Tax breaks lower US seniors’ and retirees’ taxable income. It helps them save money on taxes. There are six common tax deductions seniors and retirees can claim.
Standard Deduction
Seniors 65 and older may be eligible for a higher tax deduction. The 2021 standard deduction for individuals aged 65 and older is $14,250 for single filers. The deduction for married couples filing jointly is $27,800.
Medical Expenses
Seniors can deduct eligible medical expenses exceeding 7.5% of their adjusted gross income (AGI) for the tax year. Some of the eligible medical expenses are listed below.
- Doctor visits
- Prescription medications
- Long-term care services
- Medical equipment
- Other healthcare costs not covered by insurance
Retirement Account Contributions
Traditional IRAs and 401(k) plans may be eligible for tax deductions. It depends on your income and program eligibility. Seniors 50 and older can make catch-up contributions to their retirement accounts.
State and Local Taxes
State and local income taxes or sales taxes paid throughout the tax year may be deducted as well. Seniors who itemize their deductions may do this. It includes taxes on retirement income and real estate property taxes.
Charitable Contributions
Donations to eligible charity organizations may be tax-deductible. This applies to seniors who itemize deductions. Different types of donations are listed below.
- Cash
- Property
- Clothing
- Household goods
- Appreciated assets
Home Mortgage Interest
Seniors who own a home and itemize deductions can deduct paid mortgage interest.
- Loans used to purchase, build, or improve their main residence
- Home equity loans or lines of credit
The deduction is calculated based on loan amounts and the date the loan was taken out.
Seniors and retirees must examine their tax cases. Keep up with state and federal tax regulations to maximize tax savings. However, tax laws and deductions may change over time. Therefore, it’s best to consult with a tax professional to identify the eligible deductions.