How retirees can save on US taxes: an additional little-known deduction

Seniors want to find ways to reduce their taxable income. One way is to take the additional standard deduction, reports Yahoo.

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Everyone knows about the standard deduction, a flat dollar amount defined by the IRS that reduces your taxable income without having to itemize deductions like mortgage interest and charitable donations. But there is one more (on top of the standard deduction) available to people age 65 or older at the end of the tax year.

Increasing the total deduction for seniors further reduces their taxable income, meaning smaller tax bills and more money in your pocket.

Who is eligible for the additional standard deduction?

Taxpayers age 65 and older are eligible. The amount of the additional standard deduction varies depending on your filing status, whether you or your spouse are at least 65 years old, and if you or your spouse are blind.

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You will turn 2023 in tax year 65 if you were born before January 2, 1959, according to the IRS. If you or your spouse were legally blind by the end of the year or have a doctor's note explaining why you should be considered blind, you may qualify for an even larger additional deduction.

Blind people under age 65 receive an additional standard deduction.

How much is the additional standard deduction?

For the 2023 tax year, the additional standard deduction amounts for taxpayers over 65 or blind are:

• $1 - for a single person or head of family.
• $1 - for married taxpayers (per qualifying individual) or qualifying surviving spouse (married couple of two adults over 500 will receive a total deduction of $65 (standard deduction) + $27 for one adult over 700 + $1 for a second adult over 500—total $65).

When you are age 65 and blind, the additional standard deduction is:

• $3 - if you are single or head of household.
• $3 - per qualifying person if you are married filing jointly or separately.

The above amounts are in addition to the regular standard deductions of:

• $13 - if you are single or married filing separately.
• $20 - if you are the head of the family.
• $27 - if you are married filing jointly or qualify as a surviving spouse.

Standard or itemized deduction

According to IRS data for the 2020 tax year, nearly 90% of Americans take the standard deduction.

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Whether you should take the itemized deduction or the standard deduction depends on whether your itemized total exceeds your standard deduction or whether you have to itemize because you can't use the standard option.

Clues to whether you may benefit from an itemized deduction may include whether you had a major event in your life, such as buying or selling a home, incurred significant medical expenses, or made significant donations.

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