Special Tax Rules for Senior Citizens

The following special tax rules favor senior citizens:

• Higher filing thresholds
• Higher standard deduction
• Tax credit if age 65 or older
• Social Security benefits may be exempt from tax

Determining what your "provisional income" is the key to figuring what portion of your benefits will be taxed.

• Benefits are tax-free if your "provisional income" is $25,000 or less if you are single, or $32,000 or less if you are married and file a joint return.
• No more than 50% of your benefits are subject to tax if you file a joint return and your provisional income is over $32,000 but no more than $44,000, or if you are single and your provisional income is over $25,000 but no more than $34,000.
• When provisional income exceeds $34,000 or $44,000 (depending on your filing status), more than 50%, but no more than 85% of your benefits are subject to tax.

If you are receiving Social Security benefits, but continue to earn wages or self-employed income, you must pay FICA taxes or self-employment tax on that income regardless of your age.