Tax Facts for Seniors with a Change in Marital Status

What is my filing status now? Do I even have to file?

Your tax filing status is a category that identifies you, based on your marital situation on the last day of the year. Whether you have to file a tax return depends on your filing status, age, and gross income. When your filing status changes, the level of income that requires you to file an income tax return also changes.

What counts as income?

Generally income is taxable unless specifically exempted by law. While life insurance proceeds are rarely taxable, part of your Social Security benefits and IRA distributions may count as income.

Should I pay estimated taxes?

Changes in your filing status and income may mean that you owe taxes. You may need to pay amounts throughout the year if you will owe $1,000 or more when you file your tax return. By using IRS Form 1040-ES, Estimated Tax for Individuals, you can pay your tax in four payments during the year.

How do I deduct medical expenses?

If you are able to itemize your deductions, you may be able to deduct amounts you paid for certain medical and dental expenses that were not covered by insurance. These expenses include amounts you paid for doctors, hospitals, and prescription drugs.

What if I sell my house?

If you had a gain from the sale of your main home, you may be able to exclude up to $250,000 (or $500,000 on a joint return) in most cases.

Do I qualify for any special tax credits?

Generally tax credits reduce the amount of tax you owe. Some credits may create a refund, even if you paid little or no tax. The Earned Income Tax Credit (EITC) may be available if you are working and your earnings are low. The credit may be larger if you have a qualifying child (including a grandchild). If you do not have a qualifying child, you must be under age 65 to qualify for the EITC. The Credit for the Elderly or the Disabled may reduce your tax under certain conditions if your income is very low.

What income tax issues do I need to know about the year my spouse dies?

If your spouse died during the past year and you have not remarried, you may still file a joint return. A joint return will generally result in less tax. IRS Publication 559, Survivors, Executors and Administrators, is designed to show you how to complete and file federal income tax returns and point out your responsibility to pay any taxes due.

EXCERPTED FROM Department of the Treasury Internal Revenue Service Publication 3864.