6 Tax Perks People Over 60 May Qualify For
As a senior, you benefit from finding smart ways to cut expenses and stretch your income. But you might not consider that your age could qualify you for tax deductions, credits and exemptions or provide more flexibility for using tax-advantaged accounts. While factors such as your location, earnings and age can play a role, here are six tax perks that may be available to you.
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1. Free Tax Filing and Advice
If you or your spouse is at least 60, you can take advantage of the IRS Tax Counseling for the Elderly program to get free tax advice. The Volunteer Income Tax Assistance program is also available for free tax filing. Check this IRS tool to find nearby locations and program dates.
2. Larger Standard Deduction
Starting the tax year you turn 65, you can add a small amount to your standard deduction, which depends on the year and your filing status. You get $1,500 (if filing as a surviving spouse or married) extra or $1,850 (if filing as single or head of household) extra on your 2023 tax return. The extra amounts are $1,550 or $1,950 for the 2024 tax year.
Thanks to higher standard deduction amounts, you may not even need to file a return as long as your income doesn’t exceed the thresholds based on your filing status. Other rules do apply, so check the IRS guidance on who needs to file.
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3. Local and State Tax Perks
You could save on your property taxes if your locality offers an exemption for seniors. You might also find state income tax credits for seniors and retirees and enjoy retirement income tax subsidies.
4. Credit for the Elderly or the Disabled
If you don’t exceed the income limits, the Credit for the Elderly or the Disabled could be worth $3,750 to $7,500. If you’re not at least 65 years old, you’d need to meet the specific disability requirements, including having taxed disability income. You can complete Schedule R to calculate your credit amount.
5. Higher Contribution Limits
For the 2023 and 2024 tax years, being at least 50 years old allows you to contribute an additional $1,000 annually to an IRA, $7,500 to a regular 401(k) or $3,500 to a SIMPLE 401(k). This makes it a good time to catch up and build your retirement savings.
Plus, you can contribute an extra $1,000 in pre-tax income per year to a health savings account (HSA) for your eligible healthcare expenses.
6. Penalty-Free Distributions
Until you turned 59 ½, you may have paid a 10% tax penalty if you needed to withdraw some of your retirement account funds. Just note that you’ll need to pay any regular income taxes due on the distributions. Once you reach age 65, you can also avoid the tax penalty on nonqualified HSA withdrawals, but income taxes will apply.
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This article originally appeared on GOBankingRates.com: 6 Tax Perks People Over 60 May Qualify For
