Seniors have tax questions, problems, or situations that differ from others. When people retire or reach age 65, different tax issues arise that may not have ever come up in life before. It is helpful to know what breaks the IRS provides to seniors as well as pitfalls to avoid. Preparation and planning are always key.
Tax Benefits to Seniors
There are tax benefits to being a senior. When filing your tax return, as long as you turn 65 as of January 1, 2020, then you get a larger standard deduction specific to seniors. For single filers, it is an extra $1650, and for married filers, it is $1350 for each spouse who is 65 or older. This increase may make it smarter financially to use the standard deduction than to itemize, but you should verify that by figuring the amount of itemized deductions you qualify for.
Seniors also have a higher threshold for filing requirements than people under the age of 65. It isn’t a big difference. But it may mean you don’t even have to worry about filing federal taxes.
Seniors may not have to include Social Security income on their federal tax return, depending on how much they earn from other sources and from Social Security. The IRS directs seniors depending on their filing status to add up all income plus one-half of Social Security income to determine if any Social Security is to be included on the tax return.
Determining what income to use for this formula could prove confusing or be unclear, especially if you have different sources of income. So, an IRS solution attorney in Florida will be helpful in determining what income you need to include on your tax return. You definitely don’t want to be audited because you did not claim the correct amount of income.
Another tax benefit for seniors is the “elderly and disabled tax credit.” This credit is available to seniors with some caveats. It depends on marital status, filing status, income earned, as well as nontaxable Social Security income. But many seniors will qualify. The credit ranges between $3750 and $7500 which is deducted from Adjusted Gross Income. So, it will help reduce any taxes owed to the IRS.
Is it Best to Itemize or Take the Standard Deduction?
Seniors have to decide if it is best to itemize or take the standard deduction, and it may change once you turn 65. Seniors have to determine what they can itemize, especially with all the recent tax law changes. The higher standard deduction may make it smarter for some seniors who used to itemize to no longer do so. But some other changes may make it better to itemize.
One deduction that has changed that may make a difference to seniors is the cap on state and local taxes, which includes property taxes. That amount is capped at $10,000 now, so seniors that have homes in states with high property taxes may no longer be able to deduct all the property taxes paid.
Another item seniors need to consider when filing taxes is capital gains tax. How much of any tax is owed on property sold depends on if the home was your principal place of residence and how much money was netted from the sale. There are different things to consider when selling property, and with seniors retiring and possibly moving to a new location, it is best to consult an IRS solution attorney in Florida prior to making any sales or changes. It is best to plan ahead.
What is Considered Income?
There are also many sources of income seniors may have that others don’t, and this can make it difficult to determine what is taxable income and what isn’t. These sources of income can include IRAs, pensions and annuities, early distributions of retirement accounts, disability pensions, as well as others. There are other monetary distributions that may cause confusion about taxes such as life insurance distributions, endowment contract proceeds, accelerated death benefits, reverse mortgages, and inheritances, to name a few.
Tax Issues When Living in Florida
One question seniors in Florida may have is how to get the tax benefits of Florida even though they don’t spend the entire year here. It is necessary to know the residency requirements to reap the benefits of this state. If you want to take advantage of the fact that Florida has no income tax, you need to plan ahead.
Florida requires people moving here to reside here for at least 183 days out of the year. It is important to have some proof that you were actually living in Florida for that many days a year. In addition, seniors retiring to Florida should be sure and register to vote, open a bank account, get a Florida driver’s license or ID card, get a library card, and keep proof like grocery receipts and other similar items to prove residence. Another good idea is to file a Declaration of Domicile.
This way, you can prove residency and not pay state income tax on Social Security income, and retirement income like pensions and IRA’s, etc. This will be extremely helpful when it is time to file taxes. If you are having trouble with Florida’s Department of Revenue and proving your state residency, it is best to consult an IRS solution attorney in Florida who can help you through any troubles.
This article would not be complete without mentioning tax scams. There are many tax scams out there, and you can read in detail about them in another of our blog posts. Seniors can be vulnerable to tax scams partially because scammers target older people. Scammers try to get seniors to pay fraudulent tax bills by telephoning them and threatening them or sending emails with threats. They claim to be from the IRS, are forceful, and have fleeced many people out of money.
Any senior who has been scammed or is wondering if a tax demand is valid should contact an IRS solution attorney in Florida as soon as possible to discuss the validity of any tax bills. The best way to stay safe is to know the IRS will not attempt to collect a debt from you over the telephone or email.
Get the Assistance of Experienced Tax Attorneys in Florida – Call Mary E. King, Esq.
If you have questions about tax solutions based on age, or if you are a business that needs to plan tax payments throughout the year, then you need the help of an attorney who has experience with tax planning in Florida.
The Law Office of Mary King P.L. can help you with all of your tax needs. We are experienced tax attorneys in Florida, and we offer complete services in all areas from tax implications of alimony to planning the most efficient tax strategy for individuals and businesses. We are proud of the experience and resources we have to provide to our clients.
Call our tax attorneys in Florida today to schedule an initial consultation. With years of experience, the Law Office of Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form, or call us at 941-906-7585.