At retirement age, finances operate a bit differently than in a person’s younger years. When tax season rolls around, seniors may be able to take advantage of certain deductions that were not available to them before. Lancaster elder care experts recommend you and your senior loved one take a close look at these tax deductions.
The average senior spends around 30 percent of his or her monthly income on medical expenses. Luckily, many of these expenses are tax deductible. This may include prescription medications, preventative services, dental services, monthly premiums, and assistance from an hourly or 24-hour caregiver in Lancaster.
Many retired seniors want to give back to their community with charitable contributions, and these donations are often tax deductible. However, your loved one should understand some of the unique rules that apply to these deductions. Both cash and property contributions are heavily regulated if they amount to more than $500 a year.
The most efficient way to make money as a retired senior is with interest and capital gains from earlier investments. This form of income is taxed at a much lower rate than traditional income with some investment vehicles providing tax-free gains. All of the expenses involved with investing are tax deductible as well. This includes consultation fees, safe deposit boxes, broker fees, and even subscriptions to investment newsletters.
Seniors who decide to sell their homes upon retirement will be glad to hear they might not have to pay any taxes on the total profits from the sale. In most cases, your loved one would need to live in the home for at least 5 years to qualify for this tax deduction. The current tax deduction cap on home sales is $250,000 for a single filer and $500,000 for a couple.
Standard Senior Deduction
Those who turn 65 by January 1st of each year will qualify for the standard deduction all elderly filers receive. This deduction is given to seniors who do not itemize their deductibles because they no longer have major expenses such as a mortgage. Anyone who has a spouse over the age of 65 may also benefit from this higher standard deductible.
For more information on financial planning in the senior years, reach out to Home Care Assistance. We offer flexible hourly and live-in care plans, and we also offer specialized Alzheimer’s, Parkinson’s, and stroke care for Lancaster seniors who need more extensive assistance. Call a Care Manager today at (717) 540-4663 to learn more and to schedule a no-obligation consultation.