If you just turned 65 and retirement has been a part of your plan for the longest time, taxes could also be a cause of concern for you. However, this may be just because you are not aware of the tax breaks for retirees and seniors. Read on to know three tax benefits that you can avail of after the age of 65:
You can take advantage of larger standard deductions
Once you turn 65, there is a provision for you to opt for additional standard deduction. Depending on your income and other expenses, you are eligible for a certain standard deduction, but you can add another $1,650 to it (in case you are a single filer or head of household) once you turn 65.
If you are married and are filing a joint return, you are eligible for $1,300 for each spouse who is 65 years or older. Even if one of you turns 65, you are eligible for claiming the additional deductions instead of waiting for both partners to become eligible.
You may enjoy exemption from taxes on your social security income
Depending on your expenditures and income, the social security benefits that you earn may be eligible for tax exemptions. While this concept is slightly complicated, it is one of the most useful tax breaks for retirees and seniors. Sum up your income from different sources and include the retirement funds that are eligible for taxation. Since some funds come with tax-exempt interest, you would not need to add those. Now, you can add to this half of your Social Security benefits from the tax year.
If you do not have easy access to this, do not worry. The Social Security Administration sends you a form (SSA-1099), which shows the exact amount you received. This is done near the first of every new year. After this, if the total of your entire income added to half the amount of social security benefits is less than $25,000, you can exclude this amount from your taxable income. However, the $25,000 cap is applicable only if you are single, a qualifying widow or widower, or if you are the head of household. On the other hand, if you are married and are filing a joint return, the cap is marked at $32,000.
A tax credit can help lower or wipe out your tax liability
If you ask us about the most significant tax break for retirees and seniors, it is the tax credit for the elderly and disabled. In case you owe some amount to the IRS (Internal Revenue System), you can certainly opt for reducing some of your tax liability through credit.
You need to be 65 years old as of the last day of the year to file for credit. Additionally, you are not eligible for this if you earn a certain amount of income that varies if you are single, head of household, married but filing separately, or filing for a joint married return.