As the tax filing deadline approaches there are several items that seniors should consider as they prepare their federal tax return. Here are some tax tips for seniors provided by our Vice President and Chief Financial Officer, Mark Celigoi:
Are your Social Security benefits taxable?
Social Security benefits could be taxable, along with any extra income you receive from other sources if your “provisional income” exceeds a specific amount. Typically your total provisional income is one-half of your Social Security benefits plus any other sources of income. Generally, some Social Security benefits are taxable for singles if your total provisional income exceeds $25,000 or if you are a married couple filing jointly and your total provisional income exceeds $32,000.
Are medical expenses deductible?
If you are 65 or older you can deduct qualified medical expenses that are greater than 7.5% of your adjusted gross income. In 2017 this threshold increases to 10%.
Should I itemize my deductions?
If you are single and 65 or older your standard deduction is $7,600 or $1,500 higher than younger singles. If you are married couple filing jointly this standard deduction is $14,600 or an extra $2,400 for the standard couple deduction. If you have high medical expenses, large charitable deductions or other deductions you should consider itemizing your deductions.
When should I start withdrawing funds form my retirement savings?
Once you hit 59 ½, you are able to take out money from your IRA or 401(k) without a penalty. But those distributions are usually taxable.
When do I need to withdraw money from my retirement savings?
When you hit 70 ½, you need to withdraw a minimum distribution each year to avoid a penalty.
These questions are items that should be considered when you file your 2013 federal tax return and are only provided as a guideline. Any specific question should be directed to your tax professional and/or you can consult the IRS web site at IRS.gov.