Jacquelyn Martin, Associated Press
Jerry sits near the door at the last stop for retirees and others who are receiving free tax help one cold, but sunny March day at Warren, Mich., City Hall. He makes sure the tax filers authorize that returns can be electronically filed and he reviews returns, too.
At 91, he has been volunteering nearly 31 years to prepare taxes for the AARP Foundation Tax-Aide service.
“I was doing it when we did it on paper,” said Jerry, who like other volunteers goes by just a first name. They don’t want to be called at home to answer tax questions or track down refunds.
Many retirees and those on modest incomes who use the free services appreciate being able to save $200 or more on tax preparation, even if they need to make a second trip to a tax site because the time slots for the free service fill up quickly.
The volunteers see it all. Some tax filers pack their financial story into plastic grocery bags to be sorted out on a tax return. Some remember a tax filer being pretty upset to be told that yes, you did earn enough that your Social Security benefits will be taxed on this return.
“They’re confused because they listen to a lot of people other than their tax preparer,” said John J., 81, a retired CPA who lives in Grosse Pointe Woods, Mich., and is a district coordinator for the AARP Tax-Aide sites. Volunteers are trained to fill out basic schedules, but taxpayers with more complex returns are advised to seek paid tax assistance.
As more baby boomers move into their retirement years, they need to understand different tax breaks and rules, too. The AARP’s online site at http://www.aarp.org/taxaide also offers information on frequently asked tax questions and will let you submit questions online.
Here are five questions to consider for seniors:
QUESTION: Are your Social Security benefits taxable?
ANSWER: Many retirees who receive Social Security benefits — and have extra income from a job or other source —face the challenge of figuring out whether they will need to pay income taxes on some Social Security benefits.
The Internal Revenue Service points out one quick way.
See Form SSA-1099, the Social Security Benefit Statement, to show you how much you received in Social Security benefits. Your total benefit is shown in Box 3.
First, add one-half of all your Social Security benefits to all your other income, including any tax-exempt interest. This is called your provisional income.
Generally, some Social Security benefits are taxable for singles if your total provisional income is more than $25,000. Or some benefits would be taxable if your total provisional income is more than $32,000 for married couples filing jointly.
You can go to IRS.gov and use an interactive tool to see whether any Social Security benefits are taxable.
Q: What about medical expenses?
A: For the 2013 tax year, some seniors are able to hold onto a better federal income tax break relating to medical and dental expenses, said Diane Aksten, a certified public accountant at George W. Smith in Southfield, Mich.
If you are 65 or older, you can deduct medical expenses that are greater than 7.5 percent of your adjusted gross income. This works even if your spouse is 65 or older and you’re younger. But this break only applies from 2013 through 2016. Starting in 2017, the threshold goes to 10 percent. Taxpayers not in that age group cannot deduct medical expenses in 2013 unless they exceed 10 percent of your adjusted gross income.
Q: What if I cannot itemize deductions?