Senior Citizen Income Tax Considerations
Important: Check with a Financial Planner or Estate Planner before making financial decisions. This information is general and may be outdated at the time you are reading it or not apply to you in your location.
There are Many New Senior Citizen Income Tax Considerations
There have been several changes in income tax and many of these are Senior Citizen income tax considerations, which everyone over the age of 60 should know about. One such change is the raising of the standard deduction for people over the age of 65. But of course should you decide to take that standard deduction, you won’t be able to itemize your tax return. Of course, before deciding on one or the other option, you should decide which offers you the better results. That’s why in some cases, it is best to get a professional tax preparer to help you.
Another significant change is that social security benefits may be liable for senior citizen tax, but that depends entirely on the income level, and the type of income the senior has. If benefits are the only source of income then seniors usually won’t have to pay any retirement taxation.
If you happen to be over 70, you will find that the new senior citizen tax law has an additional benefit. The mandatory minimum IRA withdrawal is more relaxed, and this means that you don’t necessarily have to take that yearly withdrawal you may have once been required to do.
One of the best options this year is the Roth IRA which is a free IRA. This is a good option for people who only have this type of income. A traditional IRA can be changed over to a Roth, but there is a one time tax which is charged the year you convert. After that you will not have any retirement taxation on this income as long as it remains in a Roth IRA.
An additional change to senior citizen tax is in medical expenses. There is a higher itemized value for these costs to seniors. So, when you itemize those deductions then the IRS will allow for medical expense deduction. On the condition that those medical expenses be at least 7.5% of the senior’s gross income. Be sure to keep track of all those medical expenses so you can deduct them at tax paying time.
Because retirement taxation is constantly changing, it is always best to consult with a professional who is always on top of the newest senior citizen’s income tax laws. In many cases it is more cost effective to hire a retirement taxation professional to help prepare the taxes.
