- June 3, 2021
- Posted by: blogtester
- Category: Tax Relief
As we get older, our tax obligations change, and our golden years bring special milestones, such as paying off a mortgage that would otherwise be unaffordable. Senior citizens have typically put in years of dedication and paid thousands of dollars in taxes over several decades. Here are some IRS tax relief options that can provide tax relief to individuals aged 65 or above.
Tax Relief for Seniors and Retirees
The Internal Revenue Service (IRS) gets it. The United States’ tax code provides several tax relief services available to people over 65.
Here are ways through which seniors can save on their taxes.
Increased Standard Deduction
If your taxation is simple — you’re not a small businessman, you don’t give large amounts to charitable organizations. You don’t itemize complicated business deductions — you’re already taking the standard deduction tax relief service, which is a standardized tax deduction that reduces your tax liability.
When you reach the age of 65, the standard deduction rises, the exact amount is determined by your filing status and varies from year to year. Seniors over 65 can increase their standard deduction by $1,300 for the 2019 tax year. You can increase the amount by $2,600 if both you and your spouse are over 65 and file jointly.
Different Filing Threshold
The filing threshold is the amount of income to earn before filing a tax return. A variety of factors can influence your filing threshold. If you earn more than $400 as a self-employed person or a small business owner, you must file a tax return. After the age of 65, the filing threshold for typical taxpayers who are either employed or retired and receive a pension or Social Security income that is much higher.
When a single filer’s income, under 65, exceeds $12,000, they must file a return. Seniors are exempted from filing a tax return until their income exceeds $13,600. Unless their income exceeds $26,600, married filers over 65 do not need to file a joint return.
If your only or primary source of income is Social Security or a pension, you may not need to file a tax return at all.
You can deduct money from the total amount owed to the IRS with this tax relief service if you qualify for the tax credit for the elderly and disabled.
Elderly/Disabled Tax Credit
You must be over the age of 65 or permanently disabled to qualify for this tax relief service. Your income cannot exceed certain thresholds, which vary from year to year. Couples filing jointly in 2019 must have an adjusted gross income of no more than $25,000, for instance.
The credit amount varies from year to year and is affected by filing status.
Retirement Plan Contribution Benefits
Many seniors continue to work after they have reached the retirement age. Others continue to put money into their retirement accounts. Contributions to retirement plans are frequently eligible for a saver’s credit, which allows you to deduct a portion of the contribution from your tax liability. A deduction only will enable you to deduct from the amount of taxable income you claim.
You do not have to pay income taxes on your retirement benefits with these tax relief services when you withdraw them. As a result, keep meticulous records of your retirement income.
Business and Hobby Deduction
After retiring, many seniors start consulting businesses. Others take up a new hobby and eventually make enough money to sell on local shops, online or craft shows. This self-employment income is subject to income taxes. When you own a business, however, you can take advantage of a variety of tax relief services. Almost all costs associated with running a business are included in these deductions, including:
- Expenses related to advertising, such as the cost of a website or business cards.
- Crafting tools and printing supplies, for example.
- Payments for a home office
- Costs incurred to hire a consultant or employee to assist you in running your company.
- Expenses associated with business education, such as books on business ownership or the cost of attending a conference.
Home Ownership Benefits
There are several tax relief advantages to owning a home. Seniors who still have a mortgage can deduct all mortgage interest paid on loans up to $750,000.
Seniors who sell their homes may be concerned about capital gains and other taxes. You don’t have to pay taxes on profits under $250,000 if you lived in your home for at least two of the previous five years — or $500,000 if married taxpayers filing jointly.
You can use the proceeds from the sale of your home to pay for senior living. Healthcare-related senior living, such as assisted living or memory care, may be eligible for deduction as a medical expense.
Social Security Tax Exemption
Federal income taxes frequently exempt the earnings from Social Security. If your Social Security and other earnings total to less than $25,000 per year, you may not have to pay federal income taxes if you file as an individual. You only have to pay income tax on 50% of your benefits if your Social Security and other earnings are between $25,000 and $34,000.
The threshold for paying any taxes on Social Security benefits for married couples jointly filing is $32,000. You have to pay taxes on half of your benefits if you earn between $32,000 and $44,000 as a couple. If an individual or a couple earns more than $50,000 per year, they have to pay the tax for 85 percent of their benefits.
Get Assistance With Tax Relief Services
It’s never a good idea to make complicated financial decisions without getting sound advice from people who know what they’re talking about. That is why tax professionals exist; to provide you with the necessary resources to reach the best possible agreement with the IRS. If you are a senior citizen in need of tax relief services, Platinum Tax Defenders are always at your service.