Being ultra prepared for taxes in retirement can give you a leg up on the year to come.
The first step is always to prep. Gather all of your earnings paperwork, tax credits and finally deduction information. Here are six tax deductions for seniors that may help you save a little more at tax time.
1. Charitable Contributions
The first 2024 tax deduction to consider is your donations. This one is pretty standard but can be a powerful tool to leverage tax savings. For the tax years 2023 and 2024, it is allowed to deduct up to 60% of your gross income. Take a look at your cash and non-cash donations and note them for this tax season.
2. Social Security Tax Savings
If you have received social security checks throughout the year, it is important to consider they can be exempt from federal income taxes. If your earnings are less than $25,000 a year, you many not have to pay federal income tax. If your earnings are above $25,000 there may only be a percentage of income tax you are responsible for. Work with your tax advisor to check and see if you are eligible for this exemption to save a little bit this year.
3. IRA Contributions
Whether you are still working past retirement age or independently contributing to an IRA, there may be tax savings available to you. If you are not covered by an employer plan, your contributions are fully tax deductible. On the flip side, if you are contributing to a company-sponsored plan, part of your contributions can be deducted. Work with your tax professional to determine your deductions.
4. Education Savings
Contributing to educational savings accounts like 529’s or Coverdell Education Savings Accounts (ESA’s) can be an effective tax strategy for retirees. There is no federal deduction, but most states allow deductions on education savings. Check your state’s guidelines for more information. Whether you are saving for your kids or grandkids or investing in yourself, be sure to include paperwork documenting your savings in 2023.
5. Medical Expenses
This is a doozy for seniors this tax season. There are many medical costs that can be included in 2023 tax deductions like prescription drug costs, mental health expenses, health insurance premiums and more. Even parking fees at health centers could be deductible. Consider taking a quick look at your medical expense history and mark any potential savings for tax time. In addition to investing in your physical and medical well-being, it helps to know that there could be a financial benefit as well. If you haven’t kept track of these expenses, keep this deduction in mind for next year!
6. Business Expenses
There may also be a few extra exemptions if you are over 65 and running a business. Expenses like home office space, advertising costs, continued education or conference costs can be included in your tax return. Just one more good reason to invest in your business.
Bankers Life is Here
Looking for a little extra help this year? Connect with a financial representative at Bankers Life to help prepare your retirement savings. Find someone near you today!
