7 Tax Preparation Tips for Seniors

Consider the Standard Deduction for Seniors

According to the IRS, roughly 90 percent of taxpayers claim the standard deduction ($12,950 for 2022); however, those who are 65 and older can claim an even greater deduction.

Taxpayers who are 65 and older can claim an additional $1,750 on top of the standard deduction, an increase of $50 from last year. This significantly reduces one’s taxable income.

Don’t Forget Your Social Security Earnings

Many of the nearly 90 percent of Americans over age 65 who receive Social Security benefits forget to include these earnings in their tax estimations. However, up to 85 percent of your benefits are taxable if you have an individual income of more than $25,000 or a combined income with your spouse totaling more than $32,000.

Since over half of retirees do not have to pay income tax on their Social Security, many assume that this income is not taxable at all. However, depending on your earnings, your other sources of income, and your state’s laws, Social Security benefits could be taxed like any other income. Make sure to account for these when filing.

Take Advantage of the Tax Credit for Elderly/Disabled Individuals

To lower your net liability on your taxes, you need tax credits. Unlike deductions, which simply reduce your taxable income, credits reduce the actual taxes that you owe. For elderly and disabled filers, this amount is determined by whether your adjusted gross income, nontaxable Social Security benefits, and annuities fall under a certain limit.

The credit you are eligible for will vary between $3,750 and $7,500. You may be eligible for this credit if you are 65 or older or you are retired on disability and receive a disability income.

Use VITA, the Free Tax Return Prep Services From the IRS

Since so much of the tax filing process differs based on the individual, VITA can be a vital resource. VITA stands for Volunteer Income Tax Assistance. The IRS provides this service to help certain people prepare their tax returns, including those who are 65 and older, are living with a disability, or have limited English language abilities. You must also earn less than $54,000 per year to qualify.

VITA’s assistance is provided by volunteers certified by the IRS. You can find local VITA assistance in many places, including libraries, community centers, and schools. Check online or with your local IRS office to see how you can take advantage of this free tax return prep service.

Consider Using TCE

TCE (Tax Counseling for the Elderly) is a free service available to people age 60 and older that is organized by the IRS and other contributing organizations. The IRS reimburses these organizations to help pay for the expenses of the volunteer workers who provide it.

From January 1 to April 15, TCE offers seniors tax assistance, including help with understanding the text of the required forms, calculating the correct values, and filing returns.

Look out for scammers.

Unfortunately, victims of elder fraud number over 90,000 per year, with losses totaling over $1.5 billion. The increase in consumer-based phone and internet services has only made scammers more ambitious when it comes to their scams. Tax season is not immune.

Scammers claiming to be IRS employees may call with seemingly bad news, such as that you have outstanding taxes. Sometimes, scammers threaten callers with business suspensions or even jail time if they don’t receive a payment. They will ask for the information needed to make a wire transfer to get the money.

To avoid falling victim to these scams, remember that IRS employees will never call you to request personal identifying or financial information over the phone. Trust only the financial services that you contact, and assume that any phone or email requests for payment information are scams.

Check If You Even Need to File

Not everyone needs to file a tax return. Seniors over the age of 65 with an income of $14,250 or less (not including Social Security benefits) do not need to file. For married taxpayers, this number is $27,800. Remember that wages, investments, rental income, royalties, and any other income outside of your benefits count toward that total.

Thankfully, there are many free services out there, like VITA and TCE, to help seniors calculate and file their taxes. Check online, at your local community center, or on the IRS website to take advantage of these services, as well as ask any additional questions you may have about your 2023 taxes.

To learn more about ways to make the most of your retirement, check out our helpful guides:

• States That Don’t Tax Retirement Income
• How Much Money Do I Need to Retire?
• Guide to Tax-Free Retirement Countries