The $6,000 senior tax break, in dollars

FRONT PORCH MONEY · Issue #6

Good morning. Today: a tax break just for people 65 and older, an IRS tool that goes offline in mid-November, and a "tax relief" pitch to skip.

What changed: In October, the IRS updated its guide to the new senior deduction. If you're 65 or older, you may deduct an extra $6,000. A married couple gets $12,000 if both spouses qualify.

It runs from 2025 through 2028. It's on top of the standard deduction seniors already get. And it works whether you itemize or not.

What it means for your check: A deduction lowers the income you pay tax on. In the 12% tax bracket, $6,000 less income means about $720 less tax. For a couple, $12,000 means about $1,440 less.

In the 22% bracket, it's worth about $1,320 for one person. The break starts to shrink once your modified adjusted gross income passes $75,000, or $150,000 for joint filers.

What to do: The deduction goes on Schedule 1-A of your Form 1040. Each qualifying person's Social Security number must be on the return. If you're married, you must file jointly to claim it.

Before December 31, try the IRS Tax Withholding Estimator. It helps you avoid having too little, or too much, tax taken out of a pension or paycheck. Then tell your tax preparer you're 65 or older.

The best safe yields we found this week. The full table comes every Saturday.

Dollar figures are about one year's interest on $10,000. Rates change often, so check before you open anything. We skip short-term promotions. Annuities aren't bank deposits and aren't FDIC-insured.

An Identity Protection PIN is a six-digit number, and it's free to request. It stops someone else from filing a tax return using your Social Security number. You can get one even if you don't have to file.

Timing matters. The IRS says to request one before its online system goes down for upkeep in mid-November. It's generally back in mid-January.

The fastest way is through your IRS online account. Can't do it online? If your income is under $84,000, or $168,000 for joint filers, you can mail Form 15227. You get a new PIN each year. Type irs.gov into your browser yourself.

How it works: Some companies promise to settle your tax debt for "pennies on the dollar". They often charge fees and don't do the work. You can end up worse off with the tax agency.

In one FTC case, a company mailed letters that looked like government mail and warned of property seizure. Its owners agreed to a settlement of nearly $10 million.

How to spot it: They say you "qualify" before looking at your taxes. They want the full fee up front. They guarantee a result. The FTC says no company can guarantee a particular result.

What to do: Only the IRS or your state tax agency decides what you qualify for. For help with an IRS problem, contact the Taxpayer Advocate Service. Its help is always free. Report scams at ReportFraud.ftc.gov.

One more: the IRS will never call, email, text or message you on social media to ask for your IP PIN.

A question we hear a lot: "Do I pay income tax on my Social Security?"

Maybe. Start with your "combined income." That's half your benefits plus your other income.

If it's over $25,000 for a single filer, or $32,000 for a married couple filing jointly, part of your benefits may be taxed. Above $34,000 single or $44,000 joint, up to 85% can be taxable. Never more than that.

You can have tax taken out of each payment: 7%, 10%, 12% or 22%. A tax preparer can run your own numbers.

That's it for today. Hit reply and send us your biggest money question. We read every one. Front Porch Money isn't affiliated with the IRS, Social Security or any government agency.

— The Front Porch Money team

Front Porch Money is general education, not personal financial, tax, legal or investment advice. Some links are from partners who may pay us; see our disclosures.