Tax Tips for Seniors

By Nora Heston Tarte

How to Maximize your return

Filing taxes on your own is complicated. But, hiring a professional to do it for you isn’t always worth the extra expense. It’s a good idea to avoid an audit, but it may not be in the budget to give up your return dollars to a CPA. There is so much to think about when filing taxes, so it’s important to try and make the process as straightforward as possible. Americans could always consider keeping all of their work-related expense receipts in one place. This would help them to know exactly what they need to report when they file their taxes. Perhaps this FileCenter Receipts software could be useful for that. By keeping all receipts online, it reduces the chance of people losing them. This should help seniors avoid an audit. However, with new tax laws affecting 2018 returns, it’s important to stay in the know. Learn how these new laws-and existing ones-affect your return. Then, file a return you can feel confident in. In cases of businesses just starting out, a startup tax accountant may be needed to make sure all financials are correct and filed at the right times.

What kind of deduction should I take?

In the past, people could choose between standard and itemized deductions. While there is still a choice, a new law called The Tax Cuts and Jobs Act changes the way most people make this decision.

The law change nearly doubled the standard deduction making itemized deductions something that only 10 percent of tax filers will actually benefit from. The good news is that standard deductions are typically easier to file with less legwork to get to that final number.

If you turned 65 before December 31, 2018, you’ll also get to take advantage of a higher standard deduction, one those younger than 65 won’t benefit from. It might also be worth looking into whether or not a tax extension is on the cards for you when filing taxes. You may be interested to learn that quick action, with a plan and professional help, could be beneficial for you in offsetting tax penalties and lowering your tax bill, so investigating the services of CPAs may not be a bad idea.

Don’t miss out on money

Some deductions get overlooked simply because people forget about them or don’t realize they are entitled to them. Don’t leave money on the table. Learn about two of the more common deductions available to seniors.

  1. Medical & Dental Expenses

Many seniors qualify for a deduction when medical expenses are high. Keep in mind that this deduction is only applicable to those that itemize deductions, and it is subject to a limit of 7.5 percent of your adjusted gross income (AGI).

Next year, only medical expenses that total more than 10 percent of AGI will be eligible for deduction.

  • Business deductions

If you’re running a business-full or part time-in retirement, those business deductions can help get your refund up, or at least keep what you owe to a manageable amount.

Remember to write off business expenses including travel, supplies, equipment, home offices, and more. In some cases you can write off square footage in your home if it is used as a home office. Businesses that take a loss, which happens often in the first couple of years, can actually offset other earned income, too.

3) Credit for the Elderly or Disabled

Those who are over the age of 65, have a spouse over the age of 65 and are filing jointly, and those who are under the age of 65 but permanently disabled may qualify for this credit if they are filing a Form 1040 or 1040A. If you’re looking to claim due to a permanent disability but you’re not all too sure of the workings, then getting in touch with the likes of Crest SSD or a similar company could help ease the various processes that need to be carried out.

The credit is based on income requirements and does not work on a Form 1040EZ. You may qualify if: the income on Form 1040 line 38 is less than $17,500, $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 lived apart from your spouse for the entire year).

Sidebar//Tax Tips:

1) Don’t make a mistake when calculating the taxable amount of social security income (SSI). This amount isn’t the same as the total amount received. To avoid a big blunder, read the instructions for IRS Form 1040 and 1040A and check it twice before filing.

2) Charitable contributions of up to 60 percent of your AGI are allowable each year, but taxpayers have to itemize their deductions to take advantage of this discount. Instead of forgoing charitable contributions, stack them in one year to qualify for a bigger deduction. By making charitable contributions at the beginning and end of the same year (January and December, for example) instead of annually, taxpayers may qualify for that itemized deduction. The key here is to double up donations every other year, instead of spacing them evenly on an annual basis.