It’s Tax Time - Tax Tips for Seniors

A week after the April 8 total solar eclipse all eyes will be focused on another dark day: Tax Day. Many of us know the drill, but it’s always good to review the ABCs of filing federal tax returns, starting with the most basic one.

1. How to file

Paper returns are still available but why bother. “If you file a paper return the processing time could be up to a year, possibly more,” says Oberlin CPA Vance DeBouter. Vance is a member of Kendal at Oberlin’s Finance Committee and a former Board member.

“The use of paper forms instead of a software package also requires that you do many more manual calculations on worksheets that change if you make changes to other parts of the return. Paper forms also do not prompt you to limitations on losses as most software programs do.”

There are many tax-preparation software programs available for consumers, including these with three thumbs-up from Time magazine: Intuit TurboTax, H&R Block and TaxSlayer.

Before you hire a tax return preparer, consult the IRS directory. “This searchable directory is intended to help you with your choice by providing a listing of preparers in your area who currently hold professional credentials recognized by the IRS or who hold an Annual Filing Season Program Record of Completion,” the IRS explains.

As for free services, the IRS FreeFile Program offers free online tax preparation and filing at an IRS partner site for taxpayers whose adjusted gross income (AGI) is $79,000 or less. And the AARP Foundation offers free tax assistance with a focus on older adults with low to moderate income.   

2. What documents to gather

Whether you’re putting together a packet to send to a tax preparer or to do yourself, filing is much easier when all your documents are in one place. Of course, pertinent documents vary depending on your situation but here’s highlights from H&R Block’s checklist:

• Routing and account numbers to receive your refund by direct deposit or pay your balance due, if you choose;
• If self-employed, Forms 1099, Schedules K-1, expenses, home office deductions;
• If retired, pension/IRA/annuity and Social Security income;
• Savings, investments and dividend records, including income from stock sales or other property (1099-B, 1099-S), Health Savings Account and long-term care reimbursements (1099-SA or 1099-LTC) and record of estimated tax payments made (Form 1040–ES);
• Home and vehicle ownership, including receipts for energy-saving home improvements and electric vehicles;
• And charitable donations, including miles driven for charitable purposes. (The standard rate for charitable mileage is 14 cents.)

While the 2023 federal income filing is very similar to 2022, Vance DeBouter says a few legislative changes to be aware of here include:

• Legacy IRA plan from SECURE Act 2.0 allows a donor 70½ or older to transfer a qualified charitable distribution (QCD) of up to $50,000 from a traditional IRA to a “split-interest entity” that will pay a fixed percentage (minimum 5%) for life to the donor and/or donor’s spouse.
• If you turn 73 in 2023, your first required minimum distribution (RMD) is due by 4/1/2024. People who work past 73 can generally delay taking RMD’s from their current employer 401K plan until they retire.
• The deduction for long-term care premiums has increased by $300, to $5,940.
• The annual gift tax exclusion has increased from $16,000 to $17,000 for 2023.

3. Where’s my refund?

The IRS issues more than 9 out of 10 refunds in less than 21 days. However, it’s possible your tax return may require additional review and take longer.

But good news, you can track your return 24 hours after you e-file. To check your refund you’ll need Social Security number, filing status and the exact refund amount. If there’s a problem the “Where's My Refund” site will tell you to contact the IRS or you will receive a letter in the mail.

Speaking of which, beware of IRS scammers, Vance DeBouter warns:

“The IRS does not call or send emails. Many taxpayers, including myself, have received calls from individuals pretending to be the IRS or from a collection agency telling you that you owe taxes and will be arrested shortly. This is a scam and my advice is to hang up immediately. Often times, the call is a recorded call with a number to call back. Do not return the call. Most of these calls ask for payment either via gift cards or bitcoin. If you owe the IRS money, they will send you a notice via US mail and if you ignore the notice or letter, they will send you another notice or registered letter. They will not call you to ask for payment.”

In the past, Molly Kavanaugh frequently wrote about Kendal at Oberlin for the Cleveland Plain Dealer, where she was a reporter for 16 years. Now we are happy to have her writing for the Kendal at Oberlin Community.

About Kendal at Oberlin: Kendal is a nonprofit life plan community serving older adults in northeast Ohio. Located about one mile from Oberlin College and Conservatory, and about a 40 minute drive from downtown Cleveland, Kendal offers a vibrant resident-led lifestyle with access to music, art and lifelong learning.