Age Matters in Tax Law

Many tax provisions are linked to age, so whenever there’s a birthday in the family, check for changes to take into account as you do your tax planning. Major age milestones include the following:

Age        What it means for your taxes

Age 13    Beginning at this age, your child no longer qualifies for the child care credit.

Age 17    From this age on, your son or daughter no longer qualifies for the child tax credit (different from the child care credit, above).

Age 18    When your child reaches this age, his or her Coverdell education savings account is not permitted to accept new contributions (except in the case of special needs beneficiaries).

Age 18    Beginning at this age, you must pay social security taxes for any of your children that you employ in an unincorporated business.

Age 19    Is your child a full-time student? Unless you answer “yes,” you could lose the dependency deduction once your child reaches this age.

Age 24   Upon reaching this age, none of your child’s investment income will be taxed at your rate under the “kiddie tax” rules.

Age 30   By this age, any amount remaining in your child’s Coverdell education savings account must be distributed or rolled over to an education savings account for another qualifying family member.

Age 59½ You may start withdrawing money from your IRA, 401(k), and other retirement plans without penalty.

Age 65   Beginning at this age, you generally qualify for a higher standard deduction.

Age 65     Also at this age, low-income seniors may qualify for a special tax credit.

Age 70½ You must start withdrawing at least a required minimum amount from your IRA each year to avoid a stiff penalty. (This requirement doesn’t apply to Roth IRAs.) 

For more information, call us at (219) 769-3616 with your questions, or email them to tlynch@swartz-retson.com.