Dear Savvy Senior: What are the IRS income tax filing requirements for retirees in 2020? My income dropped way down when I was forced into retirement in March due to COVID, so I’m wondering whether I need to file a tax return this year. — Unexpected Retiree
Dear Unexpected: Whether or not you are required to file a federal income tax return this year actually depends on several factors: how much you earned last year (in 2020), the source of that income, your age and your filing status.
Here’s a rundown of this tax season’s IRS tax filing requirement thresholds. For most people this is pretty straightforward. If your 2020 gross income — which includes all taxable income, not counting your Social Security benefits, unless you are married and filing separately — was below the threshold for your filing status and age, you may not have to file. But if it’s over, you will.
>> Single: $12,400 ($14,050 if you’re 65 or older by Jan. 1, 2021)
>> Married filing jointly: $24,800 ($26,100 if you or your spouse is 65 or older, or $27,400 if you’re both at least 65)
>> Married filing separately: $5 at any age
>> Head of household: $18,650 ($20,300 if age 65 or older)
>> Qualifying widow(er) with dependent child: $24,800 ($26,100 if age 65 or older)
To get a detailed breakdown on federal filing requirements, along with information on taxable and nontaxable income, call the IRS at 800-829-3676 and ask to receive a free copy of the “1040 and 1040-SR Instructions for Tax Year 2020,” or you can get it online at IRS.gov.
Check here, too
There are, however, some other financial situations that can require you to file a tax return, even if your gross income falls below the IRS filing requirements. For example, if you earned more than $400 from self-employment in 2020, owe any special taxes like an alternative minimum tax or get premium tax credits because you, your spouse or a dependent is enrolled in a Health Insurance Marketplace (aka Obamacare) plan, you’ll need to file.
You’ll also need to file if you’re receiving Social Security benefits and one-half of your benefits plus your other gross income and any tax-exempt interest exceeds $25,000, or $32,000 if you’re married and filing jointly.
To figure all this out, the IRS offers an interactive tax assistant tool on its website that asks a series of questions that will help you determine whether you’re required to file, or if you should file because you’re due a refund. It takes less than 15 minutes to complete.
You can access this tool at IRS.gov/Help/ITA — click on “Do I Need to File a Tax Return?” Or you can get assistance over the phone by calling the IRS help line at 800-829-1040.
Check your state
Even if you’re not required to file a federal tax return this year, don’t assume that you’re also excused from filing state income taxes. The rules for your state might be very different. Check with your state tax agency before concluding that you’re entirely in the clear. For links to state tax agencies, see Taxadmin.org/state-tax- agencies.
Tax prep assistance
If you find that you do need to file a tax return this year, you can file free through the IRS at IRS.gov/FreeFile if your 2020 adjusted gross income was below $72,000.
Or, if you need some help, contact the Tax Counseling for the Elderly program. Sponsored by the IRS, TCE provides free tax preparation and counseling to middle- and low-income taxpayers, age 60 and older. Call 800-906-9887 or visit IRS.treasury.gov/freetaxprep to find out about services near you.
You can also get help through the AARP Foundation Tax-Aide service, a participant in the TCE program that provides free tax preparation in person, online and by phone. To find out about service options in your area, call 888-227-7669 or visit AARP.org/findtaxhelp. You don’t have to be an AARP member to use this service.
Jim Miller is a contributor to NBC-TV’s “Today” program and author of “The Savvy Senior.” Send your questions to Savvy Senior, P.O. Box 5443, Norman, OK 73070; or visit savvysenior.org.