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Does the word “taxes” make you cringe? Do you have April 18th circled in thick, red marker on your calendar? Tax season doesn’t have to be stressful. Before you roll your eyes in disbelief, let’s review the facts. For those who are over 50 years of age, you are well-experienced in this time of year. You have been through enough of them to know what things to avoid and what things to research. However, it never hurts to take a second look at the world of income tax to make sure you are in the know this season. As things are constantly changing, let’s review just a few points to keep in mind while you conquer this tax season:
1 – Know Before You Go
Are you familiar with the tax benefits that are available to you? If not, do some research before handing your well-earned money over to anyone else. There are very knowledgeable professionals available to help you (not to mention 1099 software, W2 Software, E-File software, and payroll software), but no one knows your situation better than you. For example, did you know that once you retire if you withdraw money from your ROTH IRA, you do not have to pay taxes on that money? Make sure you are well-informed in all of your applicable deductions before you seek help from someone else or file on your own.
2 – Don’t Pay a Fee If It Can Be Free
Beginning at age 50, you have the opportunity to obtain free help when filing your taxes. Instead of paying out of pocket or paying a percentage of your refund, head to an AARP or TCE volunteer who can help you file your taxes at no additional cost to you. AARP and the IRS certified TCE volunteers are located in cities all over the country, and in some cases, they are reimbursed for their expenses, so that you can be provided with some of the best free help there is!
3 – Have Fun With Your Refund
Alright, maybe our definition of “fun” varies a little from what you may be thinking. Financial stability is probably one of the most relieving, and yes “fun,” things you can do. Use your refund check to pay down your debt, invest it into a promising company, or save it in an emergency fund. Smart financial pre-planning will help you navigate your cash-flow now so that you can enjoy the years to come.
4 – The Medical Bills You’ve Paid Are Just a Deduction Away
Medical bills are expensive; you shouldn’t have to feel the weight of those more than once. Did you know you can claim those expenses when you file your taxes? If you or a dependant uses a medically issued device such as a wheelchair, or if you pay for a nursing home, you may find that to be an advantage during the tax filing process.
5 – Before Your Check Is Spent, Save 25 Percent
If you own a small business to help supplement your social security income, make sure you know which tax bracket you will be responsible for. It is good practice to hold back roughly twenty-five percent of each sale you make, so that you will be able to cover your taxes at the end of the year, without making an unexpected dent in your income.
This can be the most stress-free tax season you have ever experienced. Stay informed about the ins and outs of your tax requirements and stay prepared for your future. Whether you are just coming into retirement or you are a seasoned, senior tax-payer, use these tips to allow your money to benefit you in the years to come.
ABOUT THE AUTHOR:
Julie Morris – Ms. Morris is a life and career coach who strives to help others live the best lives that they can. She believes she can relate to clients who feel run over by life because of her own experiences. She spent years in an unfulfilling career in finance before deciding to help people in other ways.
Juliemorris.org | jmorris@juliemorris.org