Retirement and the effects of aging come with a lot of changes, but at least one thing remains constant.
Every year, Uncle Sam wants to make sure you’re paying any taxes you might owe him, and that’s true whether you are retired or not. That said, though, there are tax rules that are specific to older Americans, so it’s important to be aware of the different ways you might be able to reduce your tax bill that weren’t available to you when you were younger.
Normally, of course, April 15 is the deadline to file your tax returns. But this year, because of the disruption caused by the coronavirus, the deadline has been extended to July 15. Remember also, if you currently receive Social Security and don’t file taxes anymore, you will receive a government stimulus check (or auto-deposit) of $1,200 automatically without filing any additional paperwork.
Meanwhile, that tax deadline extension means you’ve got extra time to explore some of those rules that seniors can take advantage of. A few to be mindful of include::
You may qualify for a larger standard deduction. For many Americans, including many seniors, there’s no reason to itemize your deductions anymore because the standard deduction is so high – $12,200 for a single person and $24,400 for a married couple filing jointly. But you can get an even higher standard deduction if either you or your spouse is 65 or older, and a still higher deduction if either of you is blind. If you aren’t itemizing, then you want to make sure you’re getting the maximum standard deduction that you are allowed because that’s going to impact how much of your income is taxed.
Yes, your Social Security benefit may be taxed. The rules for how much – if any – of your Social Security benefit is taxed can be tricky, so you want to be extra careful with that. According to the Social Security Administration, if you’re filing as an individual, and your Social Security benefit plus any other taxable income you have is between $25,000 and $34,000, you may be taxed up to 50 percent of your benefit. If your combined income is more than $34,000 then up to 85 percent of the benefit may be taxable. For married couples filing jointly, if the combined income is between $32,000 and $44,000, you may have to pay tax on up to 50 percent of your benefits. If ...
