Retirement can be great, especially with the independent living at Twin Lakes Community, but living on a fixed income can be challenging. Did you know that older taxpayers may qualify for some extra tax breaks? With April 15 – Tax Day – just around the corner, we want to make sure you’re taking advantage of certain deductions and tax breaks eligible for seniors and retirees.
First off, there is a standard deduction that goes into effect when you turn 65. If you are single or you file as head of household, you could add an additional $1,600 to your standard deduction. If you are married and file a joint return, you could add an additional deduction of $1,300 for each spouse who is 65 years old or older.
When considering different types of deductions, deciding between standard deductions or itemized deductions may leave you scratching your head. According to TheBalance.com, for retirees, standard deductions are the recommended way to go for a few reasons. First is the recent change in the Tax Cuts and Jobs Act (TCJA) that has almost doubled the standard deductions for all filing statuses. These are the tax cuts that occur before the added bonus deduction for being 65 or older mentioned above. The updated TCJA deductions look like this:
- The standard deduction for filers who are single and those who are married but are filing separate returns increased from $6,350 to $12,000 in 2018.
- The standard deduction for those who file as head of household increased from $9,350 to $18,000.
- The standard deduction for qualifying widow(ers) and married filers who are filing joint returns increased from $12,700 to $24,000.
When we said almost doubles, we meant it! In addition, once retired, the list of itemized expenses you would claim likely would not add up to the amount you are eligible to deduct via standard deductions.
Another tax break seniors 65 years old or older are able to receive is an increase in the filing threshold. Typically, single taxpayers can earn up to $12,000 before having to file a return. However, if you are 65 or older, you can earn up to $13,600 before you would have to file a tax return for that income. A similar break is available when filing jointly. If you and your spouse are both under 65, you can collectively earn $24,000; $25,300 if one of you is 65 or older; $26,600 if you are both 65 or older.
One last thing to keep in mind when filing your taxes this year is the tax credit for the elderly and disabled. This is the most significant tax break available to seniors and retirees. To qualify for this credit, the taxpayer must be a U.S. citizen or a resident alien who:
- turns 65 by the end of the tax year
- has retired on disability before the end of the tax year and was permanently disabled when he/she retired
- under 65 by the end of the tax year, but retired on permanent and total disability, and received taxable disability income.
At a Continuing Care Retirement Community like Twin Lakes Community, there are other tax deductions a resident may be entitled to take regarding admission and monthly fees. This information is not intended as tax advice and is not a substitute for tax advice. Always consult with a tax professional. However, if you’re looking for advice on retirement, we have earned our credentials! Twin Lakes Community in Burlington, North Carolina is a neighborhood where information flows freely, and independence and community are treasured. We strive to help you find a place where you can expand your horizons and live an intentional life of purpose.
For more information or to schedule a tour of our community, contact us at 336-538-1572 or by email: email@example.com.