Taxation for elders, seniors, and veterans is a bit complicated. Even if you have all of the required paperwork, assisting an older parent or parents with their taxes may be daunting. Significantly if your parent's ability has deteriorated, and you need to track down details, you can expose them to unexpected refund delays or financial consequences.
Some ways to make it easier for your parents to do taxes and avoid problems:
Avail of IRS free tax counseling programs
Fortunately, all taxpayers aged 60 and older can take advantage of the IRS's free Tax Counseling for the Elderly (TCE) program and other IRS online services and tax assistance tools. Volunteers at TCE are IRS-certified. Their online sites are open from February to April but will be running at a reduced capacity.
It's worth remembering that the TCE program and the AARP Tax-Aide program have some overlap. The IRS provides grants to non-profit organizations (such as the AARP Foundation) to offer free tax advice to their local community members.
- Here are some basics you need to know
- Who among the elders needs to file for the tax year 2020?
- If they are unmarried, at least 65 years old, with a gross income of $14,050 or more:
- If they live solely on Social Security insurance, there is no need to include it in their gross income.
- If they receive non-tax-exempt money, you must measure their gross income if it exceeds $14,050 per year.
- If they are married, filing a joint tax return, both at least 65 years old and with a combined gross income of $27,400 or more.
- If one of your parents is under the age of 65 and with a combined gross income of $26,100 or more
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It is important to note that income thresholds are only valid for the 2020 tax year. Every year it slightly increases. Those who are not ordinarily required to file due to their income level may be required to do so for the 2020 tax year to receive the first or second round of stimulus payments.
Collect their previous tax documents
Last year's return is necessary, so you'll be able to see the income and deductions and copy them for the current year. Thus, you have to gather their last year's return. It may be available from your parents' tax preparer or request transcripts from the IRS online.
If a parent can no longer sign documents
If one of your parents is unable to sign due to medical concerns such as Alzheimer's or dementia, a family member may be able to sign tax forms and returns on their behalf. However, you'll need to take some extra precautions to do so legally. It is best to inquire from the IRS.
Is there a tax credit for seniors?
Yes. If they are required to file a tax return, there are methods to decrease their tax amount due on their taxable income. The tax credit for the elderly will minimize their tax bill on a dollar-for-dollar basis if they are at least 65 years old and their income from sources other than Social Security is not significant.
Ask help from expert and licensed professionals.
If that help is not sufficient, don't be afraid to seek professional advice to "guide you through this minefield," says Henry Grzes, the American Institute of CPAs' lead manager for tax policy and advocacy. "Trying to figure this out on your own will lead to a lot of mistakes."
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