As we grow older it is often a shock to realize how little we have saved and how much cost we have to plan for later in life. Luckily, there are a variety of tax breaks available to people over 50. In this blog and the next, we will discuss a few ways to hang on to the money you have saved.
- Medical & Dental – The increasing cost of healthcare is one of the greatest concerns to seniors today. If you are a person who itemizes your tax deductions, you may be able to deduct your out-of-pocket medical expenses on your income taxes. You are allowed to deduct any expenses that exceed 7.5% of your adjusted gross income (AGI).
- Home sale – If you intend on selling your home and have lived in the home for at least two of the five years before selling it, you may not have to pay taxes on any profit from the sale. Tax laws allow $250,000 per individual from a home sale to be exempt from taxes, or $500,000 per married couple.
- Contributions to Retirement – People over 50 have higher limits on what they can contribute to retirement accounts (IRA/401K) compared to those under 50. Furthermore, any amount placed into a retirement account may be claimed as an exemption on your income tax filing. Contributing to your retirement account is a great way to avoid unnecessary taxes while at the same time adding to the account that you will likely live off of later in life.