As I understand it, if we don't earn up to a certain amount we don't have to file. I believe last year the amount was $17,900. Is it the same this year? Where can I find that figure each year? I've tried using the IRS official website, but couldn't find it.
A. The “filing threshold” for your situation for 2007 would be $18,550.00. This amount is listed in Chart A on Page 6 of the 2007 Form 1040 instructions.
The amount is determined as follows:
Standard Deduction for Married Filing Joint = $10,700.00
Plus the Additional Standard Deduction for Age 65 = $ 1,050.00 (1 person)
Plus the Personal Exemption of $3,400.00 x 2 = $6,800.00
When determining your filing threshold you would include the “gross proceeds” from the sale of investments and not the net taxable gain. You would have to file a Form 1040 Schedule D to report the cost basis of the investments sold even if your net Adjusted Gross Income was less than $18,550.00.
To determine if any of your Social Security benefits would be taxed you first take ½ of your combined total gross benefits (before deducting the Medicare premiums withheld). To that you add the total of your other net taxable income plus any tax-exempt interest that would be reported on Line 8b of the 1040. From this amount you subtract any “adjustments to income” that would be claimed on Form 1040 lines 23 through 32 (i.e. educator expenses, HSA contribution, moving expenses, alimony, IRA, SEP SIMPLE or Keogh contributions, and early withdrawal penalty on CDs). If the result is less than $32,000 none of your Social Security benefits will be taxable.
FYI, your filing threshold for 2008, when you will both be age 65 or older, is $20,000.00.
The information necessary to determine your filing threshold is available on the WHAT’S NEW FOR 2007 and WHAT’S NEW FOR 2008 Pages of my website. Each year I add a new WHAT'S NEW FOR Page.