Does a retired person need to file taxes if they made money on stocks

The answer to the question “Do you have to file?” is found in the Form 1040 instructions.

There, you’ll find Chart A, described as “For most people.” This chart shows a minimum gross income at which you are required to file. For couples that are Married Filing Jointly, this minimum gross income number is either $24,400; $25,700; or $27,000; depending on your age.

Gross income is also given a definition in this chart, and as part of that definition, it says:

Don’t include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2019, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly).

If this couple is filling jointly, they need to add up their social security income, divide it by two, then add in all of their other income.

If this total is less than $32,000, then they don’t need to include the social security income in their gross income. In that case, their $1000 of investment income is less than the $24,400 threshold in Chart A at which filing is required.

However, if the total is more than $32,000, then some of the social security benefits are taxable and need to be included in gross income to determine if there is a filing requirement. Chart A directs you to another part of the instructions to figure this out.

There is also a Chart C, and if you meet any of the situations in Chart C, you are required to file even if Chart A determines that you aren’t.

Further complicating the issue is that capital gains are taxed differently than other types of income. You can find all the details by reading the Form 1040 instructions carefully.

Tax software makes this task much easier, as it will ask you questions about your situation and determine whether or not it is in your best interest to file. If that is still too complicated, your best bet is to talk to a tax accountant.