Tax Benefits for Seniors You Should Know About
If you’re closing in on retirement or already kicking back and enjoying it, you’ve probably noticed that taxes feel totally different now. Back when we were punching the clock, it was pretty straightforward. These days? Not so much. You’ve worked hard for every dollar you have the last thing any of us want is to send the IRS more than we absolutely have to.
Good news: the tax code actually throws a few lifelines specifically to folks 65 and up. A lot of people miss them completely, but they can put real money back in your pocket. Here are the four big ones I don’t want you to overlook.
- The “Extra Chunk” Standard Deduction (the easiest win ever)
Once you hit 65, the IRS automatically gives you a nice bonus on top of the regular standard deduction. No receipts, no hassle it just shows up.- Single and 65+? You get an extra $1,950 or so (the exact number changes a little each year).
- Married and both 65+? Boom – you each get the bonus. That can be almost $4,000 extra off your taxable income without lifting a finger.
Most of us take the standard deduction anyway because it’s simpler than itemizing, so this is literally free money.
- Turning Those Big Medical Bills into a Tax Break
Let’s be honest doctors, prescriptions, and everything else can eat up a huge part of the budget once we’re on Medicare. The IRS knows that, so they let you deduct medical expenses that go over 7.5% of your income if you itemize.
That includes Medicare Part B and Part D premiums, Medigap/supplemental premiums, long-term-care insurance premiums (there’s a generous age-based limit), co-pays, deductibles – the works.
If you had a rough health year (or even just pay a lot for premiums), track everything. It can wipe out thousands in taxes. - The Credit for the Elderly or Disabled This One’s Pure Gold for Some Folks
A credit is even better than a deduction because it knocks dollars straight off your tax bill. This particular credit is aimed at lower and moderate-income seniors (and people on permanent disability).
The max is $3,750–$7,500 depending on whether you file single or joint, but income limits are pretty strict. If your Social Security is mostly nontaxable and your other income isn’t too high, you might qualify for the whole thing sometimes it zeros out your tax bill completely. Just fill out Schedule R when you file. Worth checking every year! - Being Smart About Where You Pull Money From in Retirement
This one’s a game-changer once you understand it.
Money you take from a traditional IRA or 401(k) counts as income and can push more of your Social Security into the taxable zone (up to 85% of your benefit can get taxed).
But pulling from a Roth IRA? Completely tax-free (as long as the account’s been open five years and you’re over 59½). Even better Roth withdrawals don’t count when the IRS figures out if your Social Security is taxable.
So on years when you need cash, grabbing it from the Roth first can keep your income lower on paper and save you a bundle.