{"id":241,"date":"2018-12-02T05:35:55","date_gmt":"2018-12-02T05:35:55","guid":{"rendered":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/?p=241"},"modified":"2018-12-02T05:35:55","modified_gmt":"2018-12-02T05:35:55","slug":"personal-finance-after-50-how-to-minimize-your-taxes","status":"publish","type":"post","link":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/uncategorized\/personal-finance-after-50-how-to-minimize-your-taxes\/","title":{"rendered":"Personal Finance After 50- How To Minimize Your Taxes?"},"content":{"rendered":"

Numerous Americans over 50 haven\u2019t saved for retirement. Quite a few over 50 have little or no retirement savings. Generally , they delay retirement savings in favour of various other actions like pursuing debt reduction first, then children education loan, instead of accomplishing several goals simultaneously. The result, you are having less savings and also pay higher taxes. You pay a lot of money in taxes – probably more than you realize. Few people know just how much they pay in taxes each year. Your purpose\/ objective should be – how to reduce your total tax burden. You must understand the tax system, both state and federal taxes. Your tax ignorance can lead to serious mistakes.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span>\u00a0Various Tax Saving Options<\/b> : –<\/span><\/p>\n

\u00a0\u00a0Growing older qualifies you for a variety of tax perks that aren\u2019t available to younger individuals. You must understand what is your taxable income as all the income is not taxable. Some deductions are available like mortgage interest and property taxes; contributions to qualified retirement plans etc. Once you turn 50, and especially after the age 65, you can qualify for extra breaks. Older people get a bigger standard deduction and they can earn more before they have to file a tax return at all. Workers over 50 can also defer or avoid taxes on more money using retirement and health savings accounts.<\/span><\/p>\n

\u00a0<\/span>\u00a0\u00a0Some of the Tax perks available to people over 50 are as under<\/b> : –<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(<\/span>i) Bigger Standard Deduction <\/b>: – You can claim a larger standard deduction if you or your spouse is age 65 or older. The standard deduction amount for older taxpayers is $1,250 higher than the deduction for people under age 65. And if, a retiree is unmarried, the standard deduction is $1,550 higher than the younger taxpayers.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span>(ii) Higher Tax- Filing Limits<\/b> : – People age 65 and older can earn a gross income of up to $11,900 ($ 23,200 for couples both age 65 and older) before they are required to file a tax return. That is $1,550 more than the tax- filing limit for younger individuals.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(<\/span>iii) Property Tax – breaks<\/b> ; – The tax rule vary from state to state . However, in some places people who are above a certain age and who earn below a specific income level qualify for property tax rebate.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(iv) Credit For The Elderly Or Disabled<\/b> : – 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. Retirees who qualify may be able to reduce their tax bill by taking the credit<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(<\/span>v) Additional IRA Deduction<\/b> : – Workers age 50 and older can contribute an additional $ 1,000 to an IRA, or a total of $6,500.and by this way would save $1,625 on his current tax bill (if you are in 25 percent tax bracket).<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(<\/span>vi) 401(K) Catch-up Contributions<\/b> : – The tax saving is even bigger for older workers with access to a 401(K) plan. Employees age 50 or older can defer paying income tax on $6,000 more than younger workers, if they contribute that amount to a 401(K) plan, or a total of $24,000. Income tax won\u2019t be due on this money until it is withdrawn from the account (explained in details in my earlier posts on 401(K) ).<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span>(vii) No More Early Withdrawl Penalty<\/b> : – Younger workers have to pay 10 percent early withdrawl penalty unless the money is used for a couple of specific purposes. However, once you turn age 59 \u00bd, you can withdraw money from an IRA for any reason without incurring the 10 percent tax.\u00a0<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(<\/span>viii) Avoid Tax On Required Minimum Distributions<\/b> : – Retirees aged 70 \u00bd 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 contribution.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(i<\/span>x) Higher HSA Contribution Limit<\/b> : – Workers with high- deductible health plans can claim \u00a0tax deduction on contributions to a health savings account. Individuals who are age 55 or older by end of tax year are eligible to contribute up to $4,400 to a health savings account, $1,000 more than their younger counterparts.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(<\/span>x) Free Tax Help<\/b> : – The tax counseling for the Elderly Program provides free tax assistance to those age 60 or older. IRS certified volunteers assist older taxpayers with basic tax return preparation and electronic filing between Jan 1 and April,15 each year.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span>\u00a0Deducting Miscellaneous Expenses<\/b> : –<\/span><\/p>\n

\u00a0\u00a0A number of miscellaneous expenses are deductible on Schedule A. Some of these deductible expenses are : –<\/span><\/p>\n

\u00a0(i)<\/span> Educational Expenses<\/b> : – Like cost of tuition, books; continuing education classes for professional may also be deductible.<\/span><\/p>\n

\u00a0(ii)<\/span> Job Searches And Career Counselling<\/b> : – You can even deduct the cost of courses and trips for new job interview- even if you don\u2019t change jobs.<\/span><\/p>\n

\u00a0(iii) Expenses Related To Your Job That Aren\u2019t Reimbursed <\/b>: – Like your own subscriptions to trade journals related to your profession, cost of uniform, purchase of a computer for use outside the office at your own expense.<\/span><\/p>\n

\u00a0\u00a0\u00a0(<\/span>iv) Investment And Tax-related Expenses<\/b> : – Investment and tax- adviser fees are deductible when paid from taxable accounts. Similarly, accounting fees for preparing your tax return or conducting tax planning during the year are deductible. Legal fees related to your taxes are also deductible<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/strong><\/span><\/span>Growing Your Savings<\/strong><\/span> : – <\/span><\/p>\n

\u00a0\u00a0\u00a0The decade leading up to retirement is your last chance to build a significant nest egg. The decisions you make now will impact the retirement benefits you receive and how much you will be able to safely spend for the rest of your life. For this purpose, become a super saver and try your best to pay off your mortgage, debt and other loans before your retirement. Further, to minimize your tax bills, take advantage of as many tax breaks as possible, including deductions for saving for retirement and health care accounts.<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span>CONCLUSION<\/b> : –<\/span><\/p>\n

\u00a0\u00a0Taxes are probably one of your largest- if not the largest- expenditures. Retirement savings plans are one of the best and simplest ways to reduce your tax burden. Unfortunately, most people can\u2019t take full advantage of these pans because they spend everything they make. So not only they have less savings, but they also pay higher income taxes- a double loss. In order to take advantage of the tax savings that come through retirement savings plans, you must spend less than you earn. Only then can you afford to contribute to these plans. .<\/span><\/p>\n

 <\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

\u00a0\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Numerous Americans over 50 haven\u2019t saved for retirement. Quite a few over 50 have little or no retirement savings. Generally , they delay retirement savings in favour of various other actions like pursuing debt reduction first, then children education loan, instead of accomplishing several goals simultaneously. The result, you are having less savings and also … <\/p>\n

Continue reading “Personal Finance After 50- How To Minimize Your Taxes?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-241","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/posts\/241","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/comments?post=241"}],"version-history":[{"count":2,"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/posts\/241\/revisions"}],"predecessor-version":[{"id":243,"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/posts\/241\/revisions\/243"}],"wp:attachment":[{"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/media?parent=241"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/categories?post=241"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.personalfinanceafterfifty.com\/retirementfinancialmanagement\/wp-json\/wp\/v2\/tags?post=241"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}