|By CAROLE FELDMAN, Associated Press|
But for those 65 years or older, there are other tax breaks that might benefit you come tax time.
For one, not all your
"No one pays federal income tax on more than 85 percent of his or her
To determine what percent of your benefits might be taxable, add half your benefits to your other income, including nontaxable interest. If your combined income is between
Combined income lower than the threshold?
Be sure to check your state tax laws. In many states, you won't have to pay state tax on all or some of your
People 65 and over also should consider whether it's more beneficial for them to claim the standard deduction or to itemize.
The standard deduction is higher for seniors —
"Seniors very often have already paid up their mortgage and they very often don't itemize anymore," said
But it's important to do the math — or let your tax preparer or tax software do it for you — to see whether it still makes sense to itemize even with the higher standard deduction.
Even if you don't have mortgage interest to deduct, you can still deduct any property taxes you paid. State income taxes also are deductible, or alternatively, you can choose to deduct state sales taxes, an attractive option if you live in a state that doesn't have an income tax.
For seniors, medical expenses have to exceed 7.5 percent of adjusted gross income to be deductible. That threshold applies even if only one spouse has reached 65 and you file jointly. For those under 65, medical expenses are deductible only if they exceed 10 percent of your adjusted gross income.
And medical bills can be hefty for seniors. Covered medical expenses include the portion of doctor, dentist and hospital bills and the cost of prescription drugs not covered by insurance, as well as premiums for
Charitable donations also are deductible.
However, seniors who are at least 70½ had another option for charitable donations. At that age, you're required to take a minimum distribution for your individual retirement accounts. If you rolled that distribution over directly to a charity — instead of taking the money and then donating it — the distribution is not counted as income and therefore is not taxable.
"The difference is you're lowering not only your taxable income but also your adjusted gross income," Perlman said. And that can affect such things as whether
But there's no double-dipping. If you itemize, you can't also deduct a charitable donation that was made through a direct rollover from an IRA.
There is also a small tax credit for low-income seniors, which Perlman says is not widely used. "It might be helpful for someone who neither contributed to the
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