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Four Tips for Providing Tax Help for Seniors

The year 2020 was unique in so many ways. People struggled, supported one another, changed their plans, their interactions and their ways of living. However, one thing continues to be true – we have to pay taxes every year, even for a year like 2020.

For seniors, or caregivers helping senior loved ones, taxes can be especially complex. Like so many things in life, tax codes and requirements change as we age, and it is important to be knowledgeable about how to ask questions and where to find help.

Three Frequently Asked Questions

The Internal Revenue Service (IRS) and organizations that provide tax help, such as AARP, receive millions of questions every year regarding tax codes, deadlines and processes. Here are the most asked questions regarding senior tax preparation:

Can senior citizens get their taxes done for free?

The short answer is – yes! Both the IRS and AARP have programs that provide tax help to seniors in certain financial brackets. The Volunteer Income Tax Assistance (VITA) program provides free tax help for seniors who speak limited English, make an income of $57,000 or less and for persons with disabilities. The Tax Counseling for the Elderly Program (TCE) is available to any tax payers 60 years old or older who have specific questions regarding retirement related issues or pensions.

For the 2021 tax filing season, some VITA and TCE tax sites are operating at limited capacity due to COVID-19 safety precautions, while others are not opening at all. Refer to the IRS website for the latest information.

Does a 75-year-old have to file taxes?

There are several other questions to answer first, but the answer here may be no. The IRS does not typically require a tax return if a person’s Adjusted Gross Income (AGI) is below $10,750 for single persons or $20,900 for married couples. When considering if you qualify, it is important to note that Social Security benefits do not count toward AGI.

In order to be sure of your circumstances, check the IRS website to understand if your loved one needs to file a return.

What’s the difference between Form 1040 and Form 1040 SR?

This type of document-specific question is a great example of a question for a tax preparer. However, a quick answer for this question is that the Form 1040-SR is a better choice for seniors because it simplifies tax-filing requirements and is easier to complete than the longer, more detailed Form 1040.

Understanding Assisted Living Tax Deductions

If you or a family member lives in an Assisted Living facility, there are important tax implications to consider. For instance, there is an Assisted Living tax deduction available to facility residents. In a nutshell, as of 2020 the tax code states that medical expenses are deductible if the expenses are more than 10 percent of your adjusted gross income.

If you are interested in applying the Assisted Living tax deduction, there are a few more details to consider. First, the Assisted Living resident must be certified as “chronically ill” by a doctor or a nurse. Additionally, personal care services must be provided according to a prescribed plan of care, instituted by a licensed health care provider.

To fully understand the Assisted Living tax deduction and the eligibility requirements, review the tax code in detail or consult a trusted tax advisor.

Tips to Simplify the Tax Process

For many Americans, tax time is stressful — there are forms to find, receipts to track down and new codes to remember. When helping a senior loved one prepare for tax time, there are some measures you can take year-round to make tax prep a simpler, less stressful experience. Consider these suggestions:

Stay Organized Throughout the Year. Remind your loved one to keep receipts and financial records organized and up to date. Keep in mind that some information will be critical to your loved one’s ability to file taxes, including an IRS 1099 for Social Security, retirement or investment income.

Determine in Advanced if Your Loved One Needs to File Taxes. Knowing in advance that seniors in your life do not need to file taxes can be an enormous relief. According to IRS data, more than 50% of Americans over the age of 65 are not required to file a tax return.

Understand Potential Exemptions and Deductions. If your loved one does need to file a tax return, whether or not they live in Assisted Living, there are likely many deductions and exemptions that will apply to their situation. For example, everyone over the age of 65 is eligible for an elderly or disabled credit, which covers up to $1,125. While deductions may change from year to year, there are resources available. Try IRS 2120 and IRS 501 for simple outlines of exemption and deductions, laid out in everyday language.

Talk to the Professionals. It always pays to have professional support. Consulting with a tax advisor or tax accountant will ensure you have the latest, up-to-date information, you understand what information you need to help your loved one file and may save you money in the long run by helping to identify specific exemptions or deductions.

Planning for the Future

To ensure you and your loved ones are on solid financial footing through every phase of life, it is important to plan ahead. If you are not yet retired, or have a family member nearing retirement, there are steps you can take to make the process less stressful and to keep your financial future looking bright.

The Atriums is committed to supporting our residents and their families. Our communities provide resources and on-site care to ensure that all activities — from tax help for seniors to medical care or daily entertainment — align with your goals and wishes. Visit https://atriumsbytutera.com to learn more.