If you’re age 70 or up, you’ve experienced firsthand how each new year brings its own unique set of challenges and rewards. For seniors, life can feel like a roller coaster complete with everything from new health challenges to watching your grandkids grow and thrive. As a senior, you’ll also be met with new tax questions and concerns – and that’s where we come in. This week we complete our “taxes through the ages” series with tax tips for folks over 70.
Medical and Dental Expenses
Past age 70, medical and dental expenses can put a hefty dent in your wallet. Fortunately, many of these expenses are deductible. Deductible expenses include the following:
- Health insurance premiums (including Medicare premiums)
- Long-term care insurance premiums
- Prescription drugs
- Nursing home care
- And many out-of-pocket health care expenses
If you itemize your deductions, medical and dental expenses are deductible from your income taxes on Schedule A of your tax return. Keep in mind, however, that these are subject to a limit. Only medical and dental expenses in excess of 10% of a taxpayer’s adjusted gross income (AGI) are deductible.
To learn more about deductions available to you, check out IRS Publication 554, Tax Guide for Seniors.
Deductions for Long-term Care, Assisted Living, or Home Health Aides
- Long-term care: If you or your spouse require 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)
- Assisted living facilities: Individuals 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 you or your spouse require 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.
Social Security Income
Important news for those of you collecting social security: If your adjusted gross income, untaxed interest, and half of your Social Security benefit add up to less than $25,000 ($32,000 if married and filing jointly, or a qualifying widow), you don’t have to pay taxes on your social security income. Beyond that amount, savings are on a sliding scale. But you can sleep soundly knowing that no matter how much you make, 15% of your Social Security benefit will always remain untaxable.
Taxes can be overwhelming at any age. But we’re happy to help any time you have questions. 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!