Filing taxes can be a daunting task, but it can also promise a big payoff. There’s just one catch: U.S. taxes are complicated, and securing the largest refund possible isn’t always easy. This is where a tax professional can be a much-welcomed asset. CPAs have the experience and knowhow to maneuver the minutia of our tax codes. But even if you rely on an accountant, that doesn’t mean you shouldn’t take the time to educate yourself on tax breaks for seniors and learn about common mistakes seniors make when filing taxes. That’s why we’ve rounded up some helpful tax tips for seniors, to make sure you show up at your accountant’s office prepared.
Tax Tips for Seniors
Taxable Income
Be sure to include all of your taxable income. Even after retirement, income from pensions and IRAs is still taxable. Here are other examples of income the IRS considers taxable: military retirement pay, all or part of pensions and annuities, all or part of Individual Retirement Accounts (IRA), unemployment compensation, gambling income, bonuses and awards for outstanding work, alimony, and prizes. Also, part of your social security benefits can be taxable based on your income and filing status.
Common Deductions for Seniors
It seems there are tax deductions for almost everything. Unfortunately, some of these deductions are commonly missed by senior citizens. To make taxes a little easier, the AARP has assembled a list of the most commonly missed deductions. Here are five critical deductions you might not know about:
- Did you realize medical expenses can be deducted? This includes common purchases such as hearing aids and batteries, artificial teeth, prescription drugs, oxygen, and wheelchairs. As always, keep your receipts and be sure to share them when preparing your taxes.
- If you’ve made energy-efficient improvements to your house, like installing a new roof, putting in new exterior doors, or upgrading to insulated windows, you can get a tax credit. Talk with your accountant to see which improvements qualify.
- Your medical premiums, including a slice of your long-term care insurance premiums, can be deducted. The amount you can claim credit for increases with age. Talk with a tax professional to learn how much of your insurance premium can be deducted from your taxes.
- Your room and board costs can also be deducted if you’ve moved into an assisted living facility and require assistance to perform everyday tasks like bathing and dressing. A licensed health care provider must prescribe the plan of care in order for it to qualify.
- According to the AARP, if you still work but pay a home health aide to care for your spouse, you can claim a credit on your taxes.
Where to File Your Return for Free
Filing taxes can be confusing and overwhelming, no matter what your age, which is why the IRS has sponsored volunteer tax assistance programs to offer tax tips for seniors and help seniors prepare their tax returns.
The Tax Counseling for the Elderly program, or TCE, offers free tax assistance to anyone 60 years of age or older. TCE can be especially helpful if you have questions about pensions or retirement-related taxes. Before going to a TCE office, be sure you have all the necessary documents and information TCE or VITA volunteers will need to help you prepare your taxes.
If you’re looking for a TCE office, use the AARP Site Locator Tool or call 888-227-7669.
Avoiding Scams
One of the biggest concerns during tax season is the threat of scams. Scam artists know senior citizens are especially vulnerable, so it’s important to educate yourself about commonly used scams and be sceptical if someone reaches out to you regarding your upcoming tax return.
Here’s the first clue you are dealing with a scam artist: The IRS does not contact people through text message, social media, or unsolicited email. Even if the caller or sender claims to be from the IRS, they are likely a con artist. They might use fake names and ID numbers and might even know a lot about you, but don’t be fooled.
If you are told you owe money to the IRS and must pay it promptly through a preloaded debit card or wire transfer, hang up. This is a very common scam. If the caller is aggressive or threatening, this is another clue you’re dealing with a con artist. If you’re not sure, just hang up the phone. The list of scams is a lengthy one, but you don’t have to become a victim. The IRS put together a list of the Dirty Dozen common tax scams, which you can use to learn what to look out for. This list is full of helpful tax tips for seniors and pointers on how to keep yourself safe from con artists.
Are you looking for an assisted living community in Tennessee? Check out Hearthside Senior Living Place, located in Bartlett, Tennessee. We would be happy to schedule a tour for you so that you can explore the community, learn about our numerous amenities and activities, meet some of our residents, and ask any questions you might have. For more information, please call 901-854-6590. We look forward to meeting you!