Taxes and the Elderly

<h1>Taxes and the Elderly</h1>Author: <a title="Roni Deutch" href="http://www.articlesbase.com/authors/roni-deutch/46490.htm">Roni Deutch</a> The Elderly or Disabled Credit One specific credit available to struggling senior taxpayers is the Elderly or Disabled Credit. The exact amount of the credit will vary depending on your unique financial situation and is somewhat difficult to calculate. Basically, you will need to start with what the IRS calls your “initial amount” which will be between $3,700 and $7,500. Next subtract any non-taxable pensions or social security income, then reduce it by a percentage of your excess adjusted gross income. Finally, take that total and multiply it by 15% to find out the credit you quality for. As you can tell, calculating your credit is a tricky process and I highly recommend getting help from a qualified professional. However, if you do want to calculate it yourself then checkout IRS Publication 524. Qualifying for the Credit Essentially in order to claim the Elderly or Disabled Credit, you need to be either elderly or disabled. According to the IRS, you either need to be over the age of 65 at the end of the tax year you want to claim the deduction, or meet specific qualifications to be considered disabled. If you are on permanent and total disability, or had taxable disability income during the year then you may be eligible to qualify. Social Security Taxes Another issue facing elderly taxpayers in the U.S. is social security taxes. Oddly enough though, social security benefits were originally not considered taxable income. It was not until 50 years after the social security system was created that the IRS began levying taxes on them. Just like with regular income taxes, the percent of your social security income that you will need to pay to the IRS will vary widely depending on your income from other sources. In some cases this can be as much as 85% of your benefits, and in other cases you might not get taxed at all. Private Retirement It is safe to say that the tax advantages and disadvantages of private retirement are not so black and white. There are several different ways for a taxpayer to plan for their retirement, but most Americans usually go with either a traditional or Roth IRA. Generally speaking, when you go with a Roth IRA contributions are not tax deductible, but future withdrawals are not taxed. However, with a traditional IRA you can deduct your contributions from your taxable income, but you will have to pay taxes on future withdrawals. There are also specific rules regarding penalties for early withdrawals, and rules about being required to take minimum withdrawals once you reach a certain age. Since deciding on a retirement plan will affect the rest of your life, I highly recommend speaking with a financial planner or qualified expert to find the plan best for you.About the Author: The Tax Lady <a href="http://ronideutch.blogspot.com/">Roni Deutch</a> and her law firm Roni Lynn Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced tax lawyers who can fight <a href="http://www.ronideutch.com">IRS tax liens</a> on your behalf.

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The Elderly or Disabled Credit

One specific credit available to struggling senior taxpayers is the Elderly or Disabled Credit. The exact amount of the credit will vary depending on your unique financial situation and is somewhat difficult to calculate. Basically, you will need to start with what the IRS calls your “initial amount” which will be between $3,700 and $7,500. Next subtract any non-taxable pensions or social security income, then reduce it by a percentage of your excess adjusted gross income. Finally, take that total and multiply it by 15% to find out the credit you quality for. As you can tell, calculating your credit is a tricky process and I highly recommend getting help from a qualified professional. However, if you do want to calculate it yourself then checkout IRS Publication 524.

Qualifying for the Credit

Essentially in order to claim the Elderly or Disabled Credit, you need to be either elderly or disabled. According to the IRS, you either need to be over the age of 65 at the end of the tax year you want to claim the deduction, or meet specific qualifications to be considered disabled. If you are on permanent and total disability, or had taxable disability income during the year then you may be eligible to qualify.

Social Security Taxes

Another issue facing elderly taxpayers in the U.S. is social security taxes. Oddly enough though, social security benefits were originally not considered taxable income. It was not until 50 years after the social security system was created that the IRS began levying taxes on them. Just like with regular income taxes, the percent of your social security income that you will need to pay to the IRS will vary widely depending on your income from other sources. In some cases this can be as much as 85% of your benefits, and in other cases you might not get taxed at all.

Private Retirement

It is safe to say that the tax advantages and disadvantages of private retirement are not so black and white. There are several different ways for a taxpayer to plan for their retirement, but most Americans usually go with either a traditional or Roth IRA. Generally speaking, when you go with a Roth IRA contributions are not tax deductible, but future withdrawals are not taxed. However, with a traditional IRA you can deduct your contributions from your taxable income, but you will have to pay taxes on future withdrawals. There are also specific rules regarding penalties for early withdrawals, and rules about being required to take minimum withdrawals once you reach a certain age. Since deciding on a retirement plan will affect the rest of your life, I highly recommend speaking with a financial planner or qualified expert to find the plan best for you.

The Tax Lady Roni Deutch and her law firm Roni Lynn Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced tax lawyers who can fight IRS tax liens on your behalf.

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