Tax breaks for olderAmericans

Moving into the golden years could offer some breaks when it comes to taxes and finances. There are some potential age-related tax perks that are worth discussing with an accountant or a certified financial planner.

• Increase retirement savings

Older adults can contribute more to employer-sponsored retirement accounts and Roth or traditional individual retirement accounts (IRAs). For 2023, the contribution limit for employees who participate in 401(k) and 403(b) programs, most of the 457 retirement savings plans and Thrift Savings Plan through the U.S. federal government can increase their contributions to $30,5000.

• Larger standard deduction

For tax year 2022, people 65 or older can add an extra $1,750 to the standard deduction if they are unmarried and not a surviving spouse. Those who are married and file jointly can add $1,400. For tax year 2023, those amounts go up to $1,850 and $1,500.

• Reduce taxable income

The ability to contribute more to tax-deferred retirement accounts enables older adults to reduce their taxable incomes. This, in turn, reduces the amount that needs to be spent on income taxes.

• Changes in filing threshold

The filing threshold is the income that must be made before being required to file a tax return. Typical taxpayers who are either employees or retired and drawing pensions or Social Security find the threshold increases over age 65. Single filers over age 65 do not need to file returns if their incomes are $14,700 or under. Married filers over age 65 have a threshold of $278,700. If primary or sole income comes from Social Security or a pension, those over 65 may not have to file returns at all.

• Elderly or disabled tax credit

According to the IRS, differing from deductions, a credit for taxpayers is available to those 65 or older or retired people on permanent disability who receive taxable disability income for the tax year. This credit is for those who have an adjusted gross income or the total of nontaxable Social Security, pensions, annuities, or disability income under specific limits. The eligibility levels change from year to year. Credits range from $3,750 to $7,500.

For more information, visit www.irs.gov.

—MetroCreativeConnection