Were you 65 years old at the end of 2003?
If you did not itemize your deductions, you were entitled to as much as an additional $1,150 in your standard deduction. Suppose you did not turn 65 until January 1, 2004. No problem – you were still 65 last year. The Internal Revenue Service considers you to turn 65 the day before your 65th birthday. This is known as the “common-law” rule as opposed to the “common-sense” rule. Some interesting questions arise. Can we extend this line of thinking to the personal dependency exemption allowed in 2003 of $3,050 per child? If your child was born on January 1, 2004, is the child considered born the day before, thereby entitling you to an additional exemption last year? We questioned the IRS and their response, while unprintable, can probably be taken as a “No”.
How about someone who reaches age 130? Having turned 65 twice, you would think an additional deduction would be appropriate. We questioned several people who have attained this age but this topic did not seem high on their list of priorities. Or how about those people born in a leap year on February 29. The “common-law” rule would appear to allow them to reach 65 on February 28 instead of having to wait until age 260 to celebrate the big day.
Should you have similar complex issues in need of solutions, please do not hesitate to give one of our professionals a call. Ask for anyone under 65!