When preparing your 2015 individual and New Jersey income tax return or planning to file a future year’s individual income tax return, there are key ages for either you or your dependent children that will affect your family.
- Age 13- when a child turns age 13, they are no longer eligible for the child and dependent care credit. Any expenses incurred in the year that the child turns age 13 are eligible, if spent prior to their 13th birthday.
- Age 17- your child is no longer eligible for the child tax credit.
- Age 18- if you have an unincorporated business (sole proprietorship, or a partnership or LLC where the only owners are you and your spouse), you can avoid payroll tax withholdings on wages paid to your child, until they reach age 18.
- Age 19- if your child is not a full-time student, they can no longer be a dependent, unless they have under $4,000 of gross taxable income.
- Age 22- even if you are a full-time student, you will no longer be able to claim an extra $1,000 New Jersey personal exemption for your dependent college student.
- Age 24- even if your child is still a full-time student, they can no longer be a dependent, unless they have under $4,000 of gross taxable income.
- Age 50- you are eligible for “catch-up” annual contributions to various qualified retirement plans. For example, you can make $1,000 more for your annual IRA contribution, and or $6,000 more for your annual 401(k) contribution.
- Age 59-1/2- you can withdraw amounts from your 401(k), IRA, or other retirement plans without paying a 10% excise tax penalty (you will pay tax on the withdrawals). If you are under age 59-1/2, you may be able to meet an exception to the 10% penalty assessment for certain types of withdrawals.
- Age 62- you will be able to exclude up to $15,000 ($20,000, if married filing jointly) of New Jersey taxable income from your pension or IRA withdrawal, provided you have under $100,000 of total New Jersey gross income.
- Age 65- you will be able to qualify for an increased Federal standard deduction and an extra New Jersey personal exemption.
- Age 70-1/2- you must take out a required minimum distribution from your IRA’s and each of your qualified retirement plans.
As you and your children get older, certain Federal and State income tax provisions will either become available or disappear. Our firm is well positioned to help you and your family with all of your tax planning needs, regardless of your current age. If you have any questions about these age-related changes, contact us.