A Few Things to Remember at Tax Time
As tax time draws near, you want to make sure that you file all of the proper forms and take all of the deductions to which you are entitled. Here’s a quick tip list of things to keep in mind as you prepare your tax forms and get ready for April 15, 2016.
Did you give away any money this year? The gift tax can be very confusing. If you gave away more than $14,000 in 2015, you will have to file a Form 709, the gift tax return. This does not necessarily mean that you will owe taxes on that money, however. Visit http://tinyurl.com/OweGiftTax for more information.
Many types of medical expenses are tax deductible, from hospital stays to hearing aids. To claim the deduction, your medical expenses have to be more than 10% of your adjusted gross income. For taxpayers who are 65-years old and older, this threshold will be 7.5% through 2016. This includes all out-of-pocket costs for prescriptions, including deductibles and co-pays, and Medicare Part B, Part C and Part D premiums. Medicare Part B premiums are usually deducted from your Social Security benefits, so be sure to check your 1099 for the amount. You can only deduct medical expenses that you paid during the year, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance. Visit http://tinyurl.com/deductmed for more information.
If you are caring for your mother or father, you may be able to claim your parent as a dependent on your income taxes. This would allow you to get a $4,000 exemption, in 2015, for him or her. Visit http://tinyurl.com/parentded for more information.
Long-Term Care Insurance Premiums
Premiums for “qualified” long-term care policies are treated as an unreimbursed medical expense. Long-term care insurance premiums are deductible for the taxpayer, his or her spouse and other dependents. Visit http://tinyurl.com/ltcpprem for more information.
Social Security Benefits
Although Social Security benefits are generally not taxable, people with substantial income, in addition to their Social Security, may pay taxes on their benefits. If you file a federal tax return as an individual and your “combined income,” including one-half of your Social Security benefits and nontaxable interest income, is between $25,000 and $34,000, 50% of your Social Security benefits will be considered taxable. If your combined income is above $34,000, 85% of your Social Security benefits is subject to income tax. Visit http://tinyurl.com/socsecbene for more information.
Home Sale Exclusion
Married couples can exclude, from income, up to $500,000 in profit on the sale of a home ($250,000 for single individuals). If a surviving spouse sells the home, he or she can still claim the exclusion as long as the house was sold no more than two years after his or her spouse’s death. Visit http://tinyurl.com/homesaleex for more information.
Elderly or Disabled Tax Credit
Some people who are elderly, or people who are disabled, and who have low income are entitled to a special tax credit. To be eligible, you must meet income limits. Visit http://tinyurl.com/credelddis for more information.
Getting a federal tax refund should not affect your Medicaid or Social Security benefits. For a year after receiving a tax refund from the federal government, the refund will not be considered income or resources for SSI or Medicaid purposes. You can also transfer the refund within a year without incurring a penalty. Visit http://tinyurl.com/taxrefbene for more information.
The IRS’s Tax Counseling for the Elderly (TCE) Program offers free tax help to taxpayers who are 60-years old and older. Visit http://tinyurl.com/taxcouneld more information. The IRS also publishes a Tax Guide For Seniors: http://tinyurl.com/taxguidesen