Age (not death!) and Taxes – Age does matter, when it comes to tax obligations

Age (not death!) and Taxes – Age does matter, when it comes to tax obligations

The tax code is filled with age triggers. Some are beneficial, while others can create a tax increase surprise. Outlined here are some of the important age triggers everyone should know.

One of the elements that make our Federal Tax Code so hard to follow is that different laws apply to you based on your 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.

Age

Tax Code

Impact

0+ one New birth Creates a new dependent and tax exemption.
13 Dependent Care Credit This credit is gone for those age 13 and over so plan accordingly.
17 Child Tax Credit This popular credit is no longer available for those age 17 or over.
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) But wait! If your qualified taxpayer is 19 or older, but still a qualified student, the extended age limit becomes younger than 24.
50+ Qualified Retirement Account Catch-up Contributions You now have the ability to add to your annual contribution to select retirement accounts through this “catch up” provision. This includes: IRAs, 401(k)s, 402(b)s, Sep IRAs, SIMPLE and others.
55+ Health Savings Accounts Catch-up Contributions Age at which you may donate additional funds to your HSA using a catch-up provision.
59 ½ Retirement Accounts Age you may begin withdrawals from qualified retirement accounts without receiving a pre-payment penalty.
62+ Medicare and Social Security Medicare sign-up. Social Security retirement benefits may begin depending on your date of birth.
70 Social Security The age where Social Security retirement benefits are maximized if you delay starting Social Security benefits.
70 ½ Qualified Retirement Account Distributions Minimum distributions are required from select retirement accounts like Traditional IRAs, 401(k), Sep IRA, SIMPLE IRAs and more.

Please note: These age trigger dates 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 start a conversation with a qualified expert to organize and plan accordingly.

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