Although turning 50 brings certain challenges, at least you can take advantage of tax breaks. These breaks for older Americans can shave dollars off your property and income taxes. The senior placement prep advisers at The Swain Team aim to help Pennsylvanians prepare for retirement with smart real estate investments. Here we share a few ways to celebrate your age with tax savings:
Property Tax Breaks
Property taxes vary by local jurisdiction. However, many areas have property and school tax exemptions or deferrals triggered by age. If you’re unsure, it’s recommended that you speak with a financial advisor or tax professional to make sure you aren’t leaving any money on the table. It’s also worth noting that you may have to fill in extra forms to take advantage of certain tax breaks.
Investment Tax Breaks
Some investors find themselves paying additional fees and expenses after retirement. For example, you may pay fees and charges for moving assets to a new retirement account, taking minimum distributions, and rolling over funds. Fortunately, you can deduct expenses totaling 2% or more of your adjusted gross income (AGI).
Higher Retirement Contribution Limits
If you are 50 years of age or older, you can make catch-up contributions thanks to increases in contribution limits such as:
- Maximum IRA contributions go up $1,000 to $6,500
- Maximum 401(k) and 457 contributions increase to $24,500
Healthcare Tax Breaks
Some people find themselves spending more on healthcare as they get closer to retirement. Fortunately, you get a tax break for medical expenses over 7.5% of your AGI. If you’re 55 or older, the contribution limits for Health Savings Accounts and high-deductible health plans (HDHPs) go up.
Higher Standard Deduction
The recent tax bill dramatically increased the standard deductions to $12,000 for individuals or $18,000 for heads of household. Blind or disabled taxpayers get $1,300 added to their deduction if married — $1,600 if single.
Tax-Free Social Security Income
Depending on your income, you may receive Social Security Income tax free. If you make $25,000 —$32,000 if married filing jointly — or less including your taxable income plus half of your Social Security Income, the government doesn’t tax your SSI.
Higher tax deductions and contribution limits help seniors whittle away at their tax bills. Many people save additional money by downsizing their homes. If you’re looking for senior living neighborhoods in PA designed for those 55 and up, contact The Swain Team for assistance today.