Tax Breaks Every Senior Should Know

Tax Breaks Every Senior Should Know

Although getting older may not be something many look forward to, there are some perks to aging. After age 50 and even more so after age 65, seniors qualify for extra tax breaks and larger deductions. By placing income towards retirement and health savings accounts, money can actually be saved on taxes.

The following are a few tax breaks every senior should know ...

• Larger deductions – If people age 65 or older don’t itemize tax deductions, they may be eligible for a larger standard deduction. Retirees with a deceased spouse may also qualify for a higher standard deduction.
• Higher gross income – Those who are age 65 and older can earn a higher gross income than younger workers before being required to file taxes. This can apply to singles as well as those who file as a couple.
• Property owners – Although property tax rules vary for each state, there may be tax breaks for property owners. In some areas, people who earn below a certain income level and are above a certain age may qualify for property tax exemptions based on their state jurisdiction.
• Disability tax credit – People age 65 or older with a disability may be eligible for a tax credit. In addition, retirees may also qualify for a tax credit due to lower income. Retirees who qualify may be able to reduce their tax bill by taking a tax credit under these circumstances.
• IRA contributions – Employees age 50 and older may be able to contribute an additional amount of money towards their IRA than wage earners who are younger.
• 401(k) contributions – There may be a larger tax savings for seniors who have contributed to a 401(k) plan. Wage earners age 50 and older can defer paying income tax on an amount larger than younger employees who are invested in a 401(k) plan.