Monday, February 2, 2015

Time for taxes: Higher standard deduction, other breaks for older taxpayers

Carol Feldman for the SouthEast Missourian writes:   You've downsized to an apartment, the kids are long gone and you're no longer eligible for some of the deductions and exemptions that had helped you lower your tax bill.
But for those 65 years or older, there are other tax breaks that might benefit you come tax time.
For one, not all your Social Security benefits are subject to federal taxes. How much depends on your other income and filing status.

"No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service rules," the Social Security Administration says on its website.

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 $25,000 and $34,000 and your filing status is single, up to 50 percent of your benefits might be taxable, according to the IRS. For married couples filing jointly, the 50 percent taxable figure applies if your combined income is between $32,000 and $44,000.

Combined income lower than the threshold? Social Security benefits aren't taxable. If the combined income is above these income ranges, up to 85 percent is subject to income taxes.
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 Social Security benefits.

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 -- $7,750 if your filing status is single, $14,800 if you're married filing jointly and you and your spouse are both at least 65. That compares to $6,200 for single filers under 65 and $12,400 for married taxpayers under 65 who are filing jointly.

"Seniors very often have already paid up their mortgage and they very often don't itemize anymore," says Jackie Perlman, principal tax research analyst at the Tax Institute at H&R Block.

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.  [ snip ].  The article continues @ the SouthEast Missourian, click here to continue reading....


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