Even if you retire from your job and aren’t working, you are still responsible for paying taxes. However, that doesn’t mean an inevitably high bill. In fact, you should speak with your tax advisor about the many unique deductions that they can help you claim. This ensures that you can enjoy your twilight years without paying too much out of your income. Below are several deductions that you may qualify for.

Tax Deductions Every Retiree Should Take

1. Larger Standard Deduction

The IRS Standard Deduction assumes that a portion of your total income isn’t taxable, and every person qualifies for this. When filing your taxes, your tax advisor will deduct this from the total bill, reducing the amount your must pay. 

Normally, single taxpayers enjoy a $12,200 deduction. However, senior retirees receive an additional $1,300 deduction per person if they are married, or $1,650 if single. A tax advisor will maximize this deduction to either increase your return or lower your outstanding bill if you owe money. However, this only applies if you aren’t itemizing your deductions.

2. Home Sales

Many seniors sell their homes and move to retirement communities when they finish working. Profits from the sale can be significant and are subject to taxation. However, under certain conditions, the IRS will not require you to pay taxes on the sale.

For example, if you lived in the previous home for at least two out of the last five years, the profits are non-taxable. This includes earnings of up to $250,000 for single retirees and $500,000 for married couples. This provides more money that you can enjoy in retirement.

3. Retirement Contributions

Seniors often continue investing in their retirement portfolios, even while drawing a portion of them. The advantage of this is that moving money to a non-taxable individual retirement account (IRA) or 401(k) will lower your tax bill. You can also contribute to a Roth IRA to enjoy tax-free withdrawals if you still have some business activities.

When you are retiring and want to maximize your money, a tax advisor will ensure you receive as many deductions as possible. For help with this, contact PMC Tax Services LLC in Lincoln, NE. They have been serving the area since 1989 and will carefully assess your income and lifestyle to create a federal tax return plan. Learn more about their services online. Call (402) 467-5529 to speak with a tax advisor.