People who pay taxes find every possible loophole to minimize their payable tax by either making investments or budgeting. However, when it comes to seniors and retirees, paying an income tax can become a liability as they have a fixed income. The tax deductions for seniors and retirees are in the form of certain tax breaks offered by the government. The government offers some great benefits for those who are not in the workforce in the form of deductions, credits, and tips to help with taxes. Anyhow, it’s always advisable to save enough through pension and retirement plans. However, you need to understand the pros of the tax deductions offered by the governments; this will help you make informed decisions.

As you get older, standard deduction enables you to save, which you can redeem when you turn 65 years old. This also helps deduct your payable tax amount. Being a single householder gives you the advantage of adding an extra of $1600 to the standard deduction. If you plan to file a joint return, a good $1300 can be added by either of the married spouses, irrespective of their age. You ideally pay taxes on a very small amount of your income and that’s a great way to save. In the case of mortgage and donations, your standard deduction can be much higher. As per 2018, there is much saving with standard and extra standard deduction than itemizing expenses.

When it comes to medical and dental expenses which are generally exorbitant, seniors and retirees have an advantage as they itemize their personal deductions such as premiums for health insurance, long term care, medications, and other medical expenses. Since 2019, the limit for a taxpayer AGI has increased to 10%. In case of starting your own business or freelancing, you have the advantage to write off certain business expenses while filing for tax returns. If you are planning to sell your home, you may not have to pay taxes on the profits earned, as long as you have resided there for a good 2 to 5 years or have owned the house for 2 years. This is not subject to expatriate and includes capital gains from any home sale in the last 2 years.

As you step up the ladder, you can contribute to your retirement funds and IRA after your 50s; this way you can deduct the amount from income tax. So, ideally you pay taxes while contributing, but you are all good while withdrawing from it. Now, if you love doing charity, you get a tax deduction as this is an itemized expense. For example, you want to donate your property, the fair market value can be deducted. Also, learn that in case of a disability, as a senior citizen or a retiree, you can take away a tax credit.

These tax deductions rules have been laid down by the country’s federal laws and so you must stay informed about the changes to pay minimum tax.