Filing your taxes is a real pain, and if you’re not sure what to do, you may end up paying more than you need to. Did you know that if you’re retired (or 65 years and older), you’re eligible for many tax breaks that can save you thousands of dollars every year? Read on to learn more!
#1: Real Estate Tax Relief
If you and/or your spouse is disabled or over the age of 65, you qualify for real estate tax relief. There are, however, some limitations to this tax benefit. In order to receive a 100% relief, the cumulative gross income of all household members cannot exceed $72,000 a year. If the annual gross income is equal to $52,000 or less, you are eligible for 100% relief. If your household’s gross income is over $52,000 and under $62,000, you’re eligible for only a 50% tax benefit. And if the total gross revenue of your home is over $62,000 to $72,000, you’re only eligible for 25% relief.
Not including the value of your property or its contents, the total combined value of every household member’s assets cannot exceed $340,000.
Want to learn more about estate tax strategies? Click here!
#2: Tax Credit for the Elderly or Disabled
The 1040/1040A Tax Credit is designed for the elderly and disabled. In order to be eligible for this tax credit you must be at least 65 years old (or 65 years old minus one day), or less than 65 years old and a) retired on permanent or total disability; b) have received taxable disability income and; c) as of January 1st, you did not reach the mandatory retirement age.
The IRS defines “permanent and total disability” as not being able to participate in any substantial productive activity because of your physical and/mental limitations.
Depending on your marital and filing status, you will likely have income limits.
#3: Higher Claim Threshold
After you retire, you can feel free to work on side projects or hobbies that help you earn a little extra cash. That’s because the threshold for filing your taxes in the first place is much higher than individuals under the age of 65. If you’re a senior, you can earn up to $13,600 before you have to file, compared to $12,000 for people 64 years old and younger. Plus, if your spouse is also a senior citizen, your household income can reach $26,600 before you both have to file.
Earning a small bit of income in retirement allows citizens to supplement their pensions while still being able to enjoy their retirement. Many seniors enjoy working part-time jobs as a way of keeping themselves busy throughout the week, without the pressure of the 9-to-5 grind.
TPI Group Can Help You with Your Taxes!
Are you close to retirement age and want to find out how you can maximize your tax savings every year? TPI Group would be happy to help! Contact our team today.