If you are retired, you may receive Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, (Railroad Retirement benefits treated as Social Security benefits). Up to 85% of these funds may be taxable, depending on other income you may have.
If you receive other retirement benefits, you may also receive Form 1099-R, Distributions from Pension, Annuity, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc. These benefits may be fully or partially taxable, depending on your cost or basis in the plan.
You are entitled to a higher standard deduction if you are age 65 or older or if you are blind at the end of the year. However, you should still review your expenses during the tax year to determine if itemizing your deductions would be more beneficial than taking the standard deduction. You may be able to reduce your taxes by deducting the following itemized deductions:
- State or local personal property taxes paid on the value of personal property such as cars and boats
- Investment interest paid on money borrowed to invest in property held for taxable investment
- Legal fees for advice related to retirement tax planning
- Fees you pay a broker, bank, or trustee to collect taxable bond interest or stock dividend Note: Fees for purchase or sale of securities are not deductible, but can be considered when calculating the gain or loss on a security sale.
- Investment fees and trust administration fees paid to manage your taxable investments
- Various medical expenses are deductible as an itemized deduction. The purpose of these expenses must be to treat or alleviate a medical condition or to obtain medical care. Deductible medical expenses include:
- Premiums you pay for Medicare B, which are listed on Form SSA-1099
- Wages and other amounts for qualified long-term care services
- Premiums for qualified long-term care contracts
- Cost of medical care in a nursing home, home for the elderly (such as an assisted living facility), or similar institution. The cost of meals and lodging in the home is also deductible if the principal reason for being there is to get medical care.
- Inpatient care at a hospital or similar institution, including meals and lodging
- Wages and other amounts you pay for nursing services. The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse, such as giving medication or changing dressings, as well as bathing and grooming the patient. These services can be provided in your home or another care facility.
- Chiropractor fees
- Ambulance or other transportation service
- Laboratory fees and fees for X-rays
- Artificial limbs, eyeglasses, contacts, hearing aid (including batteries), and artificial teeth
- Wigs purchased upon the advice of a physician for the mental health of a patient who has lost all of their hair from disease
- Prescription medicines and insulin
- Medical supplies, such as crutches and walkers
- Dental treatment, including fees for X-rays, fillings, braces, extractions, dentures, etc. but not fees for teeth whitening procedures
- Eye examination fees or fees paid for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy
- Cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner
- Cost and maintenance of a wheelchair or electric scooter
- Devices used in diagnosing and treating illness and disease, such as a blood sugar test kit if you have diabetes or oxygen and oxygen equipment to relieve breathing problems
- Special equipment installed in a home or home improvements, if their main purpose is to accommodate a home for a person with a disabled condition
- Mileage to obtain the preceding services
If you do volunteer work, you cannot deduct the value of your time, but you may be able to deduct unreimbursed, out-of-pocket expenses you incur related to your volunteer activity. The organization to which you provide services must be a qualified organization approved by the IRS. The cost of meals you eat while you perform services for a qualified organization are deductible if it is necessary for you to be away from home overnight while performing the services. You can also deduct expenses that are directly related to the use of your car in performing your volunteer work. You can deduct actual costs, such as the cost of gas and oil, or use a standard mileage rate to calculate the deductible amount. You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. You should keep receipts to substantiate any of the expenses mentioned previously. You may be eligible for the Credit for the Elderly or Disabled if you were age 65 or over as of the end of the year or you were under age 65 but you meet certain requirements for disability. Usually, if you are age 65 or over and do not have a qualifying child living with you for more than half of the year, you will not qualify for a refund based on the Earned Income Credit (EIC). Married taxpayers (filing jointly) with only one spouse 65 or older, may still qualify for the EIC without children.