Let’s be honest! Economy isn’t very good nowadays, and we all could use some tax relief. This is especially true for the senior citizens, as many of them have seen a reduction in their net income amid Covid-led economic disruption. But is it really possible for seniors to get tax relief? You may be wondering about IRS tax relief options for seniors in Westlake Village, CA, as well as other parts of the states.
The good news is that, while seniors are still expected to pay some taxes, certain reliefs and tax forgiveness might be available for them.
If you are over the age of 65 and residing in the United States, then this article is for you. Read till the end to know about IRS tax relief options for seniors in Westlake Village, CA and other areas.
IRS Tax Relief Options for Seniors in Westlake Village, CA
1: Larger Standard Deduction
If you are 65 or over and filing taxes as head of household or as a single individual, you may be allowed an additional $1,650 standard deduction off your taxes. Similarly, if you file joint returns as a married person, you may also add a further $1,300 for your spouse, if they too are over the age of 65.
2: Increased Tax Filing Threshold
For normal single tax filers, it is mandatory to file income tax returns if one’s annual income exceeds $12,400. This is also equivalent to the typical standard deduction allowed in the year 2020-21.
On the other hand, however, you can have an annual income of up to $14,050 before it becomes mandatory for you to file income tax returns if you are 65 or over.
The amount is further increased if you are married and both of you are over the age of 65. In this case, the threshold for filing returns is extended up to $27,400.
3: Credit for the Elderly and Disabled
“Tax Credit for Elderly or Disabled” scheme by the IRS allows relief for senior citizens (of age 65 and above) who otherwise owe money to the taxman. Typical amount of tax credit may be anywhere between $3,750 and $7,500.
In reality, the exact amount of available tax credit shall depend upon a number of factors, including but not typically limited to social security benefits, adjusted gross income and other sources of income, such as annuities and pension.
4: Social Security Tax Exemption
More often than not, social security earnings are exempt from federal taxes. However, it may depend upon your overall financial circumstances, such as other sources of earnings.
For a single senior citizen earning up to $25,000 and a major chunk if this earning coming from social security, complete tax exemption may be available.
Similarly, for married people who choose to have joint filings, this threshold is increased to $32,000.
Similarly, the following type of exemptions/ deduction may be allowed to seniors in the United States.
- Business and hobby deductions.
- Medical expense deductions.
- Charitable deductions.
- Retirement plan contribution benefits.
- Home ownership benefits.
- State senior tax exemptions.
The IRS also has an online tool on its official website to help seniors better understand their taxes and to know further about likely deductions/ exemptions available to them. You may want to visit the IRS website to know further about your tax position.
At the same time, however, it is also recommended to always seek professional help from a well-experienced consultant in order to ensure maximum tax savings on your hard-earned income.
Always consider a range of available options to legally minimize your tax liability before choosing any particular one for you and your family.
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Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.