The purpose of this publication is to provide a general overview of selected topics that are of interest to older taxpayers. The publication will help you determine if you need to file a return and, if so, what items to report on your return. Each topic is discussed only briefly, so you will find references to other free IRS publications that provide more detail on these topics if you need it.
Table I has a list of questions you may have about filing your federal tax return. To the right of each question is the location of the answer in this publication. Also, at the back of this publication there is an index to help you search for the topic you need.
While most federal income tax laws apply equally to all taxpayers, regardless of age, there are some provisions that give special treatment to older taxpayers. The following are some examples.
- Higher gross income threshold for filing. You must be age 65 or older at the end of the year to get this benefit. You are considered age 65 on the day before your 65th birthday. Therefore, you are considered age 65 at the end of the year if your 65th birthday is on or before January 1 of the following year.
- Higher standard deduction. If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. You are considered age 65 on the day before your 65th birthday.
- Credit for the elderly or the disabled. If you qualify, you may benefit from the credit for the elderly or the disabled. To determine if you qualify and how to figure this credit, see Credit for the Elderly or the Disabled, later.
- Return preparation assistance. The IRS wants to make it easier for you to file your federal tax return. You may find it helpful to visit a Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), or American Association of Retired Persons (AARP) Tax-Aide site near you.
Volunteer Income Tax Assistance and Tax Counseling for the Elderly. These programs provide free help for low-income taxpayers and taxpayers age 60 or older to fill in and file their returns. For the VITA/TCE site nearest you, contact your local IRS office.
For the location of an AARP Tax-Aide site in your community, call 1-888-227-7669. When asked, be ready to press in or speak your 5-digit ZIP code. Or, you can visit their website at www.aarp.org/taxaide.
What’s New for 2011-2012
Limits on personal exemptions and overall itemized deductions ended. For 2010, you will no longer lose part of your deduction for personal exemptions and itemized deductions, regardless of the amount of your adjusted gross income (AGI).
Rollovers to Roth IRAs. For tax years starting in 2010, the $100,000 modified AGI limit on rollovers from eligible retirement plans to Roth IRAs is eliminated and married taxpayers filing a separate return can now roll over amounts to a Roth IRA.Also, for any 2010 rollover from an eligible retirement plan (other than a designated Roth account or Roth IRA) to a Roth IRA, any amounts that would be included as income will generally be included in income in equal amounts in 2011 and 2012. You can choose to include the entire amount in income in 2010.
In-plan rollovers to designated Roth accounts. After September 27, 2010, if you are a plan participant in a section 401(k) or 403(b) plan, your plan may permit you to roll over amounts in those plans to a designated Roth account within the same plan (in-plan Roth rollover). The rollover of any untaxed amounts must be included in income. See Publication 575 for more details. Starting in 2011, governmental section 457(b) plans can include designated Roth accounts.For any 2010 in-plan Roth rollovers, any amount that must be included in income is generally included in income in equal amounts in 2011 and 2012. You can choose to include the entire amount in income in 2010.
Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount increased to $47,450 ($72,450 if married filing jointly or a qualifying widow(er)); $36,225 if married filing separately). For details, get Form 6251, Alternative Minimum Tax-Individuals.
Standard deduction increased. For some people who do not itemize their deductions, the standard deduction is higher in 2010 than it was in 2009. In addition to the annual increase due to inflation adjustments, your 2010 standard deduction is increased by:
- State or local sales or excise taxes you paid in 2010 on the purchase of a new motor vehicle after February 16, 2009.
- Any net disaster loss you had in 2010 because of a disaster that occurred before 2010 and was declared a federally declared disaster after 2007.
Earned income credit. The maximum amount of income you can earn and still get the credit has increased. You may be able to take the credit if you earn less than:
- $13,460 ($18,470 if married filing jointly), do not have a qualifying child, and are at least 25 years old and under 65,
- $35,535 ($40,545 if married filing jointly), and you have one qualifying child,
- $40,463 ($45,373 if married filing jointly), and you have two qualifying children, or
- $43,352 ($48,362 if married filing jointly), and you have three or more qualifying children.
Exemption phaseout. In previous years, you would lose part of the benefit of your exemptions if your adjusted gross income (AGI) is above a certain amount. However, in 2010, you will no longer lose part of your deduction for personal exemptions and itemized deductions, regardless of the amount of your AGI.
Decedents who died in 2010. For special rules that may apply to decedents who died in 2010, including rules for property acquired from a decedent who died in 2010, see new Pub. 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010.
Disclosure of information by paid preparers. If you use a paid preparer to file your return, the preparer is allowed, in some cases, to disclose certain information from your return, such as your name and address, to certain other parties, such as the preparer’s professional liability insurance company or the publisher of a tax newsletter. For details, see Revenue Rulings 2010-4 and 2010-5. You can find Revenue Ruling 2010-4 on page 309 of Internal Revenue Bulletin www.irs.gov/irb/2010-04_IRB/ar08.html. You can find Revenue Ruling 2010-5 on page 312 of Internal Revenue Bulletin 2010-4 at www.irs.gov/irb/2010-04_IRB/ar09.html.
Expired tax benefits. The following tax benefits have expired.
- Increased standard deduction for real estate taxes or net disaster loss for a disaster occurring after 2009.
- Itemized deduction or increased standard deduction for state or local sales or excise taxes on the purchase of a new motor vehicle (unless you bought the vehicle in 2009 after February 16 and paid the tax in 2010).
- The exclusion from income of up to $2,400 in unemployment compensation.
Government retiree credit.
Alternative motor vehicle credit for qualified hybrid motor vehicles bought after 2009, except cars and light trucks with a gross vehicle weight rating of 8,500 pounds or less.
Extra $3,000 IRA deduction for employees of bankrupt companies.
Certain tax benefits for Midwestern disaster areas, including increased Hope and lifetime learning credits and the additional exemption amount if you provided housing for a person displaced by the Midwestern storms, tornadoes, or flooding.
Credit to holders of clean renewable energy bonds issued after 2009.
Decreased estimated tax payments for certain small businesses.
Tax return preparers. Choose your preparer carefully. If you pay someone to prepare your return, the preparer is required, under the law, to sign the return and fill in the other blanks in the Paid Preparer area of your return. Remember, however, that you are still responsible for the accuracy of every item entered on your return. If there is any underpayment, you are responsible for paying it, plus any interest and penalty that may be due.
Sale of home by surviving spouse. If you are an unmarried widow or widower, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. For more information, see Sale of Home, later.
Third party designee. You can check the “Yes” box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, family member, or any other person you choose. This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. It also allows your designee to perform certain actions.
Employment tax withholding. Your wages are subject to withholding for income tax, social security tax, and Medicare tax even if you are receiving social security benefits.