Senior citizens should be aware that the United States Tax Code is always changing. Filing one’s taxes alone without the help of a Massachusetts elder lawyer is risky. An estate planning attorney or living trust attorney will help you coordinate all of your assets in a manner that most reduces your taxes. Your estate planning attorney stays abreast of all of the changes to the Tax Code and knows how the law treats retirement accounts, deductions and tax credits from a senior citizen’s perspective.
Seniors should be aware that their medical and dental expenses can often be deducted from taxes. Health insurance premiums including Medicare premiums, nursing home care, prescription drugs, long term care insurance premiums and plenty of other out of pocket health care expenses are commonly deducted. Your medical and dental expense deductions are subjected to a limit. If the cost of those medical and dental expenses exceed 7.5 percent of a senior’s income, they can be deducted.
Seniors can obtain a higher standard deduction amount if they do not itemize their deductions. Those with blind spouses can get an even better standard deduction. Seniors should also understand that the figure they calculate for their taxable amount of Social Security is central to the tax return. This figure should be double checked before filling out the rest of the tax return.
Don’t fill out your taxes without using Form 1040 or Form 1040A. These allow seniors to obtain the Credit for the Elderly or Disabled. Using Form 1040EZ will not qualify your for the Credit. You qualify if you and/or your spouse are 65 years or older or if you are permanently and totally disabled. Your income must also be less than $17,500 as listed on Form 1040 line 38.
Seniors should also know that retirees are still permitted to make tax deductible contributions to retirement plans. There are actually higher contribution limits for the IRAs and 401(k)s of those age 50 and older. Those who’ve earned money in the form of interest, dividends or capital gains from investments should understand that these will be taxed at lower rates than traditional income. Yet these earnings are not subjected to Medicare or Social Security taxes.