# Top 7 Tax Breaks for Seniors 2017 (tax reform could change this if passed)



## Lara (Oct 30, 2017)

As we all grow older, it is often a shock to realize how little money we actually have stored away for our golden years. This is particularly true now that most people don't have defined pension plans and typically don't put enough money into other retirement funds (such as IRAs and 401(k)s). In order to hang onto this money as best as you can, here are the top seven senior tax breaks. See Ten Ways to Lower Your Taxes for other suggestions.

This information (copied and pasted) is up to date 2017, but may change this year if Tax Reform is approved.
http://tax.findlaw.com/federal-taxes/top-seven-senior-tax-breaks.html

*1. Medical and Dental Expenses*
There are growing concerns that one of the biggest costs to seniors and retirees over the age of 50 in the coming years is going to be healthcare. Perhaps as much as 30 percent of our income will be going to healthcare premiums, prescription drugs and other expenses related to our health. However, for some, many of these expenses are tax deductible.
If you are a person that itemizes your tax deductions (meaning you do not take the standard deduction), you may be able to deduct your out-of-pocket medical expenses on your income taxes on a Schedule A. However, this is not to say that you can deduct all of your medical and dental expenses. Instead, you are only allowed to deduct any expenses that exceed 7.5 percent of your adjusted gross income (AGI). To clarify this, it is helpful to look at an example.
Suppose that your adjusted gross income for 2008 was $150,000 and that you have receipts for medical and dental expenses totaling $15,000. You would only be able to deduct $3750 from your taxes, which is the amount that your medical and dental expenses exceeds 7.5 percent of your AGI. 7.5 percent of $150,000 = $11,250, and $15,000 - $11,250 = $3750.

*2. Home Sale*
It may be that you would like to sell your home once you retire because you want to move, perhaps to a warmer climate with more golf courses! Your home may be worth much more now than it was when you bought it, meaning you could have substantial equity built up in your home. If you lived in your home for at least two of the five years prior to selling it, you may not have to pay taxes on any profit you realize from its sale. The tax laws allow a single filer to claim up to $250,000 in profit on a home sale with no taxes, and up to $500,000 for a married couple filing together.

*3. Contributions to Your Retirement*
Even if you are retired or semi-retired, this does not preclude you from making tax-deductible contributions to your retirement accounts, like IRAs and 401(k)s. This is perhaps one of the best senior tax breaks available, as you may need to live off of your retirement funds. The tax laws are written in such a way that people over 50 have higher limits on what they can contribute to retirement accounts versus those under 50. As an example, a married couple over 50 can contribute as much as $12,000 to an IRA (for the 2009 tax year) and deduct that amount from their income tax, while a married couple under 50 can only contribute up to $10,000.
In addition to contributions to IRA accounts, you can also make contributions to Roth IRA accounts. Although you will pay taxes on the money you contribute to such an account, you will not pay taxes on money that you withdraw from it. This means that any interest that the money gains during its time in the Roth IRA account is tax-free.

*4. Expenses Related to Investments*
Perhaps the best way to get money after you reach senior status or are retired is in the form of interest, dividends or capital gains on investments. This income is taxed at a much lower rate, typically 15 percent, and is not subject to taxes for Social Security or Medicare.
Additionally, if you have expenses related to your investments (like costs related to investment advice) that exceed 2 percent of your AGI, you may be able to include these in your other itemized deductions. These expenses could include things like:


Fees for a safe deposit box
Accounting fees
Attorney fees
Fees for subscriptions to investment newsletters
Fees for online broking
Purchase of home computers for investment needs
Fees paid to financial planners, and
Fees you pay to have your investment income collected.
However, you cannot include the fee you pay to brokers or agents to acquire investment property (stocks or bonds) in your deduction. Instead, this cost is included in the cost of the property and you will recoup it when you sell the property.

*5. Business expenses*
If you own a business when you retire, or plan on starting your own business, you may be able to claim business expenses as one of your senior tax breaks. If you have a business, you may be able to deduct some or all of your expenses related to the business as long as the expenses are necessary and reasonable. Typical business expenses include money spent on travel, business equipment, and the costs of an office, whether it is at home or outside in an office building.

*6. Charitable Contributions*
When people retire, they often have time to reflect and think about just who it was that really helped out during their working life. This often leads retirees and seniors to give back to the community in the form of charitable contributions. These contributions are deductible as an itemized deduction. However, there are limits on these deductions.
Cash contributions that are charitable in nature can only be deducted up to an amount equal to 50 percent of your AGI. In addition, if you donate property (other than cash) to a charitable organization, you can generally deduct the fair market value of the property. However, if the property that you want to donate (like a house) has appreciated in value since you first bought it, you will probably have to make some adjustments.
Lastly, if you make a contribution of a piece of property that the charitable organization will likely sell off (like a car or a boat), then your deduction is limited by the gross proceeds from the sale of the item. This rule applies if the claimed value of the donation is more than $500.

*7. Standard deduction*
The standard deduction is the tax deduction you take if you do not itemize your deductions. If you are 65 at the end of the tax year (December 31 st), then you may take a higher standard deduction. In addition, if you are blind (you do not have corrected vision of at least 20/20 or have an extreme limitation in your field of vision), you may be able to claim a higher standard deduction.
For each criteria met, a married person adds $1,050 (2009 tax year) to their standard deduction, while a single person adds $1,300.
To clarify, some examples are helpful.
Taxpayer is 70 years old and single. His standard deduction is $5,350 (standard) + $1,300 (over 65) = $6,650
Married couple, Husband is 70, Wife is 68, Husband is blind. Standard deduction is: $10,700 (standard) + $1,050 (Husband over 65), + $1,050 (Wife over 65) + $1,050 (Husband's blindness) = $13,850.

*Some Tax Attorneys may offer a Free Evaluation of Your Tax Break Questions...ask if it's free first*
Tax breaks and incentives are generally intended to stimulate investment, encourage certain behaviors (such as electric vehicle rebates), or to simply ease people's burdens. Accordingly, the IRS offers several tax breaks that may make your life as a senior citizen a little easier. See if you can find an attorney to view your situation for free.


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## Don M. (Oct 30, 2017)

I've gone to a tax "expert" a couple of times in years past, and had mixed results.  For the past several years, I just get the annual H&R Block CD, load it into my computer, and start going through the process.  Generally, in 2 or 3 hours, I have the Federal and State taxes done, filed electronically, and waiting for my refunds.  A couple of times, I've also downloaded the free TaxAct program to double check what H&R is doing, and the two generally agree on every point.  H&R charges about $50 for their services, which is substantially less than any tax accountant/attorney I've found...and probably more accurate.  The key is to keep accurate records of the annual transactions, and enter the data correctly.

Luckily, if/when I get too old to handle this myself, I have a wonderful granddaughter who is a CPA and a real math whiz...and she will be quite willing to help out.


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## Aunt Bea (Oct 30, 2017)

From what I've seen so far the proposed federal tax cut will increase my taxes by about $4,000.00/year.

The biggest changes for me will be the change in deducting medical insurance premiums and state income tax.

I don't mind paying my fair share of taxes. I'm very uncomfortable with any tax reform that will add to the deficit and not include a plan for paying off the existing national debt.

I'm sure that a great deal will change before they come up with a final tax plan.

We'll see!!!


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## Don M. (Oct 30, 2017)

Aunt Bea said:


> I don't mind paying my fair share of taxes. I'm very uncomfortable with any tax reform that will add to the deficit and not include a plan for paying off the existing national debt.



I'm with you...I don't mind paying taxes, IF that money goes to worthwhile causes.  However, until this government begins to reduce its National Debt, we are All at risk of future financial ruin.  Nations like Greece, Argentina, and now Venezuela are all recent examples of what happens to the people when an irresponsible government spends like there is no tomorrow.  The US built up a massive debt during WWII, but the people back then were wise enough to raise taxes to unheard of levels for a few years, and pay down that debt...I guess people/politicians today aren't that smart.


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## Lara (Oct 30, 2017)

Don M. said:


> I'm with you...I don't mind paying taxes, IF that money goes to worthwhile causes.  However, until this government begins to reduce its National Debt, we are All at risk of future financial ruin.  Nations like Greece, Argentina, and now Venezuela are all recent examples of what happens to the people when an irresponsible government spends like there is no tomorrow.  The US built up a massive debt during WWII, but the people back then were wise enough to raise taxes to unheard of levels for a few years, and pay down that debt..*.I guess people/politicians today aren't that smart.*


I don't think it has to do with the IQ of people/politicians today as much as getting re-elected. They fear "raising taxes to unheard of levels for a few years" will tick off their support base. But I agree with you that the deficit must come down some way. There are lots of ways though like boosting the economy by luring our US businesses from overseas back to the US with lower tax incentives that they now receive from foreign countries.


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## Lethe200 (Oct 31, 2017)

​FYI:*
Deducting Medical Expenses for a Major Illness or Injury - TurboTax*
The threshold remains at 7.5% of AGI for those taxpayers until Dec. 31, 2016. Beginning *Jan. 1, 2017*, all taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that *exceeds 10% of your adjusted gross income.*


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## Knight (Oct 31, 2017)

No medical expenses, unless a bottle of asprin counts. No interest deduction on mortgage since our home is paid for. Charitable contribution useless even though we donate regularly. We are in the standard deduction boat


Between 15% taken out of our pensions and 20% taken out of our Mandatory Required Distributions our soc. sec is taxed  @ 85%. By paying percentages before we get our retirement  we wind up with not owing additional come April 15th. We don't get much back but the gov. gets a nice chunk of change. Since we don't qualify for any deductibles, the rumor that the standard deduction will be increased works for us. 


I don't think we will fare a whole lot better but like everyone else, a little more for us to spend would be nice. Actually I think that is the concept of trying for tax reform, to get more money into circulation to boost employment.


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