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6 Tax Deductions for Senior Retirees
Retiring can be both exciting and scary for
seniors. It means you will have plenty of time to fulfill dreams
your career may have distracted you from, but it also means
a loss of a paycheck and living on a fixed income. Hopefully,
throughout your working life you have planned and saved for
this time, but even so, it makes sense to make the most of
money you have by taking advantage of all of the tax deductions
available to you. Give these six deductions a try to put the
gold in your golden years.
Savvy deduction tip number one involves your medical
and dental expenditures. Your medical bills usually go up as you get older,
and the good news is that most of the cash you dole out at
the doctor’s office can come back to you in the form of tax
deductions. In fact, everything from doctor’s visits to insurance
premiums to prescription costs can be used as a tax deduction,
up to 7.5% of your adjusted gross income.
Tip number two involves selling
your home. Many retirees downsize
their homes later in life, and many find themselves looking
at a huge profit when they sell their former home. Under capital
gains tax laws, you can keep up to $500,000 in profits form
the sale of your home, tax-free. Tip number three related to
what you do with that profit. Even if you are officially retired,
you can still make contributions to your retirement savings
accounts. Put some of those home sale profits into your retirement
savings account, and then take the amount of your contribution
as a deduction on your taxes.
For savvy deduction tip number four, consider
starting a small business during your retirement years. The business doesn’t
have to be demanding; you can simply parlay a hobby into a
money making venture. The business doesn’t have to turn a huge
profit, either. As long as you can prove that you have the
intention to make money, then the IRS looks upon your venture
as business. Once your business is established, you can deduct
all of your business expenses from your taxes. If your business
is run out of your home, then that means you can deduct many
of your normal living as at least partial tax deductions.
Tip number five is to do
some good for humanity. Charitable
contributions are tax deductible, up to 50% of your adjusted
gross income. Most retirees find themselves in the position
to contribute either cash or goods to charities; take advantage
of these good works on your tax returns. To make the most of
these deductions, make sure you get documentation from the
charity for all of the donations you make.
Tip number six is to remember
to increase your standard deduction amount. After you retire, as long as you don’t itemize your
returns, then you are eligible for a larger standard tax deduction
amount from the government. Don’t forget to claim it!
Your senior years offer plenty of opportunities to maximize
your income by taking advantage of tax deductions. Don’t forget
to consider deductions for things like investment losses, energy
efficient improvements to your home, or buying hybrid cards.
To make sure you are not missing any potential deduction opportunities,
it makes sense to hire a tax preparation expert to prepare
your accounts. They can help you navigate complicated deduction
paperwork and make sure all of your records are in order, to
help you avoid any conflict with the IRS. IRS deduction rules
change almost yearly, so it is important to make sure you are
taking the proper deductions for the year in question.
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SolveYourProblem.com : 2007
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