Chapter 34

Special Tax Rules for Senior Citizens

All of your Social Security benefits are tax free if your “provisional income,” explained in 34.3, 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 married and filing separately, and did not live apart for the whole year, you must apply the 85% rate without considering the base amounts. If you are married filing separately and you lived apart the entire year, are a head of household, or are a qualifying widow(er), use the $25,000 and $34,000 base amounts for single persons.

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.

If you are on Medicare, be sure you understand the impact of adjusted gross income on your premiums (34.12).

34.1 Senior Citizens Get Certain Filing Breaks

34.2 Social Security Benefits Subject to Tax

34.3 Computing Taxable Social Security Benefits

34.4 Election for Lump-Sum Social Security Benefit Payment

34.5 Retiring on Social Security Benefits

34.6 How Tax on Social Security Reduces Your Earnings

34.7 Claiming the Credit for the Elderly and Disabled

34.8 Base Amount for the Elderly or Disabled Credit

34.9 Reduction of the Base Amount and Liability Limitation for the Credit

34.10 Tax Effects of Moving to a Continuing Care Facility

34.11 Medicare Part B and Part D Premiums for 2013