Take the stress out of tax season this year, and follow these tips to ensure you’re getting the most out of your refund.
April 15th, arguably the most dreaded day in America, is fast approaching and with the new tax increases in Congress there are some things to be aware of. First, the new increases in income and payroll (Social Security and Medicare) taxes will not affect your 2012 tax return.
Second, there are several credits and deductions that you should note to make sure you get the most from your return.
Rather than being stressed out this tax season, try to pretend paying taxes is a game and the following tips will help you win, get a higher refund, and generally be more relaxed when that dreaded date rolls around.
Tips to Win:
• If you turned 65 on or before Jan 1, 2013, you’re eligible to take a higher than normal standard deduction: Single $7,250; married $13,900 (if both over 65 -$14,200); head of household $9,950; qualifying widow/widower $12,750.
• If your adjusted gross income, exempt interest and half your Social Security benefit add up to less than $25,000 ($32,000 if married and filing jointly or qualifying widow), you’ll pay no taxes on your Social Security income. Generally, if income is above these amounts up to 50% is taxable; and for high income retirees (i.e. $32,000 for single and $44,000 for joint), up to 85% is taxable.
• If you’re in a tax bracket of 15 percent or lower, you’ll pay no federal taxes on long-term capital gains you racked up during the year.
• If you work while paying a home health aide to take care of your spouse or dependent, you may be able to claim a credit of up to $3,000 in spouse or dependent care expenses.
• If you pay all or some of your parents’ medical bills, you can deduct those as health care expenses provided you itemize deductions on your return if your parents are qualified dependents.
• If you contributed after-tax income to your retirement account such as a 401K or an IRA, a percentage of your annual distribution may be tax-free.
• If your stay at an assisted living facility or nursing home is related to medical care, you may be able to deduct the cost.
• If you bought hearing aids and batteries, artificial teeth and prescription drugs, you may be able to deduct some of the medical expenses.
• If you made certain energy-efficient improvements to your home, you may get a tax credit for expenses such as installing a new roof or new windows or exterior doors.
Some of these tips come with restrictions that may apply to you, so consult with a tax adviser or visit http://www.aarp.org/money/taxes/ for more information.
What good is a game without a team? AARP Foundation provides several Tax Aide locations around the country that can help you make the most of your refund. They provide free advice, tax help, and preparation for low to middle-income tax payers 50+. Find a team near you to help you win the most money from this year’s tax game.
For more information, go to:
AARP’s 10 Tax Tips Everyone Over 50 Should Know
Find an AARP Tax-Aide location
For general tax information, the IRS has a number of free guides and forms online that can help: