Age Does Matter When it Comes to Tax Obligations
December 18, 2020
One of the elements that make our Federal Tax Code so hard to follow is that different laws apply to you based on you or your dependents’ age. To help you navigate through some of this maze here is a chart that outlines key ages and how it applies to your tax obligation.
|0+ one||New birth||Creates a new dependent.|
|13||Dependent care credit||This credit is gone for those age 13 and over so plan accordingly.|
|17||Child tax credit||This popular $2,000 per child credit is no longer available for those age 17or over. Thankfully there is now a $500 family credit to lessen the tax hit.|
|19||Earned income credit and some education credits||These credits disappear when your qualified dependent or taxpayer is 19 or older (but also see age 24).|
|24||(see age 19 limits)||If your qualified taxpayer is 19 or older, but still a qualified student, the extended age limit becomes under age 24.|
|50+||Qualified retirement account catch-up contributions||At age 50 you may add to your annual contribution to select retirement accounts through this “catch up” provision. This includes: IRAs, 401(k)s, 403(b)s, Sep IRAs, SIMPLE and others.|
|55+||Health savings accounts catch-up contributions||Age at which you mat donate additional funds to your HSA during a catch-up provision.|
|59 1/2||Retirement accounts||Age you generally begin withdrawals from qualified retirement accounts without receiving a pre-payment penalty.|
|62+||Social security begins||Social Security retirement benefits may begin depending on your date of birth.|
|70||Social security maximized||The age where Social Security retirement benefits are maximized if you delay starting Social Security benefits.|
|72||Qualified retirement account distributions||Minimum distributions are required from select retirement accounts like Traditional IRAs, 401(k), Sep IRAs, SIMPLE and more. These distributions are temporarily suspended for 2020.|
Please note: These age triggers outline some of the major tax events that relate to your age. In most cases the impacted year is the year you turn the age on this chart. Example: If your qualified dependent turns 17 any time during the year, they no longer qualify for the Child Tax Credit. This chart is not meant to be all-inclusive and there are exceptions to some of these age qualifications. Use this information to know when to ask for help.