You've finally reached your 66th birthday, and it's time to say goodbye to the daily grind and went on a life of ease retirement.
or so we think.
Verily retirement for most of us, it will take a prudent budget and smart financial planning to make our economies last two or three decades.
One way to save every penny is to maximize your retirement tax deductions.
Here are 10 significant tax deductions each current and future retirees should know.
standard deduction
when we talk about maximizing deductions, most of us immediately jump to itemize deductions when we file our taxes.
But if you have already paid your home and have limited out-of-pocket medical expenses, the standard deduction may be your best bet.
Even better, people over 65 get an extra $ 1.550 if the single deposit, or an extra $ 1,0 if married filing jointly.
Medical Deductions
as much as we try to push the clock, our aging bodies require medical attention more for retirement.
Recognizing this, the IRS allows taxpayers over 65 to deduct all medical expenses out of pocket that exceed 7.5% of their adjusted gross income, rather than the floor of 10% required young Americans.
Deductions business Home
Being retired does not mean you can not make money.
Many people retired to find meaningful employment as consultants or start a second career with a home business.
While you certainly pay taxes on earnings, you can also deduct many business expenses, the home office deduction on gasoline consumption costs for equipment related to companies.
elderly or tax credits for disabled
Contrary to what the name suggests, you can apply this credit even if you are not disabled.
If you are over 65 and meet the income requirements, you can qualify a tax credit of up to $ 7,500 for married couples filing jointly or $ 5,000 for individual filers for 2014 taxation year
the same credit is available to people under 65 who have a total and permanent disability.
Selling a home
retirement is a great time to downsize to a smaller place or invest in the RV you've always wanted.
If you have lived in your home for at least two of the last five years, you can sell the house virtually tax free.
There are limits, but they are very generous.
single filers can earn up to $ 250,000 -Free taxes on the sale of a home, while married couples filing jointly can make $ 500,000 on the sale of a house without paying taxes on earnings.
IRA
If you have invested in a Roth IRA, you have the luxury of withdrawing money from the account tax-free after age 59 ½.
withdrawals from a traditional IRA or 401 (k) will be taxed as income, but at least you do not have to pay a penalty for early withdrawal if you are over 59 and a half.
retirement savings
If you have a retirement income source, you can continue to make contributions to a retirement savings account as a traditional or Roth IRA.
In fact, the 2014 contribution limit is $ 6,500 if you are over 50, which is $ 1,000 more than people under 50 can invest.
charitable gifts
As part of your post-retirement reduction, you can decide to get rid of one of the cars or erase all the old children's furniture.
If you give these items to a charity, you can deduct the fair market value of your taxable income
There is a limit on charitable deductions -. 50% of adjusted gross income - but do not forget that the money you spend out-of-pocket while doing volunteer work can also be deductible.
capital expenditure
investment income is taxed at a lower rate than income from employment. This is great for retirees hoping to live their wise investments
More good news: .. You can deduct most expenses related to investment, including the fees brokers , financial planners and lawyers
the deductions must be itemized and are subject to the 2% rule.
Social Security
most of us rely on Social Security checks to help fund our retirement.
It is important to note that part of your Social Security checks may be taxable, depending on your income during retirement.
The most you could possibly be imposed is 85% of the Social Security income, but that is only for the highest incomes.
single filers earning less than $ 25,000 and married couples earning less than $ 32,000 for 2014 will not be liable for taxes on social security gains.
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