How to Boost Your Refund with Tax Credits for Seniors Over 65

Tax season is upon us! Navigating the tax landscape as a senior can be complex, but several valuable credits can ease the burden and put more money back in your pocket. If you’re an older adult who wants to learn more about how you can boost your refund this tax season, you’re in the right place! Here’s what you need to know.

What Are Tax Credits?

Tax credits for older adults provide financial relief and incentives tailored to the unique circumstances of seniors. These tax credits play a crucial role in supporting the financial well-being of older adults, helping them manage expenses and maintain their quality of life during retirement. State-specific programs, such as property tax credits, homestead exemptions, and energy efficiency credits, further alleviate financial burdens for older adults.

What Tax Credits Can Help Me?

First, it’s important to remember that no two tax credits are created equally! If you’re a senior, several tax credits may be available to help you reduce your tax burden or provide financial assistance for specific expenses. Here are just a few designed to help you.

Credit for the Elderly or the Disabled (CEOD)

This non-refundable tax credit is specifically designed for seniors aged 65 or older (or those under 65 and retired on permanent and total disability) with low to moderate income. The credit amount and eligibility criteria depend on factors such as income, filing status, and disability status.

Eligibility

• Age: Must be 65 or older, or under 65, and permanently and totally disabled with taxable disability income.
• Income: Adjusted gross income (AGI) must be below specific limits, based on your filing status:
  • Single/Married Filing Separately: $21,400 in 2023, adjusted annually for inflation.
  • Married Filing Jointly/Qualifying Widow(er): $43,300 in 2023, adjusted annually for inflation.
  • Head of Household: $33,000 in 2023, adjusted annually for inflation.

Credit Amount

According to the IRS, the credit ranges from $3,750 and $7,500.

What to Do

To claim the CEOD, you’ll need to file either Form 1040 or 1040-SR, the U.S. Individual Income Tax Return. Make sure to include all relevant information, such as your income, filing status, and the amount of the credit you’re claiming. The CEOD is reported on Schedule 3 (Form 1040) or Schedule R (Form 1040-SR), depending on your filing status. Follow the instructions on the appropriate schedule to calculate and report the credit. Additionally, you may need to attach additional documentation to your tax return to support your eligibility for the CEOD. This may include documents showing your age, retirement status, or disability status.

Retirement Savings Contributions Credit

Seniors who contribute to retirement savings accounts such as IRAs or 401(k)s may qualify for the Saver’s Credit, which provides a credit based on eligible contributions. While not directly related to Medicare expenses, this credit can help offset retirement costs and potentially reduce the need to rely on Medicare for healthcare expenses in retirement.

Eligibility

• Age: Must be at least 18 by the end of the tax year.
• Income: To be eligible for the Saver’s Credit, you must have a certain level of adjusted gross income (AGI) or modified adjusted gross income (MAGI) within specified limits. These income limits are adjusted annually for inflation. The credit is phased out as income increases.
  • Married filing jointly: $73,000
  • Head of household: $54,750
  • All other filing statuses: $36,500
• Contribution to Retirement Accounts: To claim the Saver’s Credit, you must make eligible contributions to a qualified retirement savings plan, such as a traditional or Roth IRA, a 401(k), or similar workplace retirement plans. Eligible contributions can include elective deferrals to employer-sponsored retirement plans, as well as contributions to traditional or Roth IRAs.

Credit Amount

The Saver’s Credit is worth up to $1,000 or $2,000 if married and filing jointly (according to Nerdwallet).

What to Do

To apply for the Saver’s Credit, you must first fill out the IRS Form 8880. Additionally, you’ll need to file your taxes using IRS Form 1040, 1040A, or 1040NR. It’s important to note that you can’t claim the credit if you file using Form 1040EZ.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a refundable tax credit designed to provide financial assistance to low-to moderate-income working individuals and families. Seniors may also be eligible, as well.

Eligibility

• According to the IRS, to meet the eligibility for the EITC, you must meet the following requirements:
  • Be a U.S. citizen or a resident alien all year
  • Have worked and earned income under $63,398
  • Have investment income below $11,000 in the tax year 2023
  • Have not filed Form 2555, Foreign Earned Income
  • Meet certain rules if you are separated from your spouse and not filing a joint tax return

The IRS also offers an EITC Qualification Assistant that may help you determine if you meet the eligibility requirements. Click HERE to access it!

Credit Amount

For taxes filed by April 15, 2024, the credit amounts range from $600 to $7,430, depending on your filing status and how many children you have (according to Nerdwallet).

What to Do

In order to claim the EITC, collect all relevant documents, such as income statements (e.g., W-2 forms, 1099 forms), Social Security numbers for yourself and your qualifying children, and any other tax-related documents needed to complete your tax return. You can claim the EITC by filing your federal income tax return. You must use Form 1040 or 1040-SR (not Form 1040EZ or 1040A) to claim the credit. Make sure that you report all earned income accurately and provide the required information about yourself and your dependents!

Property Tax Credit

Many states offer property tax credits or similar programs specifically targeted at older adults to help alleviate the financial burden of property taxes. While programs vary by state, they generally aim to provide relief for seniors with low to moderate incomes who may otherwise struggle to afford property tax payments.

Eligibility

• Eligibility criteria for property tax credits for seniors vary by state but often include factors such as age, income, property value, and residency.
  • Age: Typically, seniors need to meet certain age requirements, such as being 65 or older.
  • Social Security status: Some states may base eligibility on Social Security status (according to Rocket Mortgage).

Credit Amount

The amount of the property tax credit varies depending on the program’s guidelines and the senior’s circumstances. Some programs offer a percentage-based credit, while others may provide a fixed amount of relief.

What to Do

If you think you may qualify for a property tax credit, first ensure that you meet the eligibility criteria for the property tax credit. Then collect any required documentation to support your application for the property tax credit. This may include proof of income, property ownership, residency, and other relevant information. Fill out the application form for the property tax credit program according to the instructions provided. It’s imperative that you provide accurate and complete information to avoid delays or potential issues with your application. So, check and double-check your forms before you send them in!

State-Specific Credits

Explore your state’s tax website or consult a tax professional to learn about potential tax credits offered specifically for seniors in your state. As of 2023, 31 states and the District of Columbia offer a state EITC. Additionally, Washington, Utah, and Missouri all recently passed legislation to introduce a state EITC, which took effect in 2023. The Tax Policy Center offers a FREE downloadable PDF that highlights each state’s EITC as a percentage of the federal credit.

Bottom Line

Seniors should review the eligibility requirements for each tax credit carefully. Make sure you also consult with a tax professional or use tax preparation software to ensure they claim all available credits for which they qualify. Additionally, staying informed about changes to tax laws and credits can help older adults maximize their tax savings and financial assistance!

Looking for more tax resources? Then check out these great articles next!

• Tax Breaks for Caregivers of Elderly Parents
• Is Social Security Income Taxable?
• 7 Little-Known Tax Breaks for Adults Over 50
• Do I Need to File a Tax Return This Year?
• How Much Do You Have to Make to File Taxes?