Volunteer Income Tax Assistance (VITA) Certification Practice Test

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How does being over 65 affect Warren's tax return?

There is no effect.
It increases their standard deduction.
It increases their personal exemptions.
They must itemize their deductions.

The correct answer is: It increases their standard deduction.

Being over 65 has a significant impact on Warren's tax return through an increase in the standard deduction. For taxpayers who are 65 or older, the tax code allows for an additional amount to be added to the standard deduction, which effectively reduces taxable income and can lead to a lower tax liability. This provision is in place to provide extra tax relief to senior citizens, acknowledging that they may have different financial needs or costs as they age. As a result, this increased standard deduction can be a considerable benefit for taxpayers in this age group, allowing for better financial management in retirement. The other options do not reflect the current structure of the tax laws. For instance, personal exemptions have been eliminated under the Tax Cuts and Jobs Act for tax years 2018 through 2025. Therefore, many taxpayers may believe that being over 65 increases personal exemptions, but that is not applicable at this time. Furthermore, seniors are not required to itemize their deductions; they have the choice to either opt for the standard deduction—or, if it offers a greater tax benefit, itemize, but the requirement to do so isn't dictated by age.