1. Write off the cost of your parents' medical expenses.
Even though your elderly parent may not be considered your dependent for tax purposes, you may still qualify to write off the cost of his or her medical costs. To qualify, the medical expenses must be completely paid by you and the amount of these costs must make up at least half of that parent's support. To claim these costs, you would simply include them with the medical expenses on your itemized deductions form. If your parent is in an assisted living for medical purposes, those costs may also be included.
2. Keep the Social Security taxation guidelines in mind.
Many taxpayers are exempt from taxes on their Social Security benefits. You can take advantage of this exclusion too if the total of your adjusted gross income, tax-free interest and up to 50 percent of your Social Security benefits comes out to $25,000 or less. The limit for couples who file a joint return is $32,000. What happens if your income total is higher than $25,000? Then you'll have to pay tax on a portion of your benefits, but you'll never have to pay taxes on all of your Social Security distributions.
3. Save on your long-term capital gains taxes if you fall into a low income tax bracket.
If your taxable income each year falls into the 15 percent tax bracket or lower, you won't have to pay any income tax on your long-term capital gains. Long-term capital gains refer to the increase in value on assets you've held for longer than one year before you sold it. This could include the appreciation on a stock you purchased more than a year ago and sold for a profit. Depending on the length of time you've owned the asset and the amount of interest it has accrued, this tax provision could save you a considerable amount of money.
The Internal Revenue Service has provided several tax breaks that can benefit taxpayers aged 50 and older. By familiarizing yourself with these deductions and exclusions you may find that this year's tax bill is a bit lighter.
