Retirement is the best time to enjoy the money you have worked hard for. In your endeavor to make sure that you put your money into good use, you might as well want to consider ways to save more during this time in your life. The good news is that there are valuable retirees’ tax-saving opportunities that you can take advantage of.
Once you reach the age of 65, you can expect that the IRS will be giving you a larger standard deduction than usual. For instance, you get $400 more as a standard deduction if you are 64 years old in 2022 when compared to your deductible in 2021 if you are of the same age. When you are 65 in 2022, this deductible increases to $14,700 as against $12,950 for 64-year old individuals in 2022. The more than $1,700 savings will definitely be of help for other expenses.
Medicare Premiums as Deductibles
When you leave your job and you become self-employed or hired as a consultant, you will be paying Medicare premiums as well. Supplemental Medicare premiums, as well as those you pay for Part B or Part D of the plan, can be deducted from your taxable income.
In case you have retired and have a low income, you may easily miss out on the special tax credit made for you. This is not mentioned much even in the main tax form, that is Form 1040, or in any other tax schedules. If you have not heard of this in the past, and are unfamiliar with it, now is the time to ask about this to save more on taxes when you have retired. You will generally be qualified if you are 65 and above. If you are under 65, but you retired due to total or permanent disability, and you have received taxable disability income, you are qualified to avail of it.
Paying Your Taxes on Time
The country declares April 15 as “Tax Day”, and most people pay their taxes during the said date. Note, however, that taxes are due once income is earned. This explains why employers usually deduct taxes through withholding taxes from paychecks. Once you retire, this same system will no longer work for you. It is your responsibility to see to it that you pay what is due to IRS on time. Penalties and interest may accumulate for late payments.
At least do so for charity. This puts you at a tax-saving advantage. You won’t even need to itemize the charitable donations in your income tax return. You can in fact transfer $100,000 annually from your traditional IRA to a charity of your choice. That will be excluded from taxable income, thus the tax savings.
The Rest is for You to Enjoy
Get the degree of independence that you want to enjoy even with old age. This is not just by saving on your taxes, but by living in assisted living communities where you can share the same sentiments with other residents. You can check community events to keep your life going every day. Try personal care living homes where you can do the things that you love doing the most.