Tax Tips For The Over 50 Set
February 20, 2012 § Leave a comment
With just under a month left to complete your tax return, hopefully you have either mailed your return or at least started to pull together all of your necessary documents. If you are still working on your 2011 return, you won’t want to miss this week’s blog because we are going to talk about some often overlooked deductions for those over 50.
You will find some of these suggestions require you to itemize your return or have other restrictions. If you are using a tax program or tax preparer, they should be able to help you navigate the specifics.
These tips are courtesy of AARP.org.
- Claim a portion of long-term care insurance premiums — the older you are, the higher the claimable ceiling. Small business adviser Barbara Weltman, who hosts a weekly radio show and publishes a newsletter, notes that some states including New York also give tax breaks for these premiums.
- Deduct the cost of medical care in an assisted living facility or nursing home if the stay is related to medical care.
- Deduct legal fees for retirement tax planning, says Mark Steber, chief tax officer for Jackson Hewitt.
- Do you work while paying a home health aide to take care of your spouse or dependent? You may be able to claim a credit of up to $3,000 in dependant (or spouse) care expenses.
- If you contributed after-tax income to your retirement account, a percentage of your annual distribution may be tax-free.
- If your adjusted gross income, untaxed interest and half your Social Security benefit add up to less than $25,000 ($32,000 if married and filing jointly or qualifying widow), you’ll pay no taxes on your Social Security income.
- If you’re in a tax bracket of 15 percent or lower, you’ll pay no federal taxes on long-term capital gains you racked up during the year.
- If you turned 65 by Jan 1, 2012, you’re eligible to take a higher than normal standard deduction: Single $7,250; married $13,900; head of household $9,950; qualifying widow/widower $12,750. But this will mean you can not itemize your tax return.
- If you pay all or some of your parents’ medical bills, you can deduct those as health care expenses. “Even if the parent doesn’t qualify as your dependent” because of income rules, Weltman says. “If you pay for a parent’s medical care and these payments are more than half of the parent’s support, those payments are treated as part of the taxpayer’s itemized medical costs.”
- You may get a tax credit if you made certain energy-efficient improvements to your home, such as installing a new roof or new windows or exterior doors. Credits may also be available if you purchased a qualifying furnace, electric heat pump, water heater or central air conditioning unit.
As we age, it is always worth keeping track of our medical expenses. If your medical bills are 7.5% higher than your adjusted gross income, you can deduct the amount above that level. Medical expenses can include a wide variety of items like chiropractic care, improvements to your home made due to medical reasons, contact lenses, crutches, dental visits, Medicare supplements, hearing aid batteries, physical therapy, wheelchairs and even acupuncture.
With all this talk of deductions and adjusted income this and that, your head may be swimming now. Unfortunately the government doesn’t make it easy to understand the tax codes. If you find yourself frustrated with your return this tax season and need a referral for tax advice, please feel free to contact the Law Office of Dawn M. Weekly, PC. The law firm is located in Sandwich, Illinois and focuses on elder law and Life Care Planning for clients. Their office may be reached by calling 815-570-2334.