There are plenty of tax incentives for senior Americans, but the details are often confusing. If you are an elderly taxpayer, here are a few tips courtesy of NYtimes.com:
Deducting one’s medical expenses isn’t technically difficult. But younger taxpayers rarely get the deduction because allowable expenses must exceed 7.5 percent of adjusted gross income before any benefit kicks in. Seniors, though, typically live on lower fixed incomes while incurring far greater medical costs.
In addition to insurance premiums and prescription drug bills, elderly taxpayers may also be able to deduct the costs of wheelchairs, dentures, long-term care premiums and many other items. The Internal Revenue Service spells out the details at its Web site.
“Especially if someone’s paying for a nursing home themselves, [medical care] can be ridiculously expensive,” said Joy Child, a tax partner with Alexander, Aronson, Finning and Co., in Westborough, Mass. The bright side? “Those costs can completely wipe out a person’s income tax liability.” Senior housing facilities often report the medical portion of a resident’s total bill for tax purposes, she noted.
Hiring In-Home Care
A tax reporting challenge may arise when families hire home care for an elderly parent. Many families find assistance through an agency, but some choose to deal directly with an aide. In such a situation, the home care aide might legally be an employee, not just an independent contractor.
How to tell the difference? “If they only work for you, and you control what hours they come in, they’re really your employee,” said Ms. Child.