Ohio Estate Planning Lawyer Explains the Top Four Tax Deductions for Senior Citizens

Retirement years are all about making sure you have enough money to live a comfortable life while also having access to “rainy day funds” to take care of any unforeseen financial difficulties that may arise. That’s why it’s so important to take advantage of the tax deductions that are available for senior citizens, since these deductions can maximize the amount of money you have to use in your retirement. The following are the top four tax deductions for senior citizens:

Medical Expenses

One of the biggest expenses for senior citizens is medical care, which is why the deductions associated with medical expenses can be a huge help come tax time. Medical and dental expenses that are more than 10% of your adjusted gross income are deductible, meaning any expenses related to health care services, doctor visits, medications, and medical devices.

 

Business Expenses

Retirement businesses are a common way for senior citizens to continue to earn income after their main career has ended. Any necessary and ordinary expenses incurred while running your retirement business may be claimed as a deduction, including the purchase of business equipment, a vehicle used for business purposes, and business travel.

 

Investments and Expenses

Interest, capital gains, and dividends from your investments are generally taxed at a lower rate than normal income and are not subject to Medicare or Social Security taxes. Additionally, any fees spent for investment advice or accountant services can be itemized as long as they exceed 2% of your adjusted gross income. These fees include legal, financial planning, and accounting fees, online investment services fees, and even investment newsletter subscriptions.

 

The Standard Deduction

The standard deduction is sometimes overlooked as a great tax deduction for senior citizens, especially if they are no longer itemizing deductions. Senior citizens (in this case, anyone who is age 65 or older by December 31^st) are entitled to a higher standard deduction than others, so it’s worth considering if the standard deduction is right for you. In addition, the standard deduction can be claimed on a joint return if at least one spouse is over age 65.

If you would like to get more information about tax deductions for senior citizens, or if you’d like to review your current finances and how they work with your future plans, please contact our office at 877-653-3450 to schedule a complimentary initial consultation.