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Tax tips for seniors

aadmin — Wed, 24 Apr 2013 13:19:41 +0000

In both the United States and Canada, April is tax season. For millions of people across North America, that means scattered papers across their dining room tables, and time spent sorting papers, printing receipts and records, to be sent to their accountants or the taxman directly.

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.

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9 Great Perks and Discounts that Come with Getting Older

aadmin — Tue, 08 Jan 2013 17:02:10 +0000

MoneyTalksNews posted a savvy article about the savings and perquisites that come with aging, including special prices and senior options.

1. Banking

A no-fee checking and savings accounts may be available for seniors which is a big advantage.

2. Drugstores

Major chains promote monthly Senior Discount Days for those 55 and over, with 20 % off all products. At the time of publication, Walgreens, W Brand, and Nice! offered these savings, but other major chains are certain to follow. Manufacturer coupons, drug store coupons, and reward points are especially designed for seniors.

3. Department stores

Special discount are available for shoppers 62 and over and some chains, and applies to all sale, regular, and clearance-priced merchandise. Kohl's offers this discount to in-house sales but not on gift card purchases or online purchases.

4. Entertainment

Seasoned citizens can look forward to movies, museums, and restaurants with the inclusion of special offers. Movie admissions can include a senior discount on the admission price and a senior special on popcorn and a soft drink.

5. Education

You're never to old to learn with any state schools offering free tuition or senior discounts. Senior scholarships are also available.

6. Legal services

Free legal services provide legal help at no cost to low-income and elderly residents for noncriminal matters. Although states vary, legal services assist seniors 60 years plus, and income is no issue.

7. Local resources

Senior centers offer social, recreational, health, safety, and educational programs to eligible people. Older adults get to enjoy many free or low-cost programs. Senior centers are listed under “Council on Aging” Vocational schools.

8. Vocational Schools

Low-cost mini-vacations are available through senior discounts offered at the local vocational school. Vacations can include a facial, a massage and and manicure for as low as $20. The glam indulgence is performed courtesy knowledgeable of students under the supervision of professionals.

Student-run restaurants can be part of the deal at senior discount levels.

9. Tax breaks

There can be a reduction on senior taxes that can come in the form of a discount amounting to a welcomed windfall. Every state is different, so older adults need to do their research.

Tax breaks for senior homeowners are available depending on the state. Work for pay options offered by select cities allow seniors to work of a portion of their tax bill by taking a job.

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Do tax cuts help people save for retirement?

aadmin — Mon, 26 Nov 2012 18:54:57 +0000

Saving for retirement can be difficult for many seniors, and as a result, successive White House administrations have sought to make saving easier by offering tax breaks to help push people to put away more money for retirement. But as reported by the New York Times, a new study from Harvard is suggesting that such tax breaks do little to encourage people to save more money.

The report evaluated tax breaks used by the government of Denmark to try and promote retirement savings among the Danish population, and discovered a very low success rate: for every dollar spent in tax cuts, savings increased by only 1 cent (i.e. one per cent).

“The findings reported here call into question whether subsidies are the best policy tool to increase retirement savings,” the report’s authors wrote.

As an alternative, the authors suggested other methods such as automatic deductions from employees’ paychecks, which means an employer automatically deducts a portion of the employee’s pay, which is then re-directed into another account exclusively for retirement savings.

According to the New York Times, most American companies do not provide a program which automatically saves and re-directs employees’ pay, but as the White House and congress evaluate ways to reduce the United States’ national debt and increase savings, such programs may become more popular.

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Texas Fights Against Hunger in the Elderly

aadmin — Fri, 21 Sep 2012 12:50:30 +0000

What is Food Insecurity?

Texas has the 3rd-highest rate of food insecurity, defined as the inability for families to consistently afford enough food.

The Texas Food Bank Network says that the hardest hit population groups are senior citizens, according to Star-Telegram.

Texas Food Bank and Local Produce Growers Join Forces

The Texas Food bank Network works to reduce hunger, and encourages partnerships with local produce growers to provide healthier foods.

The Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, is maintained by the agency.

Government Cuts Will Dismantle Food Stamps

The U.S. Senate plans to cut $4 billion and would not affect Texans much. But under the proposed $16 billion in Congressional cuts, over 300,000 people in Texas would lose food stamps, which would affect the state's economy.

According to the food bank network, for every dollar spent on food stamps, $1.79 is put back into the economy. In Texas, 3.5 million people receive SNAP benefits, mostly children, the elderly and the disabled, officials said.

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End of year tax tips for seniors

aadmin — Mon, 12 Dec 2011 15:29:17 +0000

The year 2011 is coming to a close, and that means this is the perfect time of year for retirement living seniors to think about how they can minimize their tax bill for the year. According to a recent article in USA Today, there are a few ways seniors can save extra money before tax season arrives.

Larry Karmel, a tax specialist with Metis Group, told the newspaper that seniors should consider delaying extra income for the beginning of January, instead of in December. This discretionary income includes interest and dividends from investment, or wages or salaries, for example.

Experts also suggest seniors should delay taking social security payments until at least the age of 70 and-a-half, so they can minimize tax payments. Another route some seniors take is to move to states which have low income tax rates, such as Nevada or Florida. But even these states are no longer sure bets.

“With the economic downturn, many states are enacting or thinking about new and higher taxes on residents,” tax expert Gary Duboff told the media outlet. “It's a common approach for many retirees to move, but unexpected changes in tax law could have an impact on planning.”

Financial situations can change, but many experts say the best options are taking stock of one’s finances, saving as much as possible, and having a plan for the future.

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Income tax deductions for seniors may keep more money in their pocket

aadmin — Wed, 01 Apr 2009 12:04:10 +0000

With just two weeks left to file federal and state income taxes, some deductions may be beneficial for senior citizens, especially for those who face paying for assisted living care.

The standard deduction, which went up $1,350 this year, may help seniors who do not have itemized deductions, such as for healthcare

or other expenses, that will maximize their return.

For seniors who have excessive costs, some lesser-known credits could improve their itemized return.

Medical expenses may be the largest deduction available to some seniors, as they can include the cost of prescription drugs, and hospitalization which can include food and bed fees, as well as medical devices.

They may also be eligible for a credit for assisted living costs, up to $1,050 for a single filer or $2,100 for multiple filers.

Other deductions may include ones on investments and investment advice, as well as real estate taxes.

One lesser known tip: older Americans who are able to get out and about to help the community may also deduct unreimbursed mileage from travel to volunteer work.

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AP: Advice for seniors for tax season

aadmin — Mon, 16 Mar 2009 16:04:06 +0000

For some seniors citizens, the upcoming tax season may turn into one filled with savings, provided they are familiar with certain tax laws, according to the Associated Press.

The newspaper states that even with the turbulent stock market, there are plenty of opportunities for seniors to benefit from their financial losses because of the economy.

By using capital losses, seniors who lost more than $3,000 in investments can carry that amount forward, which can be applied toward future gains, according to the article.

Seniors are also urged by the news provider to compare standard and itemized deductions to see which would provide more of a financial gain.

California tax attorney Roni Deitch said many seniors leave deductions "on the table because they are not familiar with basic tax laws."

Those who may not have the same grasp of finances and of filing taxes as others may want to take advantage of AARP's free volunteer tax help program at more than 7,000 locations around the country. The program gives special attention to those aged 60 years and older who require help.

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Does Electronic Tax Preparation Make Sense for Today's Seniors?

aadmin — Tue, 03 Mar 2009 13:56:14 +0000

Not everyone should use electronic tax software to prepare their taxes. If your taxes are simple, you don't need to bother. On the other hand, if you're not confident in your ability to make sense of the tax code or had an eventful year for tax purposes, you might consider hiring a tax professional. But if you know your way around a tax return, you might look into the major tax preparation programs.

There is, however, an upfront investment of time before you can start: both the major programs, Intuit's TurboTax and H&R Block's TaxCut, begin with an information-gathering interview. Once you make that commitment, you can count on the program to prepare a return without typos or arithmetic mistakes, a real plus that reduces your chance of being audited. Another benefit: you won't have to spend any time tracking down the tax forms you need, as these programs generate them as necessary. In addition, most software packages also give you the option of printing out the return and mailing it to the IRS or filing it electronically for an additional fee.

Here are some tips that can help you select the software package that works best for you:

When buying a program, make sure you are getting the final release that includes the most current rulings and regulations from the IRS.

Find out if the program generates state tax returns or if you have to pay extra for state income tax software.

Most tax software programs come in a variety of editions, from simplified editions for those filing a basic return to comprehensive versions for sole proprietors and consultants. Review the offerings carefully and choose the edition that best reflects your circumstances.

Traditionally, electronic tax preparation has meant installing software on your computer. In the last few years, the major tax preparation companies have introduced another electronic option—completing the return and filing online using software hosted on the Web. Doing your taxes online can be quite inexpensive and convenient. You can, for instance, often arrange for any tax refund you are due to be deposited directly to your bank account.

If you have an adjusted gross income of $56,000 or less, you can take advantage of Free File, a service that the IRS has developed with the leading retail tax software companies. But even if you don't qualify for Free File and have to pay for online access or a software package, you may be in luck. One of the benefits of using tax preparation software is that it will determine whether you can deduct its cost from your federal income taxes.

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Today's Seniors: Year-End Tax Decisions*

aadmin — Wed, 10 Dec 2008 18:02:49 +0000

When it comes to thinking about taxes, December trumps April every time. In April, your focus is primarily on minimizing the tax consequences of the previous year, but in December you have the luxury of thinking about the big picture. By December, you should have a pretty good understanding of your tax liabilities for the current year, while being well positioned to assess the factors that will affect your taxes during the next 12 months. Having this multiyear perspective is critical, because the tax decisions you make this year may have implications for the taxes you will be liable for in the future.

A prime example of this is deciding to defer income for 2008 and accelerate deductions. The idea behind this strategy is simple: thanks to inflation, the dollar you divert from taxes this year is worth more than the dollar you pay to the IRS in the next.

Minimizing Income

There are a multitude of strategies you can use to minimize your income. For instance, if you can sell a property, you should consider taking payment in installments. Each installment would be taxable income only in the year it is received. Another strategy that most investors this year should consider is harvesting their capital losses. The limiting factor here is that you can deduct capital losses only up to the amount of any capital gains you'll have during the year, as well as an additional $3,000 of losses against your other income.

Maximizing Deductions

There are many legitimate ways to take deductions this year rather than next. For instance, if you are counting on charitable contributions for a deduction but are short of cash, you can charge the contribution to a credit card. The contribution is deductible in the year charged, not when you pay off the card.

Seniors also have a number of special deductions available to them. If you've reached age 70, you can transfer up to $100,000 of otherwise taxable IRA money (including your required minimum distribution) to specified tax-exempt charities. As long as you make the transfer directly from your IRA to the charity, such a transfer will not be taxed by the federal government. There are, of course, pluses and minuses to consider. You will not be able to claim your contribution as an itemized deduction, but it may reduce your Social Security benefits subject to tax.

Reducing Your Adjusted Gross Income

By minimizing your income and maximizing your deductions, you are reducing your adjusted gross income (AGI)—and therefore reducing your taxes. Lowering your adjusted gross income may also put you in the position to take advantage of tax breaks that are only available to taxpayers whose AGI is below certain levels.

Because putting together tax strategies for 2008 and 2009 involves balancing a number of considerations, it may be a good idea to schedule a December appointment with a professional before making any decisions.

Web Resource

For definitive information for seniors on preparing your tax return, download Publication 554 from the IRS Web site.

*This article should not be treated as tax advice. All residents, potential residents, and family members should consult their own tax advisor for more information.

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Today's Senior: IRS Free File Service

aadmin — Mon, 10 Mar 2008 11:35:51 +0000

For a number of years, the U.S. Internal Revenue Service (IRS) has been issuing refunds electronically, directly into citizens' bank accounts.* Taxpayers like this method because it is fast and secure. Now, thanks to the growing popularity of the agency's Free File service, more taxpayers are filing their returns electronically. As the name of the program suggests, the price is right.

Over 15 million returns have been submitted through Free File since the program was introduced in 2003. In 2006 alone, 5.1 million taxpayers used the system—and virtually all of them were happy with the experience. Ninety-four percent of those who used Free File plan to use it again, and 97 percent said they would recommend it to others. Here are few reasons they gave:

You get a fast refund, often in 10 days or less when you also use direct deposit.

You can file your taxes any hour of day or night.

You receive a quick confirmation within 48 hours that your return was received.

The IRS offers the Free File service in partnership with close to 20 private-sector tax-software companies. To use Free File, you must begin on the Free File home page on the IRS Web site, where you can read about the programs offered by the different firms. You then choose a company and click through to their Web site. Once there, you use an online version of the company's tax preparation software. For an additional charge, many of the companies have software that you can use to file state returns.

The IRS designed Free File to be available to 70 percent of all taxpayers. This year, individuals with an adjusted gross income of $54,000 or under qualify. To ensure that you avoid paying a fee, you must start from the IRS Web site rather than the Web sites of the individual companies.

Web Resource

Reading a review of the Free File software programs can help you select one that works best for you.

*This article should not be treated as tax advice. All residents, potential residents, and family members should consult their own tax adviser for more information.

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