There are many tax incentives for seniors.
1. Medical and dental expenses. Medical expenses are often one of the largest expenses for retired people. Fortunately, some medical expenses are deductible. These include health insurance premiums (including Medicare premiums), long-term care insurance premiums, prescription drugs, nursing home care, and most other out-of-pocket heath care expenses.
If you itemize your deductions, medical expenses are deductible from your income taxes on Schedule A of your tax return. However, they are subject to a special limit: They are deductible only to the extent they exceed 7.5% of your adjusted gross income (AGI). For example, if your AGI was $100,000 in 2009, only your medical expenses above $7,500 (7.5% x $100,000 = $7,500) would be deductible. If you had $10,000 in medical expenses in 2009, you could deduct only $2,500.
2. Selling your house. Retired people often sell their homes to move into smaller places or retirement communities. If you've lived in your home for a long time, you probably have substantial equity and will earn a large profit on the sale. Fortunately, you may not have to pay any tax on your profit. As long as you live in your home for at least two out of the five years before you sell your house, the profit you make on the sale -- up to $250,000 for single taxpayers and $500,000 for married taxpayers filing jointly -- is not taxable.
3. Retirement plan contributions. Just because you are retired or semi-retired doesn't mean that you can't make tax-deductible contributions to retirement plans such as IRAs. Those over 50 have higher contribution limits for traditional IRAs, Roth IRAs, and 401(k)s. For example, a married couple over 50 can contribute as much as $12,000 to an IRA (for the 2009 tax year) and deduct the amount from their income tax.
Or, you may prefer to contribute to a Roth IRA. You'll pay taxes on the income you contribute now, but the withdrawals upon retirement are tax-free. This means no tax need be paid on all the interest or other income earned by your Roth IRA investments.
Retirees with their own businesses may also establish SEP-IRAs, Simple IRAs, Keogh plans, and solo 401(k) plans that have higher contribution limits for those over 55.
4. Investment expenses. The best way to earn money when you retire is in the form of interest, dividends, and capital gains from investments. Dividends and capital gains are taxed at just 15% (5% for taxpayers in the lowest income tax bracket). Unlike income from a job or business, these types of income are not subject to Social Security or Medicare taxes.
In addition, fees you incur for investment advice or accounting services are deductible to the extent they, along with your other itemized personal deductions, exceed 2% of your adjusted gross income. Examples include:
However, you cannot deduct fees you pay to a broker to acquire investment property, such as stocks or bonds. You must add the fee to the cost of the property and recoup your expenses when you sell.
5. Business expenses. Many retirees continue to run their own businesses or start new ones. For example, some retired employees work part-time as a consultant for their former employers and other clients. Having a business (whether full- or part-time) is a great way to get tax deductions. You may deduct all the necessary expenses you incur to do business, so long as they are reasonable in amount. This includes business travel, the cost of business equipment such as computers, and outside or home offices.
6. Charitable contributions. Retirement is a time many people think about giving back to their community by making charitable contributions. Such contributions are deductible as itemized deductions; however, they are subject to special limitations. Cash contributions of up to 50% of your adjusted gross income are deductible each year as an itemized deduction.
If you donate property other than cash to a qualified organization, you may generally deduct the fair market value of the property. If the property has appreciated in value, however, you may have to make some adjustments. However, if you donate a car, boat, or airplane, your deduction generally is limited to the gross proceeds from its sale by the charitable organization. This rule applies if the claimed value of the donated vehicle is more than $500.
7. Standard deduction. This applies if you don't itemize your deductions (many older folks don't if they are no longer paying mortgage interest). Folks who are 65 and older by December 31 of the tax year are entitled to a higher standard deduction. Technically, you are considered 65 on the day before your 65 th birthday. For example, for the tax year 2009, you can take the higher standard deduction if you were born before January 2, 1945.
You get an additional $1,250 if you are single and an extra $1,000 (for each spouse older than 65) if you are married. You can also claim the higher deduction if only your spouse is older than 65 and you file a joint return.
Income tax schedule for 2013
You have only the Federal income tax return and Maine state income tax return. The due date for the Federal income tax return and amount due is April 15 2010. The Maine state income tax return and any amount that is due is also April 15 2010.
Provisions in the federal income tax system designed as incentives for certain behaviors or as subsidies for targeted activities.These preferences are based on assumptions about how taxpayers react to the law.
Yes when is for income that you earned in the tax year 2009 that is the tax year income tax return that it HAS to be reported on.
Accessing the income tax rate for 2010-2011 is simple. Just call or go by your local IRS or Social Security office. They usually have copies of the tax forms there.
The same thing that they were for the 2009 tax year. 3650 for each exemption on the MFJ 1040 income tax return.
In some countries, seniors may qualify for certain tax exemptions or deductions, but generally, seniors are not automatically exempt from paying income tax. The tax rules may vary based on the individual's income level, sources of income, and age. It is best to consult a tax advisor or the local tax authority for specific information regarding tax obligations for seniors in a particular country.
Income tax schedule for 2013
Depends on the gross income from SS.
Senior citizens in the Philippines who are considered to be frail, sickly, or with disabilities may be granted exemption from income taxes, subject to conditions and limitations set by the Bureau of Internal Revenue. Other seniors who do not meet these conditions may still be entitled to certain tax benefits and incentives, such as a discount on their annual income tax due.
People who are over 65 or blind are allowed to take an additional personal exemption on their federal income tax return. This does amount to a "break" of sorts. (If you're blind AND over 65, you don't get to take TWO additional personal exemptions, though.)
Yes, low-income apartments specifically designated for seniors do exist. These are often subsidized by government programs, non-profit organizations, or private developers who receive tax incentives. Seniors eligible for these programs typically have limited income and may need to meet certain age and/or disability requirements.
Agnar Saudmo has written: 'Investment incentives and the corporate income tax'
Yes, Utah treats Social Security income as fully taxable. Similar to wages. Low income seniors do get a small tax credit though.
Arindam Das-Gupta has written: 'The compliance cost of the personal income tax in India, 2000-01' -- subject(s): Income tax, Compliance costs 'Incentives and institutional reform in tax enforcement' -- subject(s): Taxation, Tax incentives, Tax administration and procedure 'The VAT versus the turnover tax with non-competitive firms' -- subject(s): Turnover tax, Value-added tax
Yes, seniors are still required to pay taxes on earned income at age eighty two years old. The tax rules do not exempt individuals from paying taxes based solely on their age. However, seniors may be eligible for certain tax credits or deductions based on their age and income level.
The income tax rate in California has slightly increased between the years 2010 and 2011. Currently the new income tax has raised to around five percent.