Aside from dreaded amounts of paperwork, tax season can be especially challenging for older persons. In fact, seniors may find themselves having to adjust to unforeseen cost-increases. Luckily, there are many tax breaks and relief programs available to seniors that can make the taxation process a bit easier and, more importantly, save money!
Several programs and relief programs exist for seniors looking to save a little extra during tax season. They’re generally categorized as senior tax credits, senior tax deductibles, and general senior tax advantages.
Tax Credits for Seniors
Tax credits reduce the total amount of tax you have to pay and are determined by certain criteria. Here are some examples of tax credits that can help you save money on your taxes this year:
Lifetime Learning Credit
Lifetime Learning Credit is a tax credit that is available to anyone who has had to pay education expenses for themselves, their spouse, or a dependent. There is no time limit for claims, which means that it is perfect for any senior who might want to return to school. Note that the expenses you claim to receive this credit must be going towards a degree program or classes that improve your professional skills.¹
American Opportunity Tax Credit
Have you paid for someone else’s first four years of higher education? If so, you might qualify for this tax credit. Seniors can claim this credit for their children’s or grandchildren’s educational expenses if they are dependents.²
Tax Credit for the Elderly and Disabled
There are also tax credits for seniors and those with disabilities. These disabilities can range from those that are physical to those that reduce a persons mental capacity. If you meet the requirements for each respective category, you may be eligible for this tax credit.
Tax Deductibles for Seniors
Tax deductions are subtracted from your earnings before you add up all your taxes. A few of the most common tax deductions include:
The Mortgage Interest Deduction & Home Sale
Interest paid on a home mortgage during a tax year can be deducted from your taxes. More specifically, it allows taxpayers who own homes to reduce their taxable income by the amount of interest paid on their home loan.³ In other words, if you have a mortgage, keeping a record of your payments to your home loan can help you cut your tax bill!
Similarly, when selling a private home you will have to pay capital gains tax. While it may initially sound complicated, this tax can be reduced by deducting the cost of selling the house itself from the total profits or gains.
Itemized Medical and Dental Expenses
You might also be able to deduct your out-of-pocket dental expenses if they are more than 7.5% of your gross adjusted income. According to TurboTaxCanada, “You can claim eligible dental expenses paid in any 12-month period ending in the fiscal year in question and which have not been claimed by you or by anyone else in the previous year.”⁴ The same general structure may apply in the U.S. and can include dentures and dental implants!
In the same category is deductible medicare premiums for those considered self-employed and long-term care deductions. While medicare premiums can be deducted in certain situations if you are self-employed, for you, your spouse, and your dependents, holders of long-term care insurance policies can get tax deductions for premiums. Of course, the final deduction depends on whether or not you’re able the meet the criteria for this specific deductible.
Refinancing Points & Out-of-Pocket Charitable Deductions
In certain cases, you can deduct paid refinancing points for your mortgage or, if you have donated to qualified non-profit charities, you might be able to deduct your donations.
Tax Advantages for Seniors
Certain investment accounts may be eligible to receive special bonuses or tax advantages that are aimed at strengthening the economy and maximizing growth. Here are the most common ones:
In some specific cases, dividends that were received and then invested straight away into stocks will not be considered taxable income. You should consult your bank or financial expert to determine whether or not you meet the conditions for this tax advantage.
Waiver of Penalty
If you underpay your taxes by accident because your income was larger than you expected due to investments, you can reduce the penalties if you pay at least 90% of taxes owed. Be certain to check one more with your bank, financial expert, or taxation specialist to determine the details of this process.⁵
Tax-Exempt Social Security
Taxes are paid on benefits from Social Security, but you don’t have to pay based on the entire amount. In 2018, lower-income bracket taxpayers had to pay up to 50% of Social Security deposits, while higher bracket taxpayers, had to pay only up to 85%.⁶
 Internal Revenue Service. “Lifetime Learning Credit.” Jan 31st, 2020, IRS. https://www.irs.gov/credits-deductions/individuals/llc
 Internal Revenue Service. “American Opportunity Tax Credit.” Mar 4th, 2020, IRS. https://www.irs.gov/credits-deductions/individuals/aotc#:~:text=The%20American%20opportunity%20tax%20credit,four%20years%20of%20higher%20education.&text=If%20the%20credit%20brings%20the,to%20%241%2C000)%20refunded%20to%20you.
 Orem, Tina. “Mortgage Interest Deduction: What Qualifies in 2020.” Feb 29th, 2020, NerdWallet. https://www.nerdwallet.com/blog/mortgages/mortgage-interest-deduction/
 TurboTax Canada. “Tax Tip: Which Dental Expenses Are Considered Deductible Medical Expenses When Filin Income Taxes?” Jan 9th, 2020, TurboTax Canada. https://turbotax.intuit.ca/tips/tax-tip-are-dental-expenses-considered-medical-expenses-when-filing-income-taxes-5242#:~:text=The%20Medical%20Expense%20Tax%20Credit,or%20may%20have%20to%20pay.&text=If%20you%20paid%20for%20dental,Dentures%20and%20Implants
 Mercado, Darla. “The IRS will waive this 2018 tax penalty for more than 400,00 filers.” Aug 14, 2019, CNBC. https://www.cnbc.com/2019/08/14/the-irs-will-waive-this-2018-tax-penalty-for-more-than-400000-filers.html#:~:text=The%20IRS%20will%20waive%20this%202018%20tax%20penalty%20for%20more%20than%20400%2C000%20filers,-Published%20Wed%2C%20Aug&text=Normally%2C%20you%20must%20pay%20at,underpayment%20penalty%20from%20the%20IRS.&text=Those%20who%20paid%20at%20least,automatic%20waiver%20of%20the%20penalty.
 Internal Revenue Service. “Are Social Secirity Benefits Taxable?” Dec 31st, 2019, IRS. https://www.irs.gov/newsroom/are-social-security-benefits-taxable