What You Need to Know.
It’s never too late to get financially fit. Here are some simple and painless ways to build your financial muscle.
1. Take another standard deduction.
If you are 65 or over, you are entitled to another standard deduction (if you don’t itemize). Those standard deductions have nearly doubled in 2018. A tax professional can determine if you are better off taking those standard deductions or itemizing.
2. Continue to make contributions to a retirement plan.
It’s perfectly legal for you to put some of your income (even from retirement savings) into an IRA up until the age of 70 and a half. Roth IRAs have no age limits.
Those over 50 enjoy higher contribution limits, meaning you can contribute more. If you have your own business, you can also contribute to a host of other retirement plans. These plans have higher contribution limits for folks who are older than 55. Those include solo 401(K) plans, Simple IRAs, SEP-IRAs, and Keogh plans.
A word of caution here: There may be income thresholds that may diminish what you can contribute. Also, making a contribution that is over the allowed amount comes at a big price.
3. Save on the sale of your home.
If you are planning on selling your residence, you likely have built up a lot of equity.
Make sure you time the sale so that you have lived in the house for two of the last five years. If so, you can save on taxes.
If you’re single, you don’t have to pay taxes on profits of up to $250,000. For those who are married and filing jointly, this doubles to $500,000.
4. Find out if you are eligible for the Elderly and Disabled Tax Credit.
To qualify, you must be at least 65 years of age by the last day of the tax year. Those who are retired on permanent and total disability and received taxable disability income may also qualify.
There are income limits that must be met as well. For single filers, it is $17,500. For married filing jointly, it is $25,000 when both spouses qualify (and $20,000 when only one spouse does). The credit ranges from $3,750 to $7,500.
5. Know how much of your Social Security income is taxable.
At certain income levels, your Social Security may not be taxable. If you rely only on your Social Security checks to live, most likely you won’t need to pay taxes on it. If you’re receiving income from other sources, such as an IRA, you may have to pay taxes on as much as 85% of the Social Security income. One way to estimate is to add half of your Social Security benefits to your other income (don’t forget interest):
Combined Income = Adjusted Gross Income + Nontaxable Interest + Half of your Social Security
If you are over $25,000 as a single filer or $32,000 for those who are married filing jointly, you will have to pay some tax.
A tax professional can help you make this determination, as well as give advice on ways to lower your tax bill.
Expert advice always pays off. Get your finances in shape with tax planning today. Call (772) 337-1040 or set an appointment online now.
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Jeffrey Schneider, EA, CTRS, NTPI Fellow has the knowledge and expertise to help you reach a favorable outcome with the IRS. He is the head honcho at SFS Tax & Accounting Services as well as the Enrolled Agent and Certified Tax Resolution Specialist for SFS Tax Problem Solutions.
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Now What? I Got A Tax Notice From The IRS. Help! Defining and deconstructing the scary and confusing letters that land in your mailbox. Jeff defines and deconstructs the scary and confusing letters in a fashion that mixes attention to detail with humor and an intricate clarification of what is what in the world of the IRS.
The book is available in paperback and ebook on https://Amazon.com
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For more on SFS Tax & Accounting Services, visit https://sfstaxacct.com/
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738 Colorado Avenue Stuart, FL 34994
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Phone: 772-337-1040
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