Savvy senior - Jan. 14, 2010

Tax Help for Lower Income Seniors

Dear Savvy Senior

What are the 2009 IRS minimum filing requirements for seniors? My income was very low last year and I’m thinking I may not have to file tax returns this year. What can you tell me?

Exempted Eddie

Dear Eddie,

There are millions of seniors in your same situation. In fact, according to the Tax Policy Center, around 55 percent of Americans over age 65 won’t have to file income tax returns this year mainly because their incomes are under the IRS filing requirements. Here’s what you should know.

2009 Filing Requirements

If your “gross income” is below the 2009 IRS filing limits, you don’t have to file a federal tax return this year. Gross income includes all the income you receive that is not exempt from tax, not including Social Security benefits, unless you are married and filing separately. Here’s an income breakdown for each filing status.

* Single: If your 2009 gross income was less than $9,350 ($10,750 if you’re 65 or older), you don’t have to file.

* Married filing jointly: You don’t need to file if your gross income was under $18,700. If you or your spouse is 65 or older the limit increases to $19,800. And if you’re both over 65, your income must be under $20,900 to not file.

* Head of household: If your gross income was below $12,000 ($13,400 if age 65 or older), you don’t have to file.

* Married filing separately: At any age, you must file if your income was at least $3,650.

* Qualifying widow(er) with a dependent child: If your gross income was less than $15,500 ($16,150 if age 65 or older), you don’t need to file.

Note: Just because you’re not required to file a federal tax return doesn’t necessarily mean you’re also excused from filing state income taxes. Check on that with your state tax agency before concluding you’re entirely in the clear. For links to state and local tax agencies see http://www.taxadmin.org – click on “Links.”

Senior Tax Credit

If you find that your gross income is more than the IRS filing limits, you’ll need to file a federal tax return. But depending on your income level, you may be eligible for an elderly tax credit, which can amount to as much as $750 for a single taxpayer and up to $1,125 for a couple.

To qualify, you must be 65 or older (or under 65 and disabled), a U.S. citizen, and your adjusted gross income must be less than $17,500 for a single filer, and the non-taxable part of your Social Security or other nontaxable pensions, annuities or disability income must be less than $5,000.

Or, if you’re married and are filing jointly and you both qualify, your income will need to be less than $25,000, and your nontaxable Social Security or other nontaxable pensions must be under $7,500.

To claim the credit you’ll need to file either Schedule R, if you are filing Form 1040, or Schedule 3, if you are filing Form 1040A. To learn more, see IRS publication 524 “Credit for the Elderly or Disabled” at http://www.irs.gov/pub/irs-pdf/p524.pdf, or call 800-829-3676 and have them mail you a copy.

Tax Prep Help

If you do need to file a tax return, you can get help through the IRS sponsored Tax Counseling for the Elderly (TCE). This program provides free tax preparation and counseling to middle and low income taxpayers, age 60 and older. Call 800-906-9887 to locate a service near you. Also check with AARP, a participant in the TCE program that provides free tax preparation at more than 7000 sites nationwide. To locate an AARP Tax-Aide site call 888-227-7669 or visit http://www.aarp.org/money/taxaide.

Savvy Tips: If you have tax questions the IRS offers a helpline at 800-829-1040, or visit a nearby IRS Taxpayer Assistance Center (see http://www.irs.gov/localcontacts) where you can get face-to-face help for free. Also see http://www.irs.gov/individuals/retirees for a variety of tax tips for seniors.

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