Everyone wants to save money on their taxes, and older
Americans are no exception. If you're age 50 or older,
here are five tax tips that could help you do just that.
Standard Deduction for Seniors. If you and/or your
spouse are 65 years old or older and you do not itemize your
deductions, you can take advantage of a higher standard
deduction amount. There is an additional increase in the
standard deduction if either you or your spouse is blind.
Credit for the Elderly or Disabled. If you and/or
your spouse are either 65 years or older--or under age 65
years old and are permanently and totally disabled--you may be
able to take the Credit for Elderly or Disabled. If you are
under age 65, you must have your physician complete a
statement certifying that you had a permanent and total
disability on the date you retired. You must also have taxable
disability income that meets certain requirements.
The Credit is based on your age, filing status, and income and
you must file using Form 1040 or Form 1040A to receive the
Credit for the Elderly or Disabled. You cannot get the Credit
for the Elderly or Disabled if you file using Form 1040EZ.
You may only take the credit if
you meet the following:
In 2017 your income on Form 1040 line 38 must be less than
$17,500 ($20,000 if married filing jointly and only one spouse
qualifies), $25,000 (married filing jointly and both qualify),
or $12,500 (married filing separately and lived apart from
your spouse for the entire year).
The non-taxable part of your Social Security or other
nontaxable pensions, annuities or disability income is less
than $5,000 (single, head of household, or qualifying widow/er
with dependent child); $5,000 (married filing jointly and only
one spouse qualifies); $7,500 (married filing jointly and both
qualify); or $3,750 (married filing separately and lived apart
from your spouse the entire year).
Retirement Account Limits Increase. Once you reach
age 50, you are eligible to contribute (and defer paying tax
on) up to $24,500 in 2018 (up $500 from 2017). The amount
includes the additional $6,000 "catch up" contribution for
employees aged 50 and over who participate in 401(k), 403(b),
most 457 plans, and the federal government's Thrift Savings
Early Withdrawal Penalty Eliminated. If you
withdraw money from an IRA account before age 59 1/2 you
generally must pay a 10 percent penalty (there are
exceptions--call for details); however, once you reach age 59
1/2, there is no longer a penalty for early withdrawal.
Furthermore, if you leave or are terminated from your job at
age 55 or older (age 50 for public safety employees), you may
withdraw money from a 401(k) without penalty--but you still
have to pay tax on the additional income. To complicate
matters, money withdrawn from an IRA is not exempt from the
Higher Income Tax Filing Threshold. Taxpayers who
are 65 and older are allowed an income of $1,550 more ($2,500
married filing jointly) in 2017 before they need to file an
income tax return. In other words, older taxpayers age 65 and
older with income of $11,950 ($23,300 married filing
jointly)in 2017 or less may not need to file a tax return.
Don't hesitate to call if you have any questions about these
and other tax deductions and credits available for older
Don't hesitate to call us if you need help or
want to get started on tax planning for the rest of 2018!
If you have comments or questions on the information in these
articles, as usual feel free to call our offices. Thanks!
Feel free to give us a call if
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particular topics or issue or if you
need help or want to
get started on tax planning for the rest of 2018! If you have comments on the information in these
articles, as usual feel free to call our offices.
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Certified Public Accountant
Certified Business Exit
Charles S. Wilson, CPA/CFF, CGMA |
Charles Wilson, LLC | 307 S. Friendswood Dr, Ste B-2
Friendswood, TX 77546 | 281-993-4530 (O) | 866-567-3975 (F) |