Retirement presents a unique set of financial challenges to those who decide to stop working, but the tax code also provides advantages that can substantially reduce your tax burden. Adjusting your tax planning strategy to fit your new financial situation will help maximize your deductions, giving you more resources to direct toward your investments or other retirement activities. Below are some little-known tax benefits retirees often enjoy.

3 Tax Deductions for Retirees

1. Increased Standard Deduction

The recently enacted overhaul of the tax system doubled the standard deduction to $12,000 for single filers and $24,000 for married couples filing jointly. The law preserves an additional deduction of $1,300 for taxpayers who are over 65 at the end of the year, which could simplify your tax planning. Your tax professional will help determine whether it’s better for you to itemize or take the standard deduction.

2. Medicare Premium Deductions

Many retirees continue to work in a part-time capacity, either as a self-employed consultant or for another company. If you’re not covered by an employer-sponsored health plan, you could deduct the premiums of your Medicare Parts B and D premiums, as well as the cost of a supplement Medicare or Advantage plan.

3. Exempt Proceeds From Real Estate Sales

To accommodate their changing lifestyles, many retirees opt to sell their homes and move into a smaller residence, potentially incurring significant tax penalties if you’ve owned the property for several years. Fortunately, if you’ve lived in the property for two of the previous five years, most of the profits of the sale will likely be tax exempt. To maximize your tax deductions, consider speaking with a tax planning professional before listing any real estate for sale.

As a full-service accounting firm, Erie & Associates, P.C. offers retirees throughout Texarkana, TX, tax planning services tailored to your unique needs. Whether you’re recently retired or plan to soon, their experienced staff will help ensure you receive every deduction you’re entitled to. To schedule a consultation and discuss your financial situation, visit the website or call (903) 792-6651.