Reduce your income taxes each year by taking advantage of the deductions available!
Medical & Dental Expenses.
These expenses in general are one of the largest expenses for retired people. Good news is that some of these expenses are deductible. If your expenses included health insurance premiums, long-term care insurance premiums, prescription drugs, nursing home care and other out of pocket health care expenses, they are deductible! But you need to itemize your deductions because there is a limit. People under the age of 65 the limit is 10% of your adjusted income. If you or your spouse is 65 and older then the limit is 7.5% until December 31, 2016.
Certain Medicare Premiums
Medicare Part A is not a medical expense. If you’re covered under social security you’re enrolled in Medicare Part A. If you’re not covered by social security you can voluntarily enroll in Medicare Part A and include the premiums you paid as a medical expense. Medicare Part B is a supplemental medical insurance and the premiums are a medical expense. Medicare Part D is a voluntary prescription drug insurance program and the premiums are a medical expense.
Medical Expenses Paid for Relatives
If certain requirements are met and you paid health premiums or uninsured medical expenses for a relative, its deductible. Generally you must pay over half of his or her support for the year.
Selling your House
If you lived in your main home for at least two of the five years before you sell your home the profit you make on the sale, up to $250,000 for single taxpayers and $500,00 for married taxpayers filing jointly is not taxable.
Retirement Plan Contributions
You can make deductible contributions to retirement plans such as IRAs. Those over 50 have higher contribution limits for tradition IRAs, Roth IRAs and 401(k)s. Retirees with their own businesses may also establish SEP-IRAs. Simple IRAs, Keogh plans and solo 401 ( K) plans that have higher contribution limits for those over 55.
If you give back to the community by making charitable contributions some of those contributions are deductible as itemized deductions, subject to limitations. Cash contributions of up to 50% of your adjusted income are deductible each year.
Source: Elder Law News Photo: Pexels
Rhonda A. Mannes,