Despite what some may tell you, it’s nifty being 50. Your kids are [most likely] grown, you’re well-settled in your career – and possibly in your peak earning years, and you may finally get your first AARP card. (It’ll come in handy, we promise!) As you enter your 50s, many of your larger expenses – like your mortgage or Ryan’s braces – may be behind you, and you can hopefully start putting more toward retirement. Still, as always, a new decade means new expenses and new tax concerns. This week as we continue our “taxes through the ages” series, we’ve got a few tax tips for you, 50-somethings!
Deductions for Mom and Dad
As you enter your 50s and perhaps become an “empty nester,” you may also find yourself caring for one or both of your parents, or perhaps your spouse. In this situation, there are a number of tax benefits available to you if the person in question is a spouse or qualifying dependent.
- If you, your spouse, or a qualifying dependent requires long-term care, you can claim a portion of those insurance premiums. ($1,310 for ages 51-60, $3,500 for ages 61-70, and $4,370 for ages 71 and over)
- You can deduct room and board costs for an assisted living facility if the resident is there mainly for medical purposes and is receiving staff assistance to perform everyday activities (e.g. bathing, dressing), or has a cognitive impairment that requires assistance.
- If your spouse or qualifying dependent requires a home health aide, you may be able to claim a credit of up to $1,050 on up to $3,000 in care expenses. This credit is taken off of your bottom-line tax bill and is not a deduction from your taxable income.
- And, if you pay some or all of your parents’ medical bills, you can deduct those as health care expenses, even if they don’t qualify as your dependent under income rules.
Energy-Efficient Home Improvements
Have you recently completed a remodel? If you’ve made energy-efficient improvements to your home, you may be able to receive a tax credit. Such improvements can include a new roof, or insulated windows or doors – anything that makes your home more “green.”
Claiming Adult Children
By now, your kids are likely grown but they may still require support from Mom and Dad be they college students or newly-minted young professionals. If your child is still 18 or under, you can absolutely claim them, but after they turn 19, the qualifications can become a bit trickier – here’s the breakdown.
- If your child age 19 to 24 was a full-time college student for at least 5 months in the past year, that tax exemption is yours so long as you provided at least half of his or her financial support for the year.
- For a child who has completed (or foregone) college but is still receiving your financial support, they must be what the IRS calls a “qualifying relative.” (This is the same category you may use for an elderly parent or a child or relative with disabilities.) To be a qualifying relative, the individual does not have to live with you, so long as you provided at least one half of his or her financial support for the past year.
Remember, even the most experienced taxpayers still have questions – that’s why we’re here to help! Be sure to browse our services page and fill out the form for a free consultation. Or give us a call at 844-841-9857!