When tax time is looming on the horizon, it can be difficult to navigate the many taxes, tax credits, tax deductions, and similar issues that seem to pop up every year. Though many seem to exclude older adults, there are actually several that get better as you age. Here's a quick glance at some of the most common tax credits and deductions for older adults.

Common Tax Credits and Deductions for Adults 50+

Let's start by defining the difference between a tax deduction and a tax credit. A tax deduction is removed from your adjusted gross income BEFORE your taxable income is calculated. A tax credit is removed from your calculated tax before you pay your tax bill. Still confused? There's a great explanation here.

We'll start with deductions since they come off first:

• Larger standard deduction for ages 65+. If you're age 65 or over, you get a larger standard deduction than individuals age 64 and lower. For 2024, this amount was an additional $1950, with married couples getting an additional $1550 if one individual was 65+, or $3100 if both individuals were 65+. You can also have higher minimum income before you have to file a tax return.
• Larger IRA deduction. For individuals who are ages 50+, the IRA contribution deduction kicks in, where you can put more money into your IRA that is exempt from taxable income, lowering your income by up to an additional $1000 in 2024.
• Larger 401(k) contributions. Workers age 50+ can defer income taxes on $7500 additional contributions to their 401(k) in catchup contributions. In 2024, that allows you to contribute up to $30,500 of your income into your 401(k) while deferring taxes on that income until you withdraw the money. Be aware that for higher-income individuals, this may kick you into Roth IRA territory under the SECURE 2.0 Act.
• Lose the early withdrawal penalty. While you still pay taxes on the income, public safety officers age 50+ and individuals leaving their job at age 55+ no longer have to pay the early withdrawal penalty on distributions from their IRA. Everyone else is still at age 59.5 to make withdrawals without penalties.
• Higher HSA contributions. Does your health insurance include an HSA? If so, and you're age 55+, you can increase your HSA contributions, which are deducted from your total income, by $1,000. This allows you to save up to $5150 for medical expenses, medications, and a wide range of wellness expenses in 2024.
• Give required minimum distributions to charity. If your required minimum distribution will cause you problems with your taxes, you can divert some of it to charity to reduce the blow. The 2024 tax year limits this diversion to $105,000. These distributions typically kick in at age 70.5, though under the SECURE 2.0 Act, you can go to age 73 in some cases and must take a distribution by April of the following year.

Let's move on to tax credits:

• Tax Credit for Elderly and Disabled. For disabled individuals and those age 65+, you can receive a tax credit if your income falls below a particular point. In 2024, this limit was an adjusted gross income of $17,500 or $25,000 if both married individuals are 65+, $20,000 if one spouse is 65+. This also requires nontaxable pension or Social Security income of $5000 or married at $7500.

Beyond the IRS, let's talk about other common taxes you can take advantage of in your later years:

• Property tax credits. Older adults often receive a credit on their property taxes, typically a particular percentage. This is often referred to as a homestead exemption.
• Free tax help. The Tax Counseling for the Elderly program provides free basic tax form preparation for individuals aged 60+ from January 1 to April 15.
• Check state and local taxes. State and local tax agencies may offer a range of possible options to lower your tax burden when you reach specific ages.

Tips for Organizing Documents

• Set up file folders with separate folders for different account types, such as IRA, 401(k), HSA, and similar items. Use different colors for different types of accounts.
• Trouble keeping up with receipts? Consider an app like Evernote and take pictures of your receipts, then tag them with appropriate categories.
• Keeping digital or paper documents? Make sure to set up a secure location for backups in case you lose the original copy.
• Create a naming convention for digital documents. As an example, when I need to find something quickly, I name it "YEAR MO Document Name", or "2025 01 IRA Statement"
• File your taxes with your documents. That way, they're all together.

Tax time is tough, but by keeping these tips in mind throughout the year, you'll sail through it while reducing your tax bill.