The golden years of life come with plenty of pros and cons. For some seniors, it brings an opportunity to retire, to spend more time with family and to spend money saved over decades of working on more enjoyable ventures. For others, aging brings changes — like moving to a new community or taking on a new career opportunity. However, entering the golden years also brings some common concerns about finances and retirement. Many older adults begin to wonder how they will afford their lifestyle in retirement, they wonder what to expect from Social Security and they want to know what tax changes to expect after retirement.
Understanding how taxes will change after retirement is an important part of financial planning for seniors. And with tax time right around the corner, it is important to be aware that the tax code offers quite a few deductions and credits exclusively for older adults!
Tax Breaks for Seniors
For a senior citizen preparing their own taxes, or for a caregiver helping an elderly loved one, it is important to find every opportunity to save money. Here are five credits and tax deductions for seniors over the age of 65:
Standard Deduction for Senior Citizens
A single 64-year-old taxpayer can claim a standard deduction of $13,850 on his or her 2023 tax return, while a single 65-year-old taxpayer will get a $15,700 standard deduction in 2023. Also in 2023, taxpayers who are at least 65 years old or blind can claim an additional standard deduction for senior citizens of $1,500 ($1,850 if you’re claiming the single or head of household filing status). As with the 2022 standard deduction, the additional deduction amount is doubled if both filers are 65 or older and blind.
Assisted Living Senior Tax Deduction
For senior citizens living in assisted living communities, there is another deduction available. Medical expenses, including qualifying long-term care expenses, are deductible if the expenses add up to more than 7.5% of a senior’s adjusted gross income. Before filing, make sure this IRS senior deduction meets the Internal Revenue Service (IRS) requirements.
Retirement Plan Contribution Deduction
Seniors who are retired, or even semi-retired, are still able to make tax-deductible contributions to their retirement plans, including IRAs. For individuals over the age of 50, there are also higher contribution limits for traditional IRAs, 401(k)s and Roth IRAs.
Health Savings Account Tax Deduction for Seniors
Health savings account (HSA) contribution limits for 2023 are going up significantly. The annual inflation-adjusted limit on HSA contributions for self-only coverage will be $3,850, up from $3,650 in 2022. The HSA contribution limit for family coverage will be $7,750.
Elderly or Disabled Tax Credit for Seniors
This senior tax break is based on age, income and filing status. Seniors may qualify for the credit if they and/or their spouse are either 65 years old or older or if they are permanently disabled. Generally, the elderly or disabled tax credit ranges between $3,750 and $7,500. People age 65 and over can be eligible if they meet income restrictions. For someone filing on their own, income must be less than $17,500 and total taxable Social Security benefits below $5,000, but there are different limits for different filing statuses. Seniors who have retired on permanent disability may also qualify for the tax credit. This tax credit for seniors is difficult to qualify for and can be confusing. To see if you are eligible, go to the IRS website and use their online tool.
Tax Tips for Seniors
Understanding the deductions and tax credits for seniors is a large part of identifying tax breaks for seniors. Here are a few additional tips to make the entire process less stressful for all involved:
- When preparing a tax return for a senior, remember to be careful when calculating the taxable amount of Social Security. Use the Social Security benefits worksheet found in the instructions on Form 1040 and Form 1040A to make sure the numbers are correct.
- In 2023, single retirees age 65 and older who earn less than $14,250 do not need to file taxes. Married retirees filing jointly do not need to file taxes if they earn less than $26,450, if one spouse is 65 or older or who earn less than $27,800 if both spouses are age 65 or older.
- Not only are there tax breaks for seniors to watch for, but there is help for filing taxes, as well! The Tax Counseling for the Elderly (TCE) program provides free tax help for Americans age 60 and older. This IRS-certified program assists older taxpayers between January 1st and April 15th every year and specializes in tax issues typically faced by seniors, including questions about pension plans and Social Security benefits.
About Tutera Senior Living & Health Care
From tax questions to matters of care, finding the right experts to help answer questions can be difficult in our senior years. Tutera Senior Living & Health Care communities are prepared to help you and your loved ones navigate the complicated questions of retirement and senior living, all while providing a personalized experience.
By offering independent living, assisted living, memory care, Thrive memory care, rehabilitation and extended stay and respite programs, Tutera Senior Living is able to meet the needs of seniors and their families throughout their aging journey. Our core values of respect, integrity, hospitality and positivity drive our decisions and our program planning, ensuring there are choices available for every senior’s interests and needs, creating lots of moments of joy!
Want to find a Tutera Senior Living community near you? Use our community finder tool to find out what Tutera communities are in your area. Want to set up a tour or ask a question? Contact our team of experts today!