Mar 3rd, 2012 | By | Category: Senior Finances

Seniors Benefit From Income Tax  Code

A variety of income tax breaks are available to senior citizens who qualify.  Some of them are detailed enough that you will need to consult a tax specialist who can review your circumstances to determine if you qualify or not.  The tips are provided here, with the caveat that you should consult your financial/tax consultant before you assume you meet the criteria for any deduction or credit.

  • You do not owe tax on Social Security income if your adjusted gross income plus untaxed interest plus half your Social Security benefits are less than $25,000 ($32,000 if married).
  • If you have investments that produce capital gains, and your tax bracket is 15 percent or below, you do not have to pay federal tax on long-term capital gains.
  • If you are purchasing long-term care insurance, you may qualify for a part of the premiums to be deducted.  There is a scale for claims, meaning the older you are, the higher the ceiling for claiming a deduction.
  • If you live in an assisted living facility (ALF) for medical purposes, your room and board and services performed by facility personnel may be deductible.  Every resident in an ALF has a care plan; it is that plan that determines whether or not the senior is living there for medical reasons.
  • Certain legal fees are deductible; consult your tax adviser to determine which ones you might qualify for.
  • Medical expenses in addition to doctor, dental, hospital,lab fees may be deductible; ask your tax adviser about hearing aids, batteries, false teeth, medications, wheelchairs, walkers, oxygen, etc.
  • If you work and have to pay someone to take care of your spouse/partner/dependent, some of the expenses for care can be claimed as a credit; remember, credits come off your bottom-line tax bill – they are not expense deductions from taxable income.
  • If you have an IRA, be sure to talk with your tax adviser about any contributions you made, and your minimum annual distribution.  If you put after-tax money into an IRA, it will not be taxed again when you take it out.  But you do have to pay tax on the earnings that you take out.  Your IRA account holder should provide you with annual reports that tell you the tax you owe on earnings that you take out of your account.
  • Your standard deduction may be higher than usual if you turned 65 by January 1, 2012.  Again, the deductions vary by marital status and how you are filing (single head of household vs married filing separately vs married).
  • If you are paying for some of your parent(s)’ medical care, you may deduct those expenses on your tax return.  The payments need to be more than half of your parent(s)’ support.
  • Energy-efficient home improvements are still eligible for a tax credit.  Check with your tax adviser to determine what purchases qualify for the current tax year.

This list is intended to alert senior citizens in the United States about the possibilities for income tax deductions and credits.  Seniors should always check with their income tax advisers before they assume they qualify for any deductions or credits.




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