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Don’t Forget About Senior Tax Benefits

May 10 2019

 Don’t Forget About Senior Tax BenefitsGetting older, raising a family, and entering into retirement may mean some changes for people who are transitioning into senior living. The kind of athletics and wild adventures of youth may no longer be in the cards, but for people that have worked hard, and made valuable contributions throughout their lifetime there are rewards for making it this far too. One of those is financial recognition from the government, especially when it comes to things like taxes.

You’ve Earned It

For people who are retiring, the government wants to ensure that people who have worked hard their whole lives enjoy the fruits of that labor, and now is the time to do so. The sometimes harsh restrictions on taxes and finances become more forgiving for people in the senior living demographic. With lifestyle changes comes some adjustments in how taxes are approached for seniors, and this comes in a variety of different ways.
Healthcare, for example, may become more of an issue for seniors. As a result of this progression, there are healthcare tax breaks that seniors may qualify for, depending on whether they have a high-deductible health plan or another form of health savings account. Deductions on health for seniors can jump from $12000 to $18000 for an individual, and by $24000 for couples. This deduction grows further if blindness or other disabilities enter into the equation.

Social Security: Tax-Free

It depends on how a senior is evaluated for income in a given year, but in some instances, the social security income someone in senior living earns may be classified as partially or completely tax-free! For example, individuals that have a total income of under $25000, can have social security benefits eliminated as a source of taxable income.

Tax Breaks On Investments

One of the smartest things a person can do with money is to invest it, and this can an important financial pillar for the elderly with the right choices. This is why there are investment tax breaks available to seniors based on adjusted gross income, or AGI. Continuing investments, or even just transferring assets from one account to another can incur fees and expenses. These expenses may be deductible, depending on what percentage of the AGI they comprise. With the right timing on investments and AGI, some financial benefits can kick in when certain decisions are made during lower AGI years.

Better Contribution Limits

Americans over the age of 50 get a sharp increase in the limit of contributions they can make to their IRA, 401K, or 457. This allows people to “catch up” and make more significant savings in the run-up to retirement. Taking advantage of this after 50 can also mean reducing taxable income during these later years, that can translate to more savings, and a little bit more financial flexibility. Every little bit helps!
Just remember that even as people get older and transition to senior living, requiring assistance like laundry services, that we provide, that doesn’t mean that financial opportunities stop. With the right decisions, there are still ways to invest or make a dollar go further that can make a big difference in the retirement years.