Tax tips for seniors: Don’t leave money on the table
According to the Kaiser Family Foundation, while Social Security and Supplemental Security Income enhances economic security and reduces poverty rates among people ages 65 and older, 7.2 of 51.1 million older Americans live in poverty. The U.S. Census Bureau defines senior poverty as any household living under $11,756 annually.
With this understanding, the Internal Revenue Service (IRS) has tax tips for older adults to use when filing their taxes. The following guidelines are just a few ways to avoid costly tax deduction errors and maximize senior tax credits afforded.
Standard Deduction for Seniors
If seniors don’t itemize their deductions, they can qualify for a higher standard deduction amount if they and/or their spouse is 65 years old or older. Married seniors filing jointly can receive an even higher standard deduction amount if either is blind (one year prior to filing date).
Social Security Benefits
Some seniors may be surprised to find out that Social Security Benefits are taxable. Be advised that only a certain portion is taxed. Use the Social Security benefits worksheet to calculate the amount before filing.
Credit for the Elderly or Disabled
According to the Internal Revenue Service (IRS), the credit is based on age, income and filing status. You must file using Form 1040 or Form 1040A to receive the Credit for the Elderly or Disabled credit. The qualifications are:
- Seniors (or their spouse) are 65 and older or under 65 and retired on total and permanent disability.
- Adjusted Gross Income (AGI) is LESS than $17,500 for a single filer (based on Income Tax Form 1040, line 38); $20,000 married filing jointly and only one spouse qualifies; $25,000 married filing jointly and both qualify or $12,500 married filing separately and living apart from spouse the entire year.
- Non-taxable Social Security (or other nontaxable pensions, annuities, disability) is less than $5,000 for a single filer; $5,000 married filing jointly and on only one spouse qualifies; $7,500 married filing jointly and both qualify.
Time to file taxes. The IRS established a free Volunteer Income Tax Assistance (VITA) program to help people who earn less than $55,000, have disabilities or have limited English-speaking skills and need help with their tax returns. To find a free tax return preparation site or a list of what to bring to a VITA site. For more information about tax preparation, visit www.irs.gov.
March 6, 2019
Written by Iman Cole