Working after you turn 65

Working after you turn 65

Pay attention!! After 1 January 2013 the pension age is 65 years and 1 month!!

More and more people that have reached the pension age want to keep working. Presently, dozens of temporary employment agencies specialize in mediating for people over 65 years old. Sometimes seniors have to keep working after their 65th birthday because they have little or no supplementary pension.  However for many seniors the joy in working, the loyalty to their boss and potentially losing contact on the work floor are important motives to remain active on the labour market.

at the moment someone turns 65, but continues working, a number of fiscal matters change. Below we explain what the changes are per subject:

AOW (General old age pension law) premium

If someone is older than 65, they are no longer required to pay premiums for their AOW. In such, people over 65 years old will receive more net income. The tariff for the first bracket of box 1 of the Income tax changes from 37% to 24.1%.* This applies to an income from  €19,645.- up to €33,863.-. The third and fourth bracket remain the same (2013).

Tax credit

However, the changes in tax credit are to the disadvantage of people over 65 years old. The general tax credit for people with a pension entitled age is €1.034,- per year, the general tax credit for people under 65 years old is €2.001,-. The tax credit is lowered because AOW premiums do not need to be paid any longer (2013).

Elderly deduction

The elderly deduction applies to taxpayers that are 65 years old or older at the end of the calendar year, or at the end of the tax liability if the tax liability ends that year. The aggregated income may not exceed the maximum amount set by the Tax Authorities. The ‘aggregated income’ is the sum of the income from work and living, the income from substantial business interest and the taxable income from saving and investment. For 2013 that is €35,450. The deduction in this case will be €1.062.

Single parent deduction

You are entitled to a single parent deduction if for a specific year you received an AOW-benefit for single parents or if you are entitled for, but do not receive this benefit,  because, for example, you are conscientious objector. The single parent deduction is €429.-(2013).

Higher tax free wealth in box 3

In box 3 the Income tax for capital from savings and investments is taxed. For everyone the first €21.139,- of the capital is exempt. There is also an elderly supplement, which raises the tax free wealth. The rule when applying the elderly supplement is that it may not exceed €279,708.-. If you have a fiscal partner, together it may not exceed €559,416.-. To be eligible for this supplement the income from work and living may not exceed €19,895.-.

*for a maximum amount of €19,645.- the tariff for the second bracket changes from 41.95% into 24.1%