Working grandparents that are raising grandchildren should be aware of the Earned Income Tax Credit (EITC) and claim it correctly – if they qualify.
Contributions to Your Retirement
Even if you are retired or semi-retired, this does not preclude you from making tax-deductible contributions to your retirement accounts, like IRAs and 401(k)s. This is perhaps one of the best senior tax perks available, as you may need to live off of your retirement funds. The tax laws are written in such a way that people over 50 have higher limits on what they can contribute to retirement accounts, as opposed to those under 50.
In addition to contributions to IRA accounts, you can also make contributions to Roth IRA accounts. Although you will pay taxes on the money you contribute to such an account, you will not pay taxes on money that you withdraw from it. This means that any interest that the money gains during its time in the Roth IRA account is tax-free.
When in the golden years, a lot of seniors are in better position to donate or give back. How exactly can you deduct these contributions? Charitable contributions are deductible as an itemized deduction. However, there are limits on these deductions. Cash contributions that are charitable in nature can only be deducted up to an amount equal to 50% of your AGI. In addition, if you donate property to a charitable organization, you can generally deduct the fair market value of the property. If you make a contribution of a piece of property that the charitable organization will likely sell off, then your deduction is limited by the gross proceeds from the sale of the item. This rule applies if the claimed value of the donation is more than $500.
These perks can help ease the stress of tax season. If you have any questions about them, be sure to reach out to Gold Standard Tax and we would be happy to clarify anything for you.