As the saying goes, there are only two guarantees in life – death and taxes.  Unfortunately, both of these guarantees aren’t necessarily the most cheery yet neither can be avoided.  Taxes must be filed each year regardless of age; however some senior citizens may be confused about whether or not they should file.  The confusion mostly stems from the concept that many seniors receive income from sources that aren’t taxable.

In reality, the requirement to file taxes depends on individual circumstances. Consider your marital status, gross income, investments, and possible tax credits just to start. The following are some tips to help ease seniors through the tax season while maximizing deductions and ensuring Uncle Sam won’t come knocking at the door.

 

Don’t Assume Anything

You know what they say about assumptions: Don’t be the fool who assumed not to file and later had the IRS at your door. While it is true that Social Security income is generally not taxable, this is actually not true in all cases. For example:

  • If you’re married and you’ve lived with your spouse at any point, but choose to file separately, Social Security benefits may be considered taxable gross income.
  • Social Security may also be taxed if half the sum of your Social Security benefits plus all other income exceeds $25,000 (if you are single) or $32,000 (if you are married)

Although this may seem confusing, a general rule to follow is: the more income you have, the more likely some portion of Social Security benefits will be taxed.  To figure this out, calculate the “base amount”. The base amount is equal to half of one’s Social Security benefits plus other income (including tax-exempt interest). If that amount exceeds the limits for one’s filing status, some portion of your benefits will be taxable.

 

Higher Standard Deduction, Making Work Pay

When the time comes to file, if you or your spouse is 65 years old or older, you may actually be entitled to a higher standard deduction. Higher standard deductions mean enhancing your refund return, which increases even more if you and/or your spouse are vision impaired.  In addition, if a senior works outside the home, even on a part time basis, they may qualify for the Making Work Pay credit.

 

Don’t Forget Your Family

In this economy, it’s not uncommon to see families living together as bigger units with the grandparents assuming continuous expenses. Taking care of grandchildren and other dependents may entitle senior citizens to additional tax breaks. If you’re supporting your family, you may be entitled to claim some of them as dependents, even if one or more of them are not your child.

  • Children under 19 years old that live with you more than half the year
  • Children under 24 that are unable to support themselves for more than half the year, such as any student inclass five or more months out of the year
  • Any family member that is permanently and totally disabled
  • Any family member present while you or your spouse is absent (ex. during illness, education, business, vacation, military service, or incarceration)

 

State and Local Taxes Are Equally Important

It’s not uncommon for people to neglect or forget to file their state or local taxes. Many states offer additional breaks, tax credits, property tax rebates, rental rebates, and tax freezes for seniors. In some cases, these tax breaks are refundable, which means you may be entitled to money back, even if you don’t owe any tax. Each state offers its own tax structure. Go to your state’s tax administration or comptroller site for more information.

 

Don’t Be Afraid

Regardless of which bracket you fall under as a senior citizen, you should always seek out professional advice when filing your taxes. Tax professionals offer up-to-date advice on available deductions and verify what income is actually taxable.  Check your local community centers as many of them offer free tax services specifically for seniors.

In addition, the IRS provides programs that provide free help, including the Tax Counseling for the Elderly (TCE) program, which provides free tax help to individuals age 60 and older.  AARP also offers helpful services to seniors as a part of their membership. Visiting the respective websites of the IRS or AARP can provide further information on the free tax services available for seniors.

 

As another year goes by, make sure you look into the best way to file your taxes as a senior citizen.  When you have that refund check in-hand, you will be more than happy that you filed!

 


For additional caregiving information, visit the main Caregiving page or learn more about senior care options on the main Assisted Living page.

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About the Author: Victoria K. Stickley is a copywriter, editor, and senior content manager based in the Dallas area. Her graduate education in counseling and research has helped immensely in her writing as well as the care she provides for her grandparents. She currently provides support and resources to senior care websites as she learns and experiences senior care first-hand.

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