Tax season can be stressful at any age. However, it poses unique challenges for older adults and their family caregivers. Seniors often have different sources of income, specialized deductions, and unique life circumstances that can complicate the tax preparation process. However, with the right approach and resources, seniors can feel confident filing their taxes, uncover potential savings, and maximize their tax refund.
Whether you’re helping a loved one or filing on your own, these tax preparation tips can help seniors stay organized, reduce tax liability, and avoid common pitfalls.
1. Get Organized Early
One of the best ways to reduce stress during tax season is to gather all the necessary paperwork ahead of time. Consider creating a folder or binder with the following documents:
- Social Security statements (SSA-1099)
- Pension and retirement income (1099-R)
- Investment income statements (1099-INT, 1099-DIV, or 1099-B)
- W-2s (if the senior has part-time employment)
- 1095-A, B, or C (health insurance forms)
- Records of medical expenses
- Charitable donation receipts
- Property tax and mortgage interest documents
- Any correspondence from the IRS
Having these items organized can make tax preparation smoother and more accurate.
2. Understand Tax Benefits for Seniors
Seniors may be eligible for certain deductions and credits that can reduce their taxable income or increase their refund. Here are some key tax breaks for older adults:
Higher Standard Deduction
For the 2024 tax year, individuals age 65 or older receive a higher standard deduction than younger taxpayers. This increases the deduction amount by $1,950 for single filers and $1,550 for each senior spouse filing jointly.
Credit for the Elderly or Disabled
If you are 65 or older and meet income and filing requirements, you may qualify for the Credit for the Elderly or Disabled. This credit ranges from $3,750 to $7,500. It is available to low- and moderate-income seniors who don’t have large amounts of taxable retirement income.
Medical Expense Deduction
If you itemize deductions, you may be able to deduct qualified unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). This includes dental care, long-term care services, prescription medications, and more.
State Tax Exemptions
Many states offer property tax breaks, pension income exemptions, or other credits specifically for seniors. Check with your state’s Department of Revenue to see what local tax benefits are available.
3. Social Security Taxation: Know the Rules
Many seniors assume their Social Security payments are completely tax-free—but this isn’t always the case. Seniors may have to pay taxes on Social Security benefits depending on their total income and filing status.
- Single filers: If your combined income is between $25,000 and $34,000, up to 50% of your Social Security benefits may be taxable. If it’s more than $34,000, up to 85% may be taxable.
- Married filing jointly: If your combined income is between $32,000 and $44,000, up to 50% of your benefits may be taxable. Over $44,000, and up to 85% could be taxable.
- Married filing separately: Most or all of your benefits are likely to be taxable.
To find out how much of your Social Security is taxable, refer to the SSA-1099 form sent to you each January, or use the IRS worksheet found in Publication 915.
4. Take Advantage of Free Tax Assistance
Filing taxes doesn’t have to be expensive. Senior may get free tax help each year. Here are some programs that can help:
Volunteer Income Tax Assistance (VITA)
VITA provides free basic income tax preparation to qualified individuals, including those over age 60, people with disabilities, and limited-English speakers. Volunteers are IRS-certified and trained to handle straightforward returns.
Tax Counseling for the Elderly (TCE)
TCE is designed specifically for older adults. Sponsored by organizations like the AARP Foundation, TCE volunteers specialize in retirement-related tax topics, including pensions and required minimum distributions.
You can find local VITA and TCE sites using the IRS VITA locator tool or by calling 800-906-9887.
5. Protect Yourself from Tax Scams
Unfortunately, seniors are often the target of tax-related scams. Criminals may call pretending to be the IRS, demanding immediate payment, or threatening arrest. Here’s how to stay safe:
- The IRS will never call, email, or text to demand payment.
- Don’t give out personal or financial information over the phone.
- Avoid clicking on suspicious emails or links.
- Never send gift cards, wire transfers, or cryptocurrency to someone claiming to be from the IRS.
If in doubt, hang up and contact the IRS directly at 800-829-1040.
6. Don’t Forget About Required Minimum Distributions (RMDs)
If you’re 73 or older and have a traditional IRA, 401(k), or other tax-deferred retirement account, you must take a required minimum distribution each year. Failing to take the RMD on time can result in a hefty penalty—up to 25% of the amount you failed to withdraw.
RMDs count as taxable income, so they can affect your tax liability. Consider working with a tax advisor to time your withdrawals in a way that minimizes your tax burden.
7. Consider Hiring a Tax Professional
If you’re dealing with multiple income sources, large deductions, or complicated tax issues, hiring a CPA or Enrolled Agent can be a wise investment. A tax professional can:
- Ensure you’re taking advantage of all available credits
- Prepare your return accurately
- Assist with year-round tax planning
- Represent you if you are audited
Ask if your tax preparer offers senior discounts or free initial consultations.
8. Plan Ahead for Next Year
Don’t wait until April to start thinking about your taxes. Here are a few things seniors can do now to make it easier to prepare and file taxes next year:
- Keep a dedicated folder for tax-related documents
- Track charitable donations and out-of-pocket medical expenses
- Adjust tax withholding or estimated payments if your income changes
- Stay informed about changes to tax laws that affect retirees
Planning ahead can reduce stress and even increase your refund.
Final Thoughts
Tax season doesn’t have to be overwhelming for seniors or their families. With the right preparation and support, you can file with confidence, maximize deductions, and protect your finances.
If you or a loved one needs help staying organized or accessing the resources listed above, your local Caring Senior Service may be able to help. We can help connect you with trusted community resources to complete your taxes.
