IRS Tax Relief Options for Seniors

Last updated: May 14, 2019

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Are you a senior citizen who owes money to the IRS for years of unpaid taxes? With little earned income when you retire, it can be even more difficult to pay your tax debt.

The money you currently earn from your social security check and retirement funds can feel like it’s not enough to sustain your lifestyle.

Especially when compared to the amount of income you used to earn when you or your spouse worked full time.

The good news is the government offers IRS tax relief options and IRS debt relief for seniors that you may be able to take advantage of.

Of course, the relief options available to you depend on the state laws that you live in.

For example, certain states might offer property tax assistance and more equity from the Homestead Rebate that isn’t available to homeowners in other states.

In this post, you’ll learn about a variety of IRS tax relief options available to seniors in most states. But it’s always wise to check with the IRS or your local tax office first to learn the IRS tax relief options available to you.

Without further delay, these are general tax relief options for seniors.

IRS Tax Relief Options for Seniors

These exemptions and deductions could help you keep more money in your pocket this tax season.

1. You Might Not Need to File 

Are you 65 years of age or older and filing single with an earnings under $11,900? Then you don’t have to file taxes. Or if you’re filing jointly with your spouse, you can earn up to $23,200 before you need to file your taxes.

On the other hand, if you’re under 65 and you file as single, you don’t have to file if your earnings are below $10,350. When you’re filing jointly at this age, you don’t have to file until your income reaches $20,700.

2. Property Tax Exemptions

Do you live in the state of Alabama? If the answer is yes, you’re in one of the U.S. states that offer a rebate and discounts based on your age.

For instance, if you’re disabled or blind, you don’t have to pay state property taxes. Check with your state and your county because the county may charge homeowners property taxes that the state doesn’t charge.

Other states may provide relief based on your age alone without a disability so be sure to check. 

In the state of Arizona, the government requires senior citizens to have a minimum income.

But rather qualifying for an exemption from property taxes like other states, they will freeze the property value for a period of three years to avoid property tax increases.

This can be done by submitting additional paperwork when you file your tax return. Speak to a tax planner to learn this as well as additional tax incentive options to minimize your income.

3. Selling Your Home

Many seniors decide to put their homes up for sale. They downsize for a smaller home, move into assisted living or a long-term care facility.

If you bought your home many years ago, there’s a good chance the sale price will be much higher than when you bought it.

But the good news is when you’ve lived in your home for the last two years, you’ll receive a tax break. You can benefit by keeping a portion or the entire profit from your home. 

But there are limits to these tax-free dollars. If you’re filing single, the profit must equal or be less than $250,000. But if you’re married and filing jointly your profit can be double that amount up to $500,000.

4. Special Tax Credit for Elderly & Disabled

One IRS tax relief option for seniors to take advantage of is the Special Tax Credit for the Elderly and Disabled. Seniors are eligible for this tax credit once they turn 65.

Depending on your eligibility, if you’re a senior citizen, you can receive a credit from $3,750 to $7,500.The amount of the credit you’ll receive ranges depends on your eligibility.

This IRS takes into consideration your income when determining eligibility for the Special Tax Credit for the Elderly and Disabled.

5. Larger Standard Deduction

Not able to deduct enough expenses for the standard deduction? Then you might qualify for a Larger Standard Deduction. You could deduct $1,550 when you file as either head of household or as single.

If you’re 65 or above and you’re married and file jointly, you can tack on a $1,250 deduction for you and your spouse.

While this might not appear to be much of a deduction, it’s good to know your tax rate. For instance, if your tax rate is 25%, the deduction will enable you to keep close to $400 when you file as single or you file as head of household. 

But you’ll save around $625 when you file jointly for both you and your spouse.

6. Medical Expenses

It’s no mystery the price of healthcare for senior citizens is expensive. A study concluded that seniors spend an estimated $275,000 in medical bills after they retire. This doesn’t include long-term care.

But fortunately, the IRS permits seniors age 65 and older to deduct medical costs over 7.5% of their adjusted gross income from their taxes.

7. Capital Gains Tax

Retirees can earn income through investments. If you’d had investments for longer than one year, you can earn capital gains from them.

These are less than what you’d pay from the money in your retirement account. They also don’t affect Medicare tax or Social Security.

The Bottom Line on Senior Tax Relief Options 

In this post, you’ve learned about seven tax relief options for senior citizens. They provide a number of ways to reduce your tax liability. Be sure to check with the state you live in to determine your exact eligibility.

Precision Tax provides assistance relief for taxpayers. Explore our website for more informative content or discover how our clients have benefitted from our tax relief services.