5 Tips to Help With Filing Your Taxes
Tax season is here, folks! Maybe you’re in your Tuscaloosa assisted living community dreading your upcoming tax prep…Of course, everybody wants to find ways to save money on their taxes or maximize the return received, seniors and retirees included. If you are 50 or older, we have a few tips that just might help– tax breaks for seniors. We hope you’ll find them useful!
1)Increase on Retirement Account Limits
Once you hit age 50 or above, you are eligible to contribute up to $24,500 to a retirement account, and can also defer paying tax on those savings. What a great way to save while also making a fiscal decision with inherent tax benefits.
2) Seniors’ Higher Standard Deduction
If you and/or your spouse are 65 years old or older (and you do not itemize your tax deductions), you can take advantage of a higher deduction amount when you file your tax return. Also noteworthy is that there is an additional increase in standard deduction if either of you is blind.
3) Earned Tax Credit for the Elderly or Disabled
At ages 65 and up, if you are totally or permanently disabled, you may be eligible for the Credit for the Elderly or Disabled, which is based on age, income, and filing status. In order to get the credit, you will need to meet the following qualifications:
Your income (on Form 1040, line 38) is less than $17,500 if single, $20,000 if married and filing a joint return with one qualifying spouse, or $25,000 if married, filing jointly with both parties qualifying.
AND
Your non-taxable Social Security or other pensions, annuities, or disability payments are less than $5,000 (if filing as head of household OR married and filing jointly with one qualifying party), $7,500 if married, filing jointly, and both parties qualify, or $3,750 if you’re married, filing separately, and lived separately for a year.
4) Higher Filing Threshold for Seniors
Taxpayers ages 65 and older can earn an income of $1,600 more, or $2,600 if married, filing jointly, and both parties are 65 or older, before they need to file a tax return. So what that means is that older taxpayers with an income of $13,600 or less ($26,600 if married and filing jointly), may not even need to file an income tax return at all.
5) No Early Withdrawal Penalties
Once you reach the age of 59 1/2 you will not be penalized if you withdraw money from your IRA account. Prior to that age, you would be required to pay a 10% fee. Moreover, if you leave a job or your employment is terminated and you’re 55 or older, you may also withdraw money from a 401(k) without any penalties. That said, you would have to pay tax on that additional income.
No matter what your financial situation is at your Tuscaloosa assisted living community, we hope you find these tax prep tips helpful! Tax prep for seniors doesn’t have to be a daunting undertaking. There are many ways to ensure you get the highest possible benefit when filing your tax return.