When it comes to filing your taxes, the more you know, the better. After all, being familiar with your tax situation can earn you certain tax deductions – and sometimes even prevent you from getting audited. And if you’re over age 65, there are a few things in particular that you should know.
Below are four things that everyone over 65 should consider when filing taxes this year.
Take Advantage of the Saver’s Credit
Jackie Lin, a certified financial planner with Brewster Financial Planning in Brooklyn, New York, tells Straight Talk that those working during retirement may have access to the saver’s credit. “A lot of people who are retired may work part-time,” she says. “If they decide to contribute to an IRA or to their employer’s retirement plan, they might qualify for the savers credit.” Lin suggests talking with your tax professional to see if you qualify, and notes that if you’re putting the money into a traditional IRA, you must be under 70 ½. If it’s a Roth IRA, there is no age limit, as long as you have earned income.
Get a Higher Standard Deduction
The IRS website points out that if you and/or your spouse are over 65 and you don’t itemize deductions, you can get a higher standard deduction amount. Plus, if either you or your spouse is legally blind, your deduction may be even higher. Standard deduction instructions are available on federal tax Form 1040 and Form 1040A.
Know Your Health Care Deductions
If you decide to itemize your deductions, be sure to factor in your healthcare costs. “Your medical expenses count as itemized deductions if they are over 10 percent of your adjusted gross income,” Lin says, noting that this is an increase from 7.5 percent in previous years. She also says to remember that part of your long-term care insurance premium can be counted as a deduction.
See a Free Tax Professional – or Volunteer to Be One
If you or someone you know over the age of 60 needs free filing assistance, consider looking into AARP Foundation Tax-Aide, a volunteer-run tax preparation and assistance service (you can find a location on the AARP website.) If you don’t require assistance but would like to help out others in your community, the AARP is always looking for volunteers.
Do you itemize your deductions or take a standard deduction? Do you prepare your own taxes or get assistance from a professional?