No one likes tax time. Deductions are getting rarer and rarer but there are still some tax deductions for those over 50 and especially for those over 65. Because of the changing tax laws, all these may be different for the 2019 filing year, so take advantage of them this year! Here are some great ways to save a bit of money on this year’s taxes.
** for accurate tax advice, consult a professional**
You have the choice to take a standard deduction for home mortgage interest, real estate taxes, charitable contributions, and medical expenses. If your itemized deductions are less than the standard, always take the standard deduction. If you turn 65 before December 31, of the tax year, you are entitled to a higher deduction.
Medical and Dental Expenses
Some medical and dental expenses are deductible if you itemize your deductions. These include health insurance premiums (including Medicare premiums), long-term care insurance premiums, prescription drugs, nursing home care, and many out-of-pocket heath care expenses. As of 2019, medical and dental expenses must exceed 10% of a taxpayer’s adjusted gross income (AGI).
If you have an HSA, you’ll be able to set aside more money ($4,400) to use tax free on qualified expenses.
If you make cash donations to a qualified organization and you take an itemized deduction and the cash contributions equal 60% of your AGI, you can deduct that amount. In-kind donations are limited to fair market value. Vehicles receive the gross proceeds amount for the sale of the vehicle. Try to make all the deductions in one tax year and reap the benefits rather than spreading them out over years.
Sell Your House
If you have equity and have lived in the house for at least two of the last five years, you can sell your house and not pay taxes on your profit. Single filers can claim up to $250,000 and married, filing jointly can claim up to $500,000.
Retirement Plan Contributions
Take advantage of “catch-up” contributions to your 401(k). Employees over age 50 can defer up to $6,000. You will pay on the other end, but you’ll save now.
Property Tax Breaks
Some jurisdictions offer property tax breaks to seniors. You’ll have to check with your local governments to find out if you qualify.
You may be able to claim a tax credit if your spouse is over 65 and you meet certain income criteria.
To take advantage of all these discounts, you may want to find a tax planner or CPA to help you. If those are out of your price range, you can go to a paid preparer or even better, check out the volunteer organizations that will help you for free. Tax Counseling for the Elderly uses trained volunteers to help people over 60 file basic tax returns. Volunteer Income Tax Assistance (VITA) offers the same service for people meeting certain income guidelines, but with no age restrictions.
A quick internet search will help you locate these resources.
We aren’t professional accountants or tax filers. If you need advice, consult a professional. You can locate qualified professionals through an internet search.