Let your age maximize your deductions and credits!

Did you know that blowing out the candles on your 65th birthday can lead to tax advantages come April 15th? It’s true! There are several ways you can save money on your state and federal taxes after you turn 65, so read on to find out how your golden years may be able to put a little more green in your pocket.

California Additional Exemption Credits for Seniors

If you and/or your spouse are 65 years or older as of January 1, 2014, you qualify for additional exemption credits on your 2013 California tax return. This means you can save between $106 and $212 on your 2013 California tax return just because you and/or your spouse were born before January 2, 1949! See the instructions for Form 540, available at www.ftb.ca.gov for more information on the additional exemption credits.

California Senior Head of Household Credit

You may also qualify for the Senior Head of Household Credit equal to 2 percent of your California taxable income, up to $1,272, if:

  • You are 65 or older as of January 1, 2014;
  • You made less than $67,520 in 2013; and
  • You qualified as a head of household in 2011 or 2012 by providing a household for a qualifying individual.

See the instructions for Form 540, available at www.ftb.ca.gov for more information on the Senior Head of Household Credit.

Federal Increased Standard Deduction for Seniors

Your savings don’t end with your California return. You can also save big on your federal tax return. If you and/or your spouse are 65 or older as of January 1, 2014, and you don’t itemize your deductions, you can use the additional standard deduction for senior citizens on your 2013 tax return. For 2013, this means you can deduct between $1,200 and $2,400 more when you use the standard deduction on your tax return. Consult the instructions for Form 1040 and Form 1040A, available at www.irs.gov, for more information on maximizing your standard deduction!

Federal Credit for the Elderly or Disabled

You may also be eligible for the Credit for the Elderly or Disabled just for being 65 if you make less than:

  • $17,500 if you use the single filing status on your return;
  • $20,000 if you are married and file jointly with your spouse but only one of you is 65 or over;
  • $25,000 if you are married and file jointly with your spouse and both of you are 65 or over; or
  • $12,500 if you are married but file separately and lived apart from your spouse for the entire year.

To qualify for the above credit, the non-taxable part of your Social Security or other nontaxable pensions, annuities or disability income must also be less than:

  • 5,000 if you use the single, head of household, or qualifying widow/er with dependent child status on your return;
  • $5,000 if you are married and file jointly with your spouse but only one of you is 65 or over;
  • $7,500 if you are married and file jointly with your spouse and both of you are 65 or over; or
  • $3,750 if you are married but file separately and lived apart from your spouse for the entire year.

You can calculate the amount of your credit yourself using Schedule R, or see the instructions for Schedule R if you want the IRS to figure this credit for you. See IRS Publication 524, available at www.irs.gov, for more information on this credit.

How to Claim your Additional Credits and Deduction

You can claim your additional California exemption credits on any version of the Form 540 that you want to use, but you can only use the standard long form 540 to claim the Senior Head of Household Credit. You will also need to file the longer Form 1040 or Form 1040A to use the additional federal standard deduction and/or claim the Credit for the Elderly or Disabled; you will not be able to use Form 1040EZ.

Get Help Preparing and Filing Your Return

Don’t let fear about using the longer forms scare you away from these benefits! Have an IRS tax volunteer help you complete your return for FREE! The Volunteer Income Tax Assistance (VITA) program and Tax Counseling for the Elderly (TCE) program are both designed to assist taxpayers who are 60 and older with their tax returns, and the volunteers will let you know about credits and deductions you may be entitled to claim. Most VITA and TCE sites even offer free, electronic filing. To find the nearest VITA or TCE site, visit www.irs.gov and enter “VITA” in the search box, or call 1-800-906-9887.

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