When do

[JON]

you become 59 1/2 if your birthday is 7/1 on 12/31 or 1/1??????

[Burke]

You are 59 on your birthday. Add 6 months to that, and you are 59 1/2.

[Snaggletooth]

Way to go Burke

...I'm sure Jon will definitely be able to act from your answer.

Jon - I would say December 30, as 183 days have transpired. During the first part of the year, with February and only three 31-day months, you cannot draw the same conclusion. Someone born on Jan 1 is not 59 1-2 until July 2.

[Burke, don't take offense - I couldn't resist. Actually, I read your posts often and have thought them to be quite authoritative and correct - Snag]

[sea-tax]

Now I say this to be funny: What if you feel 59 and 1/2, but are really 40?

Actually had a client ask me this question after he took a 401k distribution, I think he was kidding, but I am still not sure.

[Grumpy]

Through the fog of time

I seem to recall that either the IRS or the Social Security rules once held that if your birthday was Jan 1, then your age was actually advanced by one year on Dec 31. I also seem to recall that, when confronted, they changed their stand on the issue.

[Bees Knees]

TTB, page 13-24 says the following:

Age 70½. A participant reaches age 70½ on the date
that is six months after his or her 70th birthday.
For example, if a participant’s 70th birthday is on
June 30, 2007, that person is 70½ on December 30,
2007. If a participant’s 70th birthday is on July 1,
2007, that person is 70½ on January 1, 2008. Thus,
a person who turns age 70 on July 1, 2007 is not
required to start taking RMD from an IRA until
April 1, 2009.

Since this is concerning the same type of rules, I would assume the same type of calculation would be used to determine when a taxpayer turns age 59½.

[Bees Knees]

Jon - I would say December 30, as 183 days have transpired. During the first part of the year, with February and only three 31-day months, you cannot draw the same conclusion. Someone born on Jan 1 is not 59 1-2 until July 2.

TTB info is taken from IRS Pub 590, page 13 which says:

You attain age 70½ on the date that is six calendar
months after the 70th anniversary of your birth.

Thus, according to IRS, you use months, not days to figure the half year. Six months from February 3rd is August 3rd. Six months from February 28 is August 28. Six months from March 1 is September 1, and so on...

[Black Bart]

Thanks, Bees.

TTB info is taken from IRS Pub 590, page 13 which says:



Thus, according to IRS, you use months, not days to figure the half year. Six months from February 3rd is August 3rd. Six months from February 28 is August 28. Six months from March 1 is September 1, and so on...

I've been wonderin' about that for 30 years or so. Guess I shoulda asked you sooner (or read the instructions).

P.S. Thanx to you too, Burke -- guess you weren't bein' sarcastic after all.

[outwest]

And the reason this is a good question..

is that that Section 1031 limit is sometimes quoted by laymen as 6 months rather than 180 days. As noted above, closing on a replacement property 6 months later may exceed the 180 day limit.

Gotta love the details.

[opie]

Thank you Bees Knees

I knew that was how I had been computing it, but I had forgotten what I used as a basis for how I did it. I probably got it from an old Pub 590 since TTB was not around when I started doing it that way.

[Nashville]

Good Answer Bees

Nothing like a straight answer with authoritative details.

Burke, looks like you were trying to tell us from the beginning...

[Roland Slugg]

RMD rules versus age-65 exemption rule

But ... if a T/P was born on January 1st, he is deemed to turn 65 on the day before his 65th birthday.

[Nashville]

New Years Baby

What about a baby born on New Years' Day? Can he (she) be claimed as a dependent as if the birth had occurred Dec 31?

In my youth, the rural south had hospitals most of which would deliver a baby free if it was born on New Year's Day. A woman could have a baby "on the house." Of course the fee in those days may have only been $100 or thereabouts. The practice was discontinued years ago.

[dtlee]

I have tried to understand this for years and I believe I do (but would be still willing to learn).

A child born on January 1, 2009 is not an eligible dependent on a taxpayer's 2008 tax return. I believe that this myth was derived from the rule that is used for determining a taxpayer's age.

When the IRS looks at a taxpayer, they consider the taxpayer to have attained age X on the day before the taxpayer's Xth birthday. I believe they had followed this rule for all computations of ages at one time but then realized that it was not fair (for example in the case of being able to claim the Child Tax Credit [where it would unfairly restrict the number of years that a parent could claim the credit for a twin born a minute after midnight on January 1 versus the older sibling born a few minutes earlier]). In 2003, they issued Revenue Ruling 2003-72 which can be found here:

http://www.taxlinks.com/rulings/2003/revrul2003-72.htm

This talks about determining the age of a taxpayer's child. For such individuals, they consider the child to attain an age on the date the individual's birthday.

Thus, I believe that the following is true:

Based on the revenue ruling cited above, a child attains an age on his or her birthday for purposes of

• Child and Dependent Care Credit (Code Section 21)
• Adoption Credit (Code Section 23)
• Child Tax Credit (Code Section 24)
• Earned Income Credit (Code Section 32)
• Excludable Dependent Care Benefits (Codes Section 129)
• Excludable Foster Care Benefits (Code Section 131)
• Excludable Adoption Assistance Benefits (Code Section 137)
• Dependency Exemptions (Code Section 151)

Plus, I agree with Bees assertion that you attain age 70½ as of the date six calendar months after the 70th anniversary of the employee's birth. That can be found in the regulations as well as the publications.

However, an individual taxpayer still attains an age on the day prior to his or her birthday for determining:

• When a child is no longer subject to The Kiddie Tax
• Taxpayer Earned Income Credit Eligibility
• Eligibility for an Additional Standard Deduction
• Credit for the Elderly Eligibility

Which brings me to another interesting quirk that I had not noticed before.

A full-time student born on January 1, 1985 will turn 24 on the day prior to his/her 24th birthday (i.e. December 31, 2008) for the purpose of the Kiddie Tax, but will turn 24 on the date of his 24th birthday for the purpose of dependency. To me that means that such an individual will not be subject to the Kiddie Tax for 2008 (not under age 24) but will be an eligible Qualifying Child (if all other tests are met) for 2008 (because he/she is under age 24 and a full-time student).

[Nashville]

Tax Simplication

Mr. Lee, thank you for your well-documented response to my question.

I suppose if anything can be learned from the perusal of your enumerated qualifications it is that there is a crying need for tax simplication.

For example, a child deemed to have been born on a day consistent for all applications you enumerate in your post. How much more simple could that be?

I am expecting some to reply that we should be thankful for tax complexities, that they confuse the public to the extent that they seek out competent tax advisors, and as a result we can benefit by charging expert fees for knowledge such as this.

Fact of the matter, if indeed they confuse the public, the result is that the taxpayer buys TurboTax and does what he pleases, or finds a tax preparer who will agree with his position instead of seeking out the most knowledgeable person.