Inquiry concerning the $6,000 Senior Tax Exemption on July 18th
New $6,000 Senior Tax Deduction Boosts Relief for Elderly Individuals
The recently passed One Big Beautiful Bill (OBBB) introduces a significant tax break for seniors, offering an additional $6,000 deduction for individuals aged 65 and over. This deduction, applicable to both single filers and married couples, can provide a substantial relief for eligible seniors.
Who is Eligible for the $6,000 Senior Deduction?
To be eligible, an individual must be at least 65 years old by the end of the tax year. It's important to note that both spouses must reach the age of 65 to claim the full couple's deduction amount.
How Does the Deduction Work?
The deduction is per eligible individual, meaning that only those aged 65 and older can claim it. This deduction adds on top of standard existing senior tax deductions, not replacing them. There are no specific income or asset limits mentioned in the sources, but eligibility is strictly age-based.
Phaseout of the Deduction
For joint filers, the maximum $12,000 senior deduction (for couples where both spouses qualify) begins to phase out at a modified Adjusted Gross Income (modified AGI) of $150,000.
Calculating Modified AGI
To calculate modified AGI for the $6,000 senior deduction, start with adjusted gross income on line 11 of Form 1040, add foreign earned income exclusion, foreign housing exclusion, and amounts excluded from gross income because they were received from sources in Puerto Rico or American Samoa. Modified AGI is used by the IRS to determine eligibility for tax benefits or tax breaks.
Where to Find More Information
Subscribers of The Kiplinger Tax Letter and The Kiplinger Letter can ask Joy Taylor questions about tax topics. Readers can also submit questions on tax changes in the OBBB, and more queries on the OBBB will be answered in future Ask the Editor round-ups.
The $6,000 senior deduction is part of the changes in the OBBB and can be claimed on Form 1040 for individuals aged 65 and older, subject to modified AGI phaseouts. This new deduction offers a valuable tax relief for seniors, directly benefiting those age 65 and older with no further detailed restrictions noted in the available information.
The $6,000 senior deduction is not limited to a specific field, making it applicable for seniors from diverse industries such as finance, business, health-and-wellness, personal-finance, and science. In the crypto arena, the deduction could be advantageous for those who have recently participated in Initial Coin Offerings (ICOs) as part of their investment portfolio. Additionally, DeFi (Decentralized Finance) users could also potentially benefit from this tax relief.
