9 Tax Breaks for People Over 50

Tax season is officially upon us, and SunRiver has found 9 Tax Breaks for People Over 50!

Once you turn 50, and especially after age 65, there are quite a few extra tax breaks you can qualify for. 

With age, comes a larger standard deduction, and because of that, you can earn more before they have to file a tax return at all. 

Ahh finally. One of the many perks of aging!

Workers over 50 can also defer or avoid taxes on more money using retirement and health savings accounts. Can I get an amen ?!

Without further ado, here is SunRiver Active Adult Communities 9 Tax Breaks for People Over 50:

Property Tax Breaks

Number 1 on the list of 9 Tax Breaks for People Over 50 comes as no surprise– property tax breaks!

Property tax rules vary considerably by state and local jurisdiction of course. 

Luckily though, in some places, people who are above a certain age and who also earn below a specific income level qualify for property or school tax deferrals or exemptions!

Definitely something worth looking into in our humble SunRiver Active Adult Communities opinion!

401(k) Catch-up Contributions

Older workers with access to a 401(k) plan may be eligible to make catch-up contributions.

What is that, you might ask?

A catch-up contribution is a type of retirement savings contribution that allows people 50 or older to make additional contributions to their 401(k) accounts and/or individual retirement accounts (IRAs). 

These contributions are often larger than the standard contribution amount.

Therefore, employees age 50 and older can defer paying income tax on $6,500 more than younger workers if they contribute that amount to a 401(k) plan or a total of $26,000. 

An older worker in the 24% tax bracket who maxes out his 401(k) plan could save $6,240 on his current tax bill, $1,560 more than a younger worker in the same tax bracket could potentially save. 

What’s even better is that income tax won't be due on this money until it is withdrawn from the account. 

Oh yeah baby!

No More Early Withdrawal Penalty

Young workers who pull from their retirement stash accounts are hit with a 10% early withdrawal penalty unless the money is used for a couple of specific purposes. 

Sound familiar? 

However, once you turn age 59 1/2, you can withdraw money from an IRA for any reason without incurring the 10% tax. 

As well, should you feel inclined to leave your job at age 55 or later, you can begin penalty-free 401(k) distributions from the account associated with the job you most recently left. 

Unfortunately, though, this time income tax will be due on withdrawals from traditional retirement accounts at any age.

Larger Standard Deduction

As discussed, with age, comes a larger standard deduction. There are more benefits that come with age than we thought when we were younger isn’t there?!

If you don't itemize your tax deductions, you can claim a larger standard deduction if you or your spouse is age 65 or older. 

The standard deduction for seniors is $1,650 higher than the deduction for people younger than 65 who file as individuals. 

Married couples can increase their standard deduction by $1,300 if one member of the couple is 65 or older and $2,600 if they're both at least age 65.

Ahh, getting older never felt so good my friends!

Charitable Distributions

Retirees are typically required to withdraw money from traditional retirement accounts and pay the resulting income tax bill. 

Yuck…

However, if you don't need the money, you can avoid income tax on withdrawals from traditional retirement accounts if you make a qualified charitable distribution. 

Retirees ages 70 1/2 and older who transfer any amount up to $100,000 directly from their IRA to a qualified charity will not owe income tax on the transaction.

There you have it– charity is not only a beautiful thing that makes you feel great, but you also get a great tax break in the process.

Find your favorite local charity, pet shelter or rescue, or homeless shelter today!

Credit For The Elderly or Disabled

Number 6 on the SunRiver Active Adult Communities 9 Tax Breaks for People Over 50 is not quite as bubbly and exciting as the others, but it’s a great benefit for those who are experiencing the downside of getting a bit older!

If you or your spouse is age 65 or older and you have a low income, you could be eligible to claim a tax credit for seniors. 

Retirees who qualify may be able to reduce their tax bill by taking the credit. Younger people who are retired and disabled might also qualify!

While not as happy go lucky, this is another something worth looking into in our humble SunRiver Active Adult Communities opinion!

Additional IRA Deduction

Workers age 50 and older can contribute an additional $1,000 to an IRA, or a total of $7,000 in 2020. 

Yay for the New Year am I right?!

A 50-year-old worker in the 24% tax bracket who maxes out his IRA would save $1,680 on his current tax bill, $240 more than the maximum possible tax break of $1,440 for a younger retirement saver in the same tax bracket.

Higher Tax-Filing Threshold

Tax season is upon us, so take advantage of tip number 8 on the SunRiver Active Adult Communities 9 Tax Breaks for People Over 50!

People age 65 and older can earn a gross income of up to $13,850 before they are required to file a tax return for 2019, which is $1,650 more than younger workers. 

The tax filing threshold is $27,000 for couples both age 65 and older, and $25,700 if only one spouse is at least age 65, compared to $24,400 for younger couples.

Higher HSA contribution limit

Last but not least, tip number 9 of our 9 Tax Breaks for People Over 50! If you’ve filed your taxes yourself before, this one may not be as surprising, but it’s great to know even still.

Whether you are 50 or older, workers with a high-deductible health plan can claim a tax deduction on contributions to a health savings account. 

Distributions from these accounts are tax-free when used to pay for qualifying medical expenses. 

However, individuals who are age 55 or older by the end of the tax year are eligible to contribute up to $4,500 to a health savings account, $1,000 more than their younger counterparts.

And of course, you can no longer contribute to an HSA once you enroll in Medicare, which can in fact, be quite the bummer.

SunRiver Active Adult Communities

We hope you’ve found value in our SunRiver Active Adult Communities 9 Tax Breaks for People Over 50. With tax season upon us, any tax break we can receive is a great one, right? No complaints here! 

SunRiver, now home to multiple communities, including the original SunRiver St. George and the new SunRiver Villas, there’s an amenity—and a lifestyle—here for every retiree ready to live young. For the past twenty years, the wide-open spaces and obliging breezes have made SunRiver Active Adult Communities the ideal location to retire for hundreds of residents.

Boy let me tell ya, between tax breaks, freedom, and beautiful, sweet retirement, 50 and over never looked sooooo good.

We’ll see ya next time friends.