Christopher Karachale, partner and tax attorney at Hanson Bridgett, LLP, recommends talking to your tax preparer about medical expense deductions.
“If you have any questions, ask,” he says. “Don’t just assume something is or isn’t deductible.”
It’s also important to ask whether it makes sense for you to claim the standard deduction rather than itemizing medical expenses. That’s because the standard deduction has now doubled. Karachale notes that “the standard deduction is now $12,950 for individual filers and $25,900 for joint filers. The math can get complicated, but there are some situations where the medical expenses aren’t that high, so it makes more sense to take the standard deduction instead.”
He also recommends paying close attention to all sources of income. Social Security benefits, pensions, and annuity benefits all count as income. “If you have income from investments, the family business, or some form of profit-sharing revenue, you can take that favorable new tax deduction,” says Karachale. And that deduction will change your Adjusted Gross Income (AGI), which in turn, impacts how much you can deduct as medical expenses. Yet another reason to talk with a professional tax preparer.
If you’re considering a senior living community, be sure to factor in these possible tax savings. Ask each community you visit to tell you what percentage of the fees are allocated toward medical expenses.
Did You Know: The Most Tax-Friendly States for Retirees
Based on factors like taxes on retirement income, property and sales taxes, and special tax breaks for seniors, here are the top 10 most tax-friendly states for retirees to live.
- South Dakota