do so. However, those who have retired while under the age of 65, may not use it. �
There is no income test
Unlike Form 1040EZ, which limits interest income to $1,500 and total income to $100,000 or less, the 1040SR has no limit on the amount of your total income for a given taxable year.
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Income categories have been expanded
You’re permitted to include several types of income with a Form 1040SR in addition to those permitted by Form 1040EZ, such as wages, tips or fellowship grants, and it allows you to include Social Security benefits along with distributions from qualified retirement plans, annuities or similar deferred-payment arrangements. Tax deductions for Form 1040SR: If you’re 65 or over, you’re entitled to an extra $1,300, that would raise the standard deduction to $13,300 for the tax year 2019, which is the first year that you’re permitted to use the new form.
If you’re married and one of you is 65 or over, the deduction would increase to $25,300, while if both are over 65, it would rise to $25,600. Filling an important gap for older citizens who are not entitled to use Form 1040EZ, the new Form 1040SR simplifies the tax filing requirements, but it’s by no means flawless. To discuss your filing options as a senior citizen, reach out to your preferred tax specialists, who will talk you through your options and guide you through the process.
At Heyer & Associates, we proactively assist our individual and small business clients in meeting their goals. Our key area of focus is ensuring that our clients remain compliant with federal and state tax laws by providing them with high quality accounting and tax services Miami Beach. If you are looking for individual tax preparation in Miami Gardens, Heyer & Associates would be a right option.