Fed Income Tax for older seniors

[Sheri12]

My husband and I both are 71 yo.  We have social security and one pension.  We are both retired and do not work extra jobs.  Is there an age limit to being taxed on the pension?  Our social security appease to not be taxed.  I had heard that there was one many years ago.   Something like 80 yo.  We live in Washington state which does not have state tax withheld..  Thanks

[VolvoGirl]

Sorry no age limit on paying taxes or on your pension, etc.  Part of your Social Security might be taxable.  Pension is on 1040 line 5 and SS will be on 1040 line 6a and any taxable amount on 6b.  

Up to 85% of Social Security becomes taxable when all your other income plus 1/2 your social security, reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

[KanchanM]

Hello Sheri12,

That's a very good question. Unfortunately, we all keep paying taxes even in old age. But there are certain tax benefits when you are 65 or older because of the higher standard deduction. But if your income is only from social security, generally your benefits are not taxable and you probably do not need to file a federal income tax return.

Please give me a thumbs up if that answers your question. Thanks 🙂

[rschule1]

HI There:

There is no age limit for taxability of pension. However, there is an income limit in which pensions will not be taxed (due to standard deduction), which in 2023 for married filing jointly over 65 is $28,700.  This amount also includes social security and other taxable income.  

[KarenJB]

Hi @Sheri12,

Thank you for your question!

The IRS has a great tool that help one determine whether or not their pension is fully taxable; you can find it here: https://www.irs.gov/help/ita/is-my-pension-or-annuity-payment-taxable.

Unfortunately, there is no age that a taxpayer can reach that renders a pension non-taxable based on that fact alone.

Generally, pension payments are fully taxable if any of the following situations apply:

• You didn't contribute any after-tax amounts or aren't considered to have contributed any after-tax amounts for your pension or annuity
• Your employer didn't withhold after-tax contributions from your salary, or
• You received all of your after-tax contributions (your investment in the contract) tax-free in prior years

Please see https://www.irs.gov/taxtopics/tc410 for a more thorough discussion.

Please let me know if I can be of further assistance, and thanks for participating in our ask the experts event!

[Holly W1]

Hello @Sheri12,

We are so happy you could join us today!  There isn't necessarily an age limit, more of an income limit.  
If your income is lower than either your Standard Deduction or Itemized Deduction, then you do not have taxable income.  Here are the filing requirements for 2023 assuming you would be filing Married Filing Joint.

2023:

Standard Deduction for Married Filing Joint:         27,700

Additional amount for being over 65 (1,400 ea):     2,800

Total:                                                                                29,500

So for 2023, if your taxable pension is below 29,500, then you are not required to file a tax return (assuming your social security is not taxable income, only your retirement).  

If you had federal withholding on the retirement or social security, you would file to get that back.

Here is a link to the IRS on filing requirements:  https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return 

Thanks again for participating today.  I hope you enjoy the rest of your day!