DEAR SAVVY SENIOR: What are the 2011 IRS income tax filing requirements for seniors? I had to file and pay federal income taxes last year, but my income dropped and I’m wondering if I’m exempt this year. — Recently Retired
DEAR RETIRED: According to the Tax Policy Center, 56 percent of retirees will not have to file or pay federal income taxes this year mainly because their incomes are under the IRS filing threshold. Here’s a breakdown of the 2011 filing requirements along with a few other tax tips to help you determine if you need to file.
If your gross income is below the IRS filing limits, you probably won’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. You probably don’t have to file this year if:
• You are single and your 2011 gross income was less than $9,500 ($10,950 if you’re 65 or older).
• You are married filing jointly and your gross income was under $19,000. If you or your spouse is 65 or older, the limit increases to $20,150. And if you’re both over 65, your income must be under $21,300 to not file.
• You are head of household and your gross income was below $12,200 ($13,650 if age 65 or older).
• You are married filing separately and your income was less than $3,700.
• You are a qualifying widow(er) with a dependent child and your gross income was less than $15,300 ($16,450 if age 65 or older).
You also need to be aware that there are some special financial situations that require you to file a tax return, even if your gross income falls below the IRS filing requirement. For example, if you had net earnings from self-employment in 2011 of $400 or more, or if you owe any special taxes to the IRS such as alternative minimum tax or IRA tax penalties, you’ll probably need to file.
To figure this out, the IRS offers a page on its website called “Do You Need to File a Federal Income Tax Return?” that includes a list of financial situations and a series of questions that will help you determine if you’re required to file, or if you should file (if you’re due a refund). You can access this page at www.doyouneed2file.info, or you can get help over the phone by calling the IRS helpline at 800-829-1040.
Even if you’re not required to file a federal tax return this year, it 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 taxadmin.org — click on “Links.”
If you do need to file a tax return this year, you can get help through the Tax Counseling for the Elderly (or TCE) program. Sponsored by the IRS, TEC 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 around 6,100 sites nationwide. To locate an AARP Tax-Aide site call 888-227-7669 or visit aarp.org/findtaxhelp.
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.