As the sun sets over Lady Bird Lake, casting a golden glow on the bustling streets of Austin, parents gather at a local café to enjoy the holiday light show. A common concern emerges amid their conversations about business, family life, and the end of the year: ensuring their aging parents are not missing out on crucial tax benefits. Seniors often miss out on such benefits according to the Wall Street Journal article, “Four Lucrative Tax Deductions That Seniors Often Overlook.” As an experienced Austin estate planning attorney, I offer insights into maximizing overlooked tax benefits that can significantly benefit seniors, a topic that resonates deeply with these families.
With its intricate and frequent changes, the tax code can be daunting. Major legislative shifts like the Tax Cuts and Jobs Act and the Inflation Reduction Act have particularly impacted seniors. Staying abreast of these changes is crucial for maximizing tax benefits.
In 2023, seniors aged 65 or over are eligible for an additional standard deduction, a benefit often overlooked. This extra deduction increases the standard deduction to $15,700 for single filers and $30,700 for married couples filing jointly, significantly reducing taxable income.
Many are unaware that a working spouse can contribute to a nonworking or low-earning spouse's IRA, a strategy known as spousal IRAs. These contributions can reduce the couple's pretax income, yet they are individual accounts and must adhere to specific guidelines.
Seniors making charitable donations directly from their bank accounts are missing out on Qualified Charitable Distributions (QCDs) benefits. Seniors aged 70 ½ and older can transfer up to $100,000 tax-free directly from a traditional IRA to a charity. This method is particularly advantageous for those required to take minimum distributions but who do not need the funds.
Self-employed retirees in Austin can deduct Medicare premiums, including Parts B and D, and Medigap or Medicare Advantage plans. This deduction is available even for those who don't itemize and is contingent on having business income from self-employment.
Consulting with an experienced Austin estate planning attorney is essential to navigate these and other potential tax deductions. Professional guidance can ensure seniors and their families fully utilize available tax benefits, enhancing their financial well-being.
For Austin's affluent families, understanding and maximizing tax benefits for seniors is not just a financial matter—it's a way of caring for their loved ones. By staying informed and seeking expert advice, families can ensure their aging parents enjoy the financial comfort and security they deserve in their golden years.
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