Being a senior can be difficult in many ways. One such example is finances. Unfortunately, as far too many seniors know, no matter how hard you try, planning for retirement can be extremely difficult, and it seems as if you never have enough money to meet your growing list of expenditures. Thankfully, in many ways, the government can help. One of the ways it does this is by providing an ample range of tax breaks. Here’s a list of some of the most lucrative.
Medical & Dental Expenses. As you are likely well aware, the costs of medical care grow significantly in old age. Thankfully, you can benefit financially from this in at least one way: Your federal taxes.
A variety of medical and dental expenses are deductible. These include a wide array of insurance deductions, including deductions for Medicare, long-term health insurance, and more. Furthermore, if you itemize your deductions and don’t take the standard deduction, you can deduct up to 7.5% of your Adjusted Growth Income for other medical and dental expenses. Hopefully, you won’t need this deduction, but if you do, it is available.
Selling Your House. Many seniors downsize. If you do, you can reap the tax benefits. Provided you have lived in your home for two of the past five years, you will not be taxed on the income from any home sale. Just make sure you adjust your taxes after the sale, as you will likely lose on many mortgage and property tax deductions.
Educational Contributions. Some seniors find themselves in the position whereby they make contributions to a grandchild’s 529 account. If you do, this is wonderful, and there’s even better news: These contributions are tax-deductible. Furthermore, many states allow for additional education-related expenses to be deducted. Make sure to check with a financial planner to find out if this the case for you.
Charitable Contributions. As a senior, you may have some additional disposable income that you donate to charity. It goes without saying that these deductions can be deducted for taxes. As such, make sure you keep track of all of the charitable donations you make. If you are downsizing your home and donating physical goods, make sure you get a receipt from the agency that you are donating to. This will allow you to get a deduction on any donation, even if it is not of direct financial value.
State-Specific Deductions. You may need to contact a CPA for specific advice here, but many states allow for senior-specific deductions. For example, some states allow for home modifications to be deducted, if those deductions are made to better accommodate a disabled senior.