IS A PUZZLEMENT!

 

As a “senior citizen” (age 65 or older) I am entitled to the new $6,000 “Senior Deduction” on my 2025 Form 1040-SR.  Married seniors are entitled to a maximum deduction of $12,000 on a joint return (the deduction is not allowed if you are filing separately).

The deduction is phased out at 6% of the amount MAGI (AGI plus foreign income excluded) exceeds $75,000 for unmarried filers or $150,000 if married filing a joint return.

So, if a single filer has a MAGI of $80,000 his/her deduction is reduced by $300 ($5,000 x 6%).  He/she can deduct $5,700.

Looking at a real-life example, one would think that a married couple, both of whom are seniors, with a MAGI of $322,030 would reduce the allowable deduction by $10,322 ($172,030 x 6%) and be able to claim $1,678 ($12,000 less $10,322).  But that is not the case.

If you follow the form – Schedule 1-A Part V – the couple gets no Senior Deduction.

Line 31 – Enter the amount from Line 3 (MAGI)             322,030

Line 32 – Enter 150,000 if married filing jointly              150,000

Line 33 – Subtract 32 from 31                                      172,030

Line 34 – Multiply line 33 x 6%                                       10,322

Line 35 – Subtract line 34 from $6,000                      0

For some strange reason the phase-out amount is subtracted from $6,000 and not $12,000.  If there had been a positive number on Line 35 it would have been doubled to get the total allowable deduction.  So, this married couple is screwed out of a $1,678 deduction.

I have no idea why the calculation is done this way.  Is this what Congress intended?  But then the members of Congress who voted on this new tax deduction never actually read the bill but - they voted as they were told to by their Party.

Is a puzzlement. 

TTFN