It’s tax season, which means you might be feeling overwhelmed at the prospect of helping file taxes for your aging parent. The IRS offers several tax deductions for seniors, though not everyone knows about them. Here are 7 tax deductions for seniors and how you can help take advantage of them:
Increased Standard Deduction.
For the 2022 tax year, seniors filing single or separately get a standard deduction of $14,700. For those who are married and filing jointly, the standard deduction for 65 and older is $25,900.
The standard deduction for a widow over 65 is also $25,900 if they qualify. Taking the standard deduction is often the best option and can eliminate the need to itemize.
Different Filing Threshold and Social Security Tax Exemption.
The filing threshold is the income your parents must earn before being required to file a tax return. Seniors don’t have to file a return until their income exceeds $14,050. Married filers over 65 do not need to file a joint return unless their income exceeds $27,400. Individual filers or married couples with Social Security and other earnings totaling less than $25,000 or $32,000 per year, respectively, may not have to pay federal income taxes.
Medical Expense Deduction.
Your aging parents do have the option to itemize and deduct certain medical bills. They are allowed to deduct any medical expenses that exceed 7.5% of their adjusted gross income.
Professional medical fees, such as doctor or dentist visits, can be deducted. In addition, prescription drugs, therapy, glasses, and even dentures make the list of deductible expenses.
Health insurance premiums, the costs of in-home senior care, and even expenses incurred because of medical needs, such as parking fees paid at the doctor’s office, can be deducted.
Elderly or Disabled Tax Credit.
The elderly or disabled might be eligible for a tax credit that allows them to deduct money from the total amount owed to the IRS. To be eligible for this credit, your parent must be over the age of 65 or permanently disabled, and their income must not exceed certain levels. Talk with their accountant if you believe they might be eligible for this deduction.
Estate and Gift Tax.
In 2022, Your parents could give up to $12 million to their heirs without penalty per estate law. This number increases to $12.9 million in 2023 ($25,860 for a married couple filing jointly).
Look into an annual gift tax exclusion. This allows parents to give up to $16,000 each year to their heirs without worrying about paying a gift tax. This increases to $17,000 in 2023.
Filing taxes is much easier with the help of a professional who has experience working with seniors and their families. They can help ease the stress that comes this time of year.
Thank you Chris Harper and arborcompany.com for this content!