Written by: Kimberly Bergmann
January 16, 2017 • 0 comments
It may seem ambitious to look ahead to April during the cold weather months, but now really is the best time to get organized for tax season. Seniors especially should look ahead since taxes and deductions can be significantly different (and sometimes more complicated) than what was filed pre-retirement.
We sat down with Caryn Feldman, a licensed CPA, to learn some things you can do before the clock strikes midnight on April 15, 2017.
1. Get organized!
Gather any documents and other paperwork so that when January rolls around, you won’t be searching for paperwork from last summer. Organize your receipts, such as those from charitable donations, check your latest brokerage statement for gains or losses, and get medical and business expense receipts and insurance reimbursement forms in order.
Seniors and their caregivers are often eligible for deductions for dental treatments, transportation to and from healthcare appointments and health insurance premiums. It’s best to have all documented information on hand so you can accurately track and claim deductions.
2. Speaking of deductions…
Consider making charitable contributions by cash or check to a 501(c)(3) or donate some of your well-loved (but no longer used) furniture and clothing items. Donate those items to a local charity that accepts these goods (be sure to get a receipt!). The total value of the noncash donation must be more than $500 within the same tax year in order to qualify for a deduction.
If your year-to-date medical expenses are nearing the 10 percent threshold of your adjusted gross income for the year, consider incurring medical or dental expenses before the end of the year so you can potentially deduct them on your tax.
If you still own any real estate, you may also be able to prepay your January real estate taxes or mortgage payment in order to get a larger deduction for the taxes and interest paid in the current year. However, if you do decide to sell any real estate this year, you may not have to pay any taxes on your profits, especially if you lived in your home at least two of the five years before you decided to sell.
3. Harvest your losses
No one likes losing value on their investments, but if this has happened to you this year, there may be a bright side. According to Feldman, tax loss harvesting “is the practice of selling any securities that have decreased in value from the original acquisition date.”
Realizing or “harvesting” those capital losses will offset any year-to-date capital gains. Tax laws allow you to deduct capital losses to the extent of your capital gains for the year, plus another $3,000. Any remaining capital losses not deducted will carry forward to subsequent tax years.
Whether you’re a senior or a caregiver, we highly recommend talking to your tax advisor or CPA for the most comprehensive and individualized guidance. Taxes and finances can be vastly different for those over the age of 65, and getting professional assistance can help you minimize mistakes and maximize refunds and benefits.
At Generations, looking out for our residents’ well-being is our top priority. Contact us to learn more about our independent and assisted living communities.