Deductions for Senior Citizens To Ask Your Gilbert CPA

If you are a senior citizen or you are already retired, you have to discuss the deductions that you are eligible for by virtue of your age with your trusted Gilbert CPA. These tax deductions are obviously designed to reduce your annual income taxes so you have to take advantage of them now!

 

Medical and Dental Expenses

 

As you age, your medical and dental expenses will likely increase and, in fact, may even be among your largest expenses. Fortunately, you can deduct a few of these expenses including but not limited to your health insurance premiums, long-term care insurance premiums, nursing home care, and prescription drugs. Your accountant will also consider your out-of-pocket healthcare expenses as tax deductions.

 

Be sure to set realistic expectations, however, as there are limits as to the amount you can claim as deductions to your income. According to current rules, medical and dental expenses in excess of 10% of your adjusted gross income (AGI) are deductible. For example, if you have an AGI of $100,000 per year, you can only deduct medical and dental expenses above $10,000 (10% x $100,000 = $10,000). 

 

This is not a hard rule because there are exceptions that your Chandler tax accountant can discuss. For example, you can still claim the previous 7.5% threshold when you are 65 years or older upon the law’s passage until 2017. 

 

Retirement Plan Contributions

 

Your retirement is not a valid reason to stop making tax-deductible contributions to one or more retirement plans, such as IRAs. In fact, you can avail of the higher contribution limits on Roth IRAs, traditional IRAs, and 401(k).  In case you contribute to a Roth IRA when you reach 50 years of age, you will pay taxes on the income you are contributing now but your withdrawals upon your retirement will be exempted from taxes (i.e., tax-free on all income including interests earned by your investments). 

 

As a retiree, you can also establish simple IRAs, SEP-IRAs, solo 401(k), and Keogh plans when you have a business. These usually have higher contribution limits for people over 55 years of age.

 

Other tax-deductible expenses include investment expenses including the fees incurred for accounting services and/or investment advice services (e.g., attorney and accountant fees, safe deposit fees, and online services fees), business expenses, and charitable donations. Just make sure that you have reliable Chandler tax help on your side as tax laws are among the most complicated and complex in the country. You certainly don’t want to be caught with your pants down, so to speak, by the taxman!