Senior smarts: Cut your taxes this year with these two simple moves!
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As the golden years grace us with wisdom and experience, they also bring opportunities for financial savvy—especially when it comes to taxes.
For our seasoned citizens, the IRS has tucked away some nifty perks that could boost your bank account come tax season.
Here at The GrayVine, we're all about helping you navigate the golden years with ease and confidence. So, let's unravel the mystery of these two tax-saving treasures that are exclusive to older Americans.
First up is the extra standard deduction. If you're not familiar with the term, the standard deduction is a fixed dollar amount that reduces the income you're taxed on.
It's a straightforward way to lower your tax bill without the hassle of itemizing deductions.
And the best part? For those 65 and older, the IRS offers an additional amount on top of the standard deduction.
Here's the breakdown for tax year 2024:
Source: KVUE / Youtube.
That means a single senior could claim a total standard deduction of $16,550, while a married couple both over 65 could enjoy a deduction of $32,300.
And if you're both 65+ and blind, the IRS allows you to stack these additional deductions, potentially reducing your taxable income even further.
Also read: The retirement savings revolution: What you absolutely must know for 2025!
Just remember, the IRS considers you 65 if you were born before January 2, 1960, and they have specific criteria for blindness–an additional deduction for blindness is allowed if you’re blind on the last day of the tax year.
Next, let's talk about the super catch-up contribution. This is a golden nugget for those aged 60 to 63, thanks to the Secure Act 2.0 passed at the end of 2022.
It's a chance to supercharge your retirement savings and simultaneously shrink your taxable income.
Typically, catch-up contributions for those 50 and older in workplace plans like 401(k)s and 403(b)s are capped at $7,500. This means that the total contribution cap for those who qualify is $31,000.
But for those in the 60 to 63 bracket, the cap rockets up to $11,250, allowing for a total contribution of $35,000 for 2025.
However, there's a catch: not all employers offer these super-sized limits yet. It's up to your company to amend their retirement plans to include this option.
"Technically, there is no law that says that employers must offer a super catch-up contribution so I believe an employer’s retirement plan must be amended to specifically allow for a super catch-up contribution," stated certified public accountant Richard Pon.
So, it's worth having a chat with your employer or HR department to see if this is on the table. If it's not, consider advocating for it.
After all, these extra savings could be crucial for those looking to bolster their nest egg later in life.
Also read: Unlock hidden savings on your taxes with this guide to federal tax credits
Have you already benefited from these tax items? Do you have tips for fellow seniors on managing taxes and retirement savings? Or perhaps you have questions about other financial strategies for older adults? Share your insights and inquiries in the comments below!
For our seasoned citizens, the IRS has tucked away some nifty perks that could boost your bank account come tax season.
Here at The GrayVine, we're all about helping you navigate the golden years with ease and confidence. So, let's unravel the mystery of these two tax-saving treasures that are exclusive to older Americans.
First up is the extra standard deduction. If you're not familiar with the term, the standard deduction is a fixed dollar amount that reduces the income you're taxed on.
It's a straightforward way to lower your tax bill without the hassle of itemizing deductions.
And the best part? For those 65 and older, the IRS offers an additional amount on top of the standard deduction.
Americans aged 65 years or older are entitled to claim an extra standard deduction on their taxes, potentially reducing the amount they owe. Image source: Michal Jarmoluk / Pixabay.
Here's the breakdown for tax year 2024:
- Married filing jointly or qualifying surviving spouse: $29,200
- Head of household: $21,900
- Single or married filing separately: $14,600
Source: KVUE / Youtube.
That means a single senior could claim a total standard deduction of $16,550, while a married couple both over 65 could enjoy a deduction of $32,300.
And if you're both 65+ and blind, the IRS allows you to stack these additional deductions, potentially reducing your taxable income even further.
Also read: The retirement savings revolution: What you absolutely must know for 2025!
Just remember, the IRS considers you 65 if you were born before January 2, 1960, and they have specific criteria for blindness–an additional deduction for blindness is allowed if you’re blind on the last day of the tax year.
Next, let's talk about the super catch-up contribution. This is a golden nugget for those aged 60 to 63, thanks to the Secure Act 2.0 passed at the end of 2022.
It's a chance to supercharge your retirement savings and simultaneously shrink your taxable income.
Typically, catch-up contributions for those 50 and older in workplace plans like 401(k)s and 403(b)s are capped at $7,500. This means that the total contribution cap for those who qualify is $31,000.
But for those in the 60 to 63 bracket, the cap rockets up to $11,250, allowing for a total contribution of $35,000 for 2025.
However, there's a catch: not all employers offer these super-sized limits yet. It's up to your company to amend their retirement plans to include this option.
"Technically, there is no law that says that employers must offer a super catch-up contribution so I believe an employer’s retirement plan must be amended to specifically allow for a super catch-up contribution," stated certified public accountant Richard Pon.
So, it's worth having a chat with your employer or HR department to see if this is on the table. If it's not, consider advocating for it.
After all, these extra savings could be crucial for those looking to bolster their nest egg later in life.
Also read: Unlock hidden savings on your taxes with this guide to federal tax credits
Have you already benefited from these tax items? Do you have tips for fellow seniors on managing taxes and retirement savings? Or perhaps you have questions about other financial strategies for older adults? Share your insights and inquiries in the comments below!
