The tax season is upon us again, and like every other year my husband and I will gather the necessary paperwork and schedule an appointment with our favorite tax professional Ms. Harriet. For us, the process hasn’t changed much over the years. We can usually expect our W2s from our employers in the mail by January 31st and all other information needed sprinkles in throughout the month.
Two years ago, when my father moved here from Virginia, he asked if I knew whether or not he still needed to file taxes and he wasn’t sure because it was something my stepmother had always taken care of prior to her death. My first thought was to believe that he did not have to because he was retired. After a couple of minutes, I changed my answer because I realized that I really didn’t know the answer. My only experience with a senior citizen and taxes had been my grandmother , who had never worked outside of the home and whose income had been my grandfather’s pension and Social Security since his death.
After a phone call to my tax professional and a little online research, I found that every situation is different and if you have to ask, it’s probably worth an appointment with a tax professional. This way you won’t run into problems with the IRS later on down the road. Lucky for my dad, I found that he indeed needed to file and to his surprise he received a refund.
Many factors affect the amount of tax an individual pays, but there are specific areas that concern seniors 55 and older. There are several important tax deductions that are often overlooked when deductions are itemized:
– Investment expenses- Provided you do itemize your deductions and use a
financial planner, the fees you pay your adviser are deductible when they exceed 2 percent of your Adjusted Gross Income (AGI).
– Long-term care insurance- Premiums you pay for a long-term care policy are
treated the same as medical expenses and are deductible if they exceed 10
percent of your AGI.
– Medical mileage- The IRS lets you deduct 24 cents per mile for medical-related trips like doctor visits, outpatient hospital visits, etc. This is also subject to the 10 percent limit.
Because there are a number of different tax rules, any questions or concerns about your individual tax situation, should be directed to a tax professional.