And while the average tax refund in the United States is about $3,000 (and in Canada, about $2,000), there are many opportunities for seniors and older people to ensure they receive the highest refund possible.
Although every person’s situation is different, there are a number of different tax tips and strategies for seniors:
Live in the United States? Here are some tax strategies for seniors:
1. Disability credit: Seniors aged 65 and older can take advantage of the Credit for the Elderly or Disabled, which would allow them to enjoy a deduction in their income taxes, even if they are not disabled.
2. Low-income seniors: Seniors who earned less than $11,200 in income in 2012 are not required to file a tax return, according to the IRS (Internal Revenue Agency). Additionally, depending on their overall level of health and independence, some seniors may be considered dependents of their adult children, thus allowing them additional tax savings.
3. Medical deductions: Expenses incurred while living at some senior living communities such as skilled nursing homes or Alzheimer’s Care facilities are considered medical expenses, and senior residents of these communities may be able to include some of these expenses as tax deductions.
Live in Canada? Here are a few options you can use to lower your taxes:
1. Check your income: According to the Canada Revenue Agency, people aged 65 and older who had a net income of less than $78,684 in 2012 are eligible to claim tax credits that are not available to higher-income tax filers.
2. Breaks for people with disabilities: The Disability Tax Credit is open to anyone who has a proven physical or mental disability, and this credit serves to lower the amount of income tax paid by the filer every year.
3. Transit use: Although less than one-in-ten Canadians aged 65 and older use public transit as their primary form of transportation, they are still eligible to claim their transit passes on their income tax, thus lowering their overall tax bracket.
The above three tax tips are open to all Canadians, regardless of age, but seniors and older people are likely to be among the biggest beneficiaries of these tax laws, so as you prepare your taxes (or if you already have, for next year), keep these strategies in mind for a maximum return.
When it comes to income taxes, there are plenty of deductions available for seniors and the elderly, so if you haven’t yet filed your taxes for last year – or in preparation for next year – do some research and find the deductions which you are eligible to claim.