Commonly Missed Tax Deductions for Seniors
The start of a new year also means the start of tax season. From January through April, Americans are busy compiling tax documents and filing their returns. While this is something that many seniors have done for decades, things can change once individuals turn 65 or older. You may be eligible for tax deductions you didn’t even realize.
Higher Standard Deduction
For instance, did you know that individuals age 65 or older may qualify for a higher standard deduction than younger adults? In addition to the standard deduction – which has increased for 2018 to $12,000 for singles and $24,000 if married and filing jointly – you could receive another $1,300 to $1,600.
More in Return for Medical Expenses
Many seniors have higher medical and dental costs as they get older. They may develop more health conditions or complex issues that require additional care, and this can add up. If these expenses are at least 7.5% of your adjusted gross income (AGI) and you are filing an itemized deduction, you may be able to claim them and get a greater return. Keep in mind that this will soon be changing, and as of 2019, the rate will increase to 10% of your AGI. You may also be able to deduct your long-term care insurance premium.
Deduction for Selling Your Home
If you decided to sell your home this year and move to a smaller home, assisted living, or a nursing home, you may not have to include all of the income from the sale on your tax return. For married couples, you may be able to exclude up to $500,000, and for singles, up to $250,000. However, there are a few exclusions and stipulations for excluding capital gains, so check with a tax professional to see if you qualify.
Contributing to Retirement
For individuals over age 50, you may be able to stash away a little extra in your 401(k) because the contribution limit increases to $24,500 per year. Even if you’ve already retired, you can continue saving money in a traditional or Roth IRA to help support your needs as you age.
If supporting charitable organizations is something you are passionate about, you may be able to claim this as part of your itemized deductions. There are some limitations though, and these contributions can only be deducted if they exceed a certain amount. You may be able to claim cash donations up to 60% of your AGI, but if your contributions include property, it can change things a bit.
Taking advantage of available tax deductions can help you make the most of your return. Since tax laws change from year to year, it is important to consult with a tax professional regarding available claims and deductions for the current year to see if you qualify. Don’t forget to ask about deductions related to in-home care, long-term care, and other expenses that come with aging. You may be able to include some of these expenses on your tax return. To learn more about in-home care and senior services, contact Always Best Care of Morris today at 201-212-4409.