Corrections and clarifications: An earlier version of this article had an error in the year the IRS used to determine whether you were eligible for the additional tax credit at age 65. This mistake was caused by an error on the IRS's website. A revised version will follow.
Last year, seniors felt some relief from inflation following the largest Social Security cost-of-living adjustment in 40 years.
But now that the taxman is coming, people may want to find ways to reduce their taxable income.
One way is to take an excess basic deduction.
Everyone knows about the standard deduction. This is a fixed amount determined by the IRS that allows you to lower your taxable income without having to itemize deductions such as mortgage interest or charitable contributions. However, in addition to the standard deduction, there is an additional deduction available to those over the age of 65 at the end of the tax year.
A larger overall deduction for seniors will further reduce your taxable income, reduce your tax bill and leave you with more money.
Here's how it works:
Who is eligible for the additional basic deduction?
Taxpayers over 65 years old. The amount of additional basic deduction varies depending on the filing status. Whether you or your spouse are 65 years of age or older. and whether you or your spouse are visually impaired.
According to the IRS, for the 2023 tax year, you are considered to be 65 years old if you were born before January 2, 1959. If you or your spouse are legally blind by the end of the year, or have a doctor's note explaining why you are considered blind, you can claim a larger additional deduction. They also cannot claim you as a dependent or itemize your taxes. Others.
People who are visually impaired and under age 65 take the additional standard deduction instead of the larger deduction.
How much is the additional basic deduction?
For tax year 2023, the additional standard deduction amounts for taxpayers age 65 or older or who are visually impaired are:
- $1,850 for single person or head of household
- $1,500 for married taxpayers (per qualifying person) or qualifying surviving spouse (for married couples with two adults age 65 or older, the total deduction is $27,700 (standard deduction) + one adult age 65 or older ($1,500 per person + $1,500 for second adult over 65 = $30,700)
If you are over 65 years old and If blind, the excess standard deduction is:
- $3,700 if you are filing as single or head of household
- $3,000 per eligible individual if married filing jointly or separately.
The above amount will be added to your regular standard deduction:
- $13,850 for single or married applicants filing separately
- $20,800 for head of household
- $27,700 if married filing jointly or by eligible surviving spouse
Should I itemize or take the basic deduction?
According to IRS data for the 2020 tax year, nearly 90% of Americans take the standard deduction.
However, the IRS says whether you need to itemize depends on whether your total itemized deductions exceed the standard deduction or whether you must itemize your deductions because you can't use the standard deduction. .
A hint as to whether you'll benefit from itemizing without detailed calculations may lie in whether you've had a major life event, such as buying or selling a home. A large amount of medical expenses were incurred. Or made a large donation.
Medora Lee is USA TODAY's money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
