Helpful Advice to Make IRS Season Less Taxing

When asked about completing his income tax form, Albert Einstein once said, “This is a question too difficult for a mathematician. It should be asked of a philosopher.”

It may be a little early to tell whether the government’s new tax reforms are too difficult for mathematicians and accountants to figure out, let alone average taxpayers like the rest of us. But one thing is for sure about one of the sure things in life: pretty much everyone has to face up to doing taxes within the next few weeks.
The Internal Revenue Service has begun accepting 2017 returns and set the deadline for filing to April 17. So, what happened to April 15, you ask? Well, for the second year in a row, April 15 falls on a weekend (Sunday) and April 16 is Emancipation Day, a legal holiday in Washington, D.C. While it’s nice to have two extra days to get the job done, there’s no time like the present to become familiar with some of the changes and top tax benefits that favor seniors and retirees. It’s definitely worth the extra effort:

• Standard Deduction Amounts. For starters, according to the new tax plan, the standard deduction amounts will increase to $12,000 for all individuals, to $18,000 for heads of household, and to $24,000 for married couples filing jointly and surviving spouses. If you are 65 or over, blind or disabled, you can tack on an extra $1,300 to your standard deduction ($1,600 for unmarried taxpayers). But don’t get too excited just yet. While doubling the standard deduction is a good thing for most people, losing the personal exemption is not so good for others. In fact, a disabled senior couple living on Supplemental Security Income and a small pension could see their tax go up.
• Medical and Dental Expenses. For the 2017 tax year, you will be able to deduct medical and dental expenses for amounts over 7.5% of your Adjusted Gross Income (AGI). Beginning next year, that amount will increase to a full 10% of your AGI. You can deduct health insurance premiums, including Medicare and long-term care insurance, prescription drugs, medical transportation, nursing home care and other out-of-pocket healthcare expenses.
• Retirement Plan Contributions. Anyone over the age of 50 is eligible to contribute up to $6,000 annually to an Individual Retirement Account (IRA). Traditional IRAs permit you to make tax-free contributions, but you must start taking withdrawals when you reach the age of 70½. You can also deduct contributions to a traditional IRA if you meet certain conditions.
• Investment Expenses. Investing has additional benefits after you retire. Dividends and capital gains are taxed by the federal government at lower rates than regular income and are not subject to Social Security or Medicare taxes.
• Charitable Contributions. Generally speaking, you can deduct Charitable Contributions made in 2017 up to 50% of your AGI if you itemize using Form 1040 or 1040A. You can also donate money from your Traditional IRA without paying taxes if your account custodian sends the donation directly to the charitable organization.

Of course, these are just a handful of the tax benefits available to seniors. The best way to get help and have your questions answered is to take advantage of free preparation and tax advice available in many areas. Life Enrichment Directors (LEDs) at some Sunshine Retirement communities are helping residents connect with these volunteer consultants. For example, Ashley Hurd, LED at Dunwoody Pines in Georgia has arranged to take residents to the local library, where AARP will provide free tax service on March 7 and 21 from 10:00 am – 2:00 pm.

For those who want to take the initiative themselves, here are several reliable alternatives to explore:

• AARP Foundation Tax-Aide. Beginning February 1 every year, IRS-certified volunteers offer free tax preparation assistance to low- and moderate-income taxpayers. You don’t have to be an AARP member and there’s no age requirement to get help. Check the Tax Aide Site Locator for locations or call 888-227-7669 toll-free.
• Tax Counseling for the Elderly (TCE). This federal grant program provides tax preparation assistance from IRS-certified volunteers to anyone 60 and older. Most sites are operated by the AARP Foundation Tax-Aide program. For more information, call 888-227-7669 toll-free or check online.
• Volunteer Income Tax Assistance (VITA). Under another federal grant program, IRS-certified VITA volunteers provide tax-preparation services to older Americans. Generally, you must have an annual income below $54,000 to qualify. Call 211 to find a nearby VITA site. Online assistance is also available.
• IRS Free File. If you’re comfortable doing your own taxes, you may be eligible to file federal tax returns online through IRS Free File software. Check the Free File Software Lookup Tool to find federal and state tax return options.
• IRS Taxpayer Assistance Centers (TACs). Help is available at local IRS offices that host this free service. Check the IRS site for locations and scheduling appointments.
• H&R Block. Unless you are still taking mortgage interest deductions and/or have an annual taxable income of more than $100,000, you may be eligible to file a simple 1040EZ return and therefore be able to file your federal return for free with the help of one of the nation’s largest tax preparation providers. Visit H&R Block to see if you qualify.
• Do-it-yourself tax software programs. Several for-profit tax assistance providers offer help through tax software packages and may file 1040EZ and 1040A returns and state returns for free. Check H&R Block’s More Zero, Intuit’s TurboTax, Credit Karma Tax, TaxAct, DIY Tax and TaxSlayer Simply Free.
• A solid second opinion. If you’re not sure about filing your return by yourself, the National Society of Accountants says nearly 90% of their members offer free client consultation and can help you decide if it makes sense to seek professional help.

If all of these options still feel a little overwhelming, the best thing to do might just be finding a professional accountant in your area. Contact your local LED to help you get connected. Chances are, one of your fellow residents is already related to one.

*This blog was first published here: Sunshine Retirement Living, February, 2018.

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