If you’re in your 60s, you’re likely an empty nester, you might have a few grandkids, and you may even be retiring soon if you haven’t already. As with every age that came before, there are a lot of big milestones to look forward to in your 60s. And, as always, big lifestyle changes mean new expenses and new questions come tax season. But not to worry. This week, as part of our “taxes through the ages” series, we’re offering some tips for those of you in your 60s.
Retirement Savings Post-retirement
If you’re retired or getting ready to retire, it’s important to know about savings and deductible options that are available to you. Retirees and semi-retirees can still make tax-deductible contributions to retirement plans such as IRAs. Just keep in mind that folks over 50 have higher contribution limits for traditional IRAs, Roth IRAs, and 401(k)s.
If you prefer to contribute to a Roth IRA, you’ll pay taxes on the income you contribute now, but the withdrawals upon retirement are tax-free.
Lastly, if you’re retired but have started or purchased your own business, you can establish SEP-IRAs, Simple IRAs, Keogh plans, and solo 401(k) plans that have higher contribution limits for individuals over 55.
Business Expenses
It’s not uncommon for retired individuals to start or purchase new businesses, be they part-time hobbies or full-time startups. If that sounds like you, you should be aware of the great tax deduction benefits available to you. You may deduct all the necessary expenses you incur to do business, including:
Social Security Income
Important news for those of you collecting social security: If your adjusted gross income, untaxed interest, and half of your Social Security benefit add up to less than $25,000 ($32,000 if married and filing jointly, or a qualifying widow), you don’t have to pay taxes on your social security income. Beyond that amount, savings are on a sliding scale. But you can sleep soundly knowing that no matter how much you make, 15% of your Social Security benefit will always remain untaxable.
Deductions for those Over 65
If you turned 65 before January 1st of the year in which you are filing (2017 for next tax season), you can take a higher than normal standard deduction. For 2016, the additional standard tax deduction was $1,250 for married tax payers filing jointly, or $1,550 for unmarried.
No matter how long you’ve been filing taxes, you may still have questions. And that’s ok! Just remember we’re always here to help. Be sure to browse our services page and fill out the form for a free consultation. Or give us a call at 844-841-9857!