Pronto Tax Class Blog
What are the Best Tax Benefits for Seniors?
By Tim Frye
Every person wants to be able to say that they lived a long fulfilling life. We should be so privileged as to complain about the deficiencies of old age. Getting up in years can be a pleasant experience or it can be a brutal one. And in many cases that delineation is drawn along financial lines. If the years are flying by and we are gradually getting more financially secure life will be much more comfortable, but this can only happen if a person plans ahead and saves money for retirement. And one of the most underrated ways to save money is on your taxes paid every year. And most importantly there are added tax benefits and tax breaks that are offered to taxpayers over 50. This article will outline the best tax breaks available to senior taxpayers.
Medical and Dental Expenses
As a person gets older and their health issues become more of a concern, their health care costs will most likely climb. There are certainly growing concerns that the biggest costs to seniors over the age of fifty is going to be healthcare. It can be said that as much as 30% of a seniors income will be dedicated to medical and dental expenses. As much as it seems like a negative aspect of life, on the tax side of things the expenses can allow for a hefty write off against taxable income. Senior taxpayers who itemize their deductions can use those expenses to save hundreds to thousands on their tax bill. Remember to note that their is a floor placed on medical expense deductions in the tax arena, in that they have to exceed 10% of overall income to begin to count against taxable income.
Sale of Personal Residence
When the kids are grown and retirement is within reach, many couples look to downsize their living situation and spend more of that discretionary money on traveling the world. So this means many retirees are selling their homes and moving elsewhere. If a person has lived in their home for a minimum of two out of the past five years prior to the sale of the home, they are entitled to the Personal Residence Exclusion allowing for a tremendous amount of tax free income. Tax law will allow the qualifying seller to avoid tax on up to $250,000 worth of gain if single, and double the single exclusion if married.
Even when a taxpayer is retired they are allowed to take advantage of those popular tax deductible contributions to their preferred retirement accounts. This is one of the best senior tax breaks around because many people are looking to live off their retirement funds. Tax law states that those people fifty or over are allowed to contribute more to their retirement funds than those that have yet to reach their 50th birthday.