Top 10 Tax Deductions Most Seniors Miss

Frequently Asked Questions

1. Can I really deduct my Medicare premiums?

Yes, you can. Premiums for Medicare Part B, Part D, and Medicare Advantage plans are all considered medical expenses. You can include them in your total medical expense calculation. However, you can only get a tax benefit if you itemize your deductions and your total medical costs exceed 7.5% of your AGI.

2. I take the standard deduction. Are there any other tax breaks I can get?

For the most part, taking the standard deduction means you cannot also claim itemized deductions like medical expenses or charitable donations. However, one major exception is the Qualified Charitable Distribution (QCD) from an IRA. Because a QCD is a direct transfer that is excluded from your income, you get the tax benefit without having to itemize. It’s a powerful strategy for charitably-minded seniors over 70½.

3. If my only income is Social Security, do I still need to file a tax return?

It depends. If Social Security is truly your only source of income, you likely will not have to file a federal tax return because your income will be below the filing threshold. However, if you have other sources of income, such as from a pension, an IRA withdrawal, or a part-time job, you may need to file. You must determine your “combined income” to see if a portion of your benefits becomes taxable and if you meet the overall filing requirement.

4. Can you explain the difference between a tax deduction and a tax credit one more time?

Absolutely. Think of it this way: a deduction reduces the amount of your income that is subject to tax. A credit reduces your final tax bill directly. A $1,000 deduction might save you $120 or $220 depending on your tax bracket. A $1,000 credit will always save you $1,000.

5. I need help with my taxes but can’t afford a professional. Where can I go?

The IRS sponsors two excellent free programs. The first is Tax Counseling for the Elderly (TCE), which provides free tax help from IRS-certified volunteers, specializing in questions about pensions and retirement-related issues unique to seniors. The second is Volunteer Income Tax Assistance (VITA), which generally helps people who make $64,000 or less, persons with disabilities, and limited English-speaking taxpayers. These programs are reliable and can be found in community centers, libraries, and senior centers.

For expert guidance on senior health and finance, visit Benefits.gov, National Institute on Aging (NIA), Centers for Disease Control and Prevention (CDC), Medicare.gov and National Institute of Mental Health (NIMH).