Tax season is here once again. But before you file on Monday, April 15, consider these tips and benefits that you can take advantage of as you get older.
One Reverse Mortgage is not a tax service. Please consult a certified tax professional before taking any action.
Online Filing – Technology has made filing your taxes easier. If you’re going to get a refund, it should happen within two weeks. Plus, you can have your return deposited directly into an account you choose. If you’re still a fan of a paper trail and durable records, print any critical documents before you submit them.
Free Help – A number of community groups across the country offer free tax assistance for older Americans. The federally subsidized Tax Counseling for the Elderly is one such program. It offers free tax services to those over 60. Keep in mind that most of these free services prepare only simple tax returns.
Medical Expense Deductions – These can add up quickly for older adults. However, some medical expenses can be deducted. These include health insurance premiums, prescription drugs, long-term care insurance premiums and most out-of-pocket health care expenses.
Disability Credit – If you are 65 or older and considered permanently and totally disabled, you may qualify for the Credit for the Elderly or Disabled. Certain income qualifications must be met, and you must also file a “long form” tax return. Consult a tax professional for further details.
Higher Standard Deduction – As long as you turned 65 by the end of 2018, you will qualify for a higher standard deduction than younger folks. Consult a tax professional for further details.
Keep in Mind
Tax Code Changes – Laws are constantly changing, so you may want to double check the changes that will affect your tax return for 2018. For example, the standard deduction nearly doubled, so filers who are used to itemizing may want to do the math and figure out what will save them the most.
State-Level Tax Rules – These differ everywhere you go. Some states offer additional tax credits (some of which are refundable), and even tax freezes, too.
Tax Effects on Social Security – The more income you have, the more likely that some of your Social Security benefits will be taxed. So, how do you know whether or not your benefits are taxable? First, add up half of your Social Security benefits and the rest of your income (including tax-exempt interest). This is called your combined income, and if this amount exceeds the limits for your filing status, then a portion of your benefits will be taxable. To find out how much you’ll have to pay, consult with a tax professional or review the rules in detail.
Ways to Supplement Income – If your tax refund doesn’t give you back as much as you hoped, there may be other ways to supplement your income. One is to access your home equity – and older adults have the exclusive privilege of using a reverse mortgage to do so. With the money from a reverse mortgage, you could eliminate any existing mortgage and pay for immediate expenses like medical bills or fund long-term goals like living a better retirement.