A Simple Guide to Senior Taxes, Credits, and Deductions
Are you a senior who is unsure how to get the most out of your tax deductions? Need an easy guide to the deductions that will save you money? Looking for tax tips designed for seniors?
With the joy of the spring season comes the much less joyful tax season. If you pass each year finding that your taxes get more and more complicated, you’re not alone. As you enter your senior years you may be unaware of certain tax deductions you should be taking full advantage of. Because we know everyone could use a little extra padding in their tax return, we’ve put together a simple guide to help you get the most from your tax return!
As experts in senior and respite care in Ann Arbor, we have experience with many tax situations and want to share some of that experience for your benefit with a simple guide to taxes, credits, and deductions.
Owed Taxes
Standard IRA: Withdrawals from your IRA will be taxed just like regular income, at a rate based on your income for the year.
Pensions: Pensions are taxed like regular income as well. Your pension provider will use a 1099 form to show you the portion of your pension that is taxable.
Interest, Dividends and Capital Gains: Money earned through non-retirement accounts are taxed like income. A 1099 form for each account will report your earnings and help you calculate tax. Earnings from retirement funds are not taxed when earned, only when withdrawn.
Life Insurance Proceeds: If you received money from a life insurance policy that paid out more than was paid in, you’ll owe taxes on the excess amount.
Social Security: Depending on your income, you may owe taxes on your social security benefits. If your total income (including 50% of your social security benefits) falls above the established threshold of $25,000 for single persons and $32,000 for married persons, you’ll owe tax on your benefits.
Credits and Deductions
Medical and Dental Expenses: If your unreimbursed medical and/or dental expenses are 10% or more of your adjusted gross income, you can deduct them on your taxes. Depending on your age, the expenses may need to only be 7.5% of your AGI. Transportation expenses for care can also be included.
Casualty and Theft Losses: Property and income loss as a result of things like natural disasters, accidents, and thefts may be deducted. Your deduction would only count the portion of loss not covered by insurance or other reimbursement.
Credit for the Elderly or Disabled: Taxpayers over the age of 65 or who are retired with a permanent disability and receiving disability benefits may be eligible for a tax credit.
Credits for Dependent Care Expenses: Any expenses for care outside of your home for your qualifying dependent(s) may be eligible for this credit.
Premium Tax Credit: If you or a family member are enrolled in a health plan through HealthCare.gov or a state marketplace and get assistance to pay for the premiums, you may be eligible for this credit.
Earned Income Credit: If you’re over 65 with a child dependent, are working, and earn less than $53,505, you may qualify for this credit.
With this simple guide to taxes for seniors, you can feel confident that you aren’t missing anything and are more likely to get the return you really deserve! Although our guide should be useful, because taxes can be complicated and unique to your situation, it’s recommended that you seek the advice or services of a professional before filling. If you have more questions about taxes or respite care in Ann Arbor, give us a call today. At Hillside Terrace, our family shares life with yours.