Very few people enjoy paying taxes, but if you are a senior, you may be particularly concerned about the impact that income taxes have on your Social Security benefits. Those funds are precious, and many seniors can ill-afford to lose money as a result of tax issues.
The good news is that individuals receiving Social Security often have some tax advantages that others may not possess. Below are a couple of key Social Security tax considerations that you should keep in mind.
Basic Social Security Income Isn't Usually Taxable
You will be happy to know that Social Security income alone isn't taxable in most circumstances. In fact, you may not even be required to file a federal tax return at all.
Under current law, seniors can keep all their Social Security earnings if that is their only source of income. However, if you earn more than a certain amount, and Social Security makes up a percentage of that figure, you may owe taxes. Be sure to contact a tax professional to calculate how much tax you may need to pay, especially if you earned additional income for the year.
Claim the Credit for the Elderly or Disabled
Another tax benefit that can impact your finances positively is the Credit for the Elderly or Disabled. This provision provides a tax credit worth up to $7,500 per year for qualifying individuals.
That means you will reduce your taxes, dollar for dollar, by up to the amount of the credit. Further, this credit is maximized when your income is solely dependent upon Social Security. Of course, if you earn more than just your Social Security, your credit may decline, so be sure to contact a qualified tax advisor for help in knowing its impact.
At Caring Senior Service we are always ready to help seniors and their families by providing professional advice and services. As you consider ways to give support to your aging parents or relatives, consider including us in your plans. Contact our care team today!