Tax Expenditures for Senior Citizens

Here at Family First Estate and Corporate Services, I spend most of my time working with clients regarding Arizona living trusts, living wills, and power of attorney paperwork. A lot of my energy is spent alerting clients, and friends, about the importance of having your finances and assets in order. Sometimes, the need to have you assets in order for the unknown future means taking care of them in the present, something that can also get overlooked. If you’re not protecting your assets today, taking advantage of those little perks and breaks that come with age, how do you expect to protect those assets for your family in the future?

Tax Expenditures for Senior Citizens

“Tax expenditures are those special tax loopholes, deductions, exclusions and credits” that you’ve been hearing so much about in politics as of late. This side wants tax reform, that side wants tax breaks and cuts, some wants lower tax rates, others wants higher tax rates. As I sit down with clients every week to review their finances and assets, getting them in order for their living trust, we often talk about certain tax breaks that many seniors didn’t even know existed.

“The largest group excluded from tax because of tax expenditures are seniors, who get a bigger standard deduction than younger folks and more importantly, special tax treatment for their Social Security benefits. In all, 16.7 million elderly households will pay no tax in 2011 because of those two breaks and a special credit for elderly low income folks.” – Forbes.com

What does this mean? Well, from the perspective of someone who is in charge of getting your Arizona living trust in order and securing your assets for your family in the future, it tells me that you need to be taking this unspent tax income and placing it towards securing your assets for the future.

“Unless the current formula is changed, more well off seniors could escape taxes on their Social Security, if they’ve previously converted their individual retirement accounts to Roth IRA’s and don’t happen to be cashing in any capital gains that year.” — Forbes.com

And what happens to that Roth IRA account, your finances and assets after you pass on? If you have spoken to your attorney, assigned a beneficiary and gone through the proper paperwork, funds from the IRA account will began to be distributed “at least one year from the date of your death.” However, if you own a significant estate, that IRA might be used to estate tax. Talk to me if you have more questions about how all of this works at (480) 266-4025.

Need Help?

If you are not sure as to what legal document you currently have contact one of our professionals to help you with your estate planning. They will make sure you have all of your grounds covered and have the right legal documents that best suite your wants and needs.