Tax Time—it’s one of those phrases that strikes fear in the hearts of even the strongest among us. It can send one spouse scurrying for cover while the other gathers and organizes tax documents. And vile words not heard during the rest of the year have been known to escape from the lips of people you’d never expect to use such language.
Tax time for Seniors can be unique and challenging because of the various types of income they have to report—Social Security, pension, annuities, 401(k) withdrawals, IRA Required Minimum Distributions (RMD), or even the sale of a home if they downsize or move into a retirement community.
Fortunately, there are free resources available to help older Americans make sure their tax return is prepared properly and they don’t raise any red flags at the IRS. One of the favorites used by seniors is the AARP Tax Aide.
AARP Tax Aide
The AARP Foundation created a nationwide network of free in-person and virtual tax preparation services, focusing on people aged 50 and up and taxpayers with low to moderate income.
The people who help with tax preparation are IRS-certified and in many cases are retired accountants and CPAs who donate their time. They can help prepare state and federal returns but there are some things they won’t help with:
- Rental property income
- Farm income
- Moving expenses
- Casualty and theft losses
- The Alternative Minimum Tax
- Losses from a self-employment business
You don’t have to be an AARP member to get help from Tax Aide. You can use this locator to find an AARP Tax Aide site near you.
Tax Counseling for the Elderly (TCE)
For 45 years, Tax Counseling for the Elderly has been providing basic tax return preparation for people 60 years old and older. The IRS provides funds to various community organizations, such as the United Way. Volunteers involved in tax preparation are required to pass tax law training that meets or exceeds IRS requirements, and includes issues specific to Seniors, things like Social Security income, pensions, and Required Minimum Distributions from retirement plans and IRAs.
You can find a TCE site by calling 800-906-9887 or going to the TCE locator tool.
Volunteer Income Tax Assistance (VITA)
Another free tax service funded by the IRS is the Volunteer Income Tax Assistance program. It’s similar to TCE, but there is no age limit on who can use the service. However, priority is given to:
- People who make $60,000 or less
- People with disabilities
- Taxpayers who speak limited English
For people who prefer to do their own taxes but want guidance, you can use VITA’s web-based tax preparation software. IRS-certified volunteers are available to answer questions and help you through the process.
You can find the nearest VITA location to you with this location locator.
IRS Free File
Another free service with IRS involvement is IRS Free File. Unlike TCE and VITA, which are administered by nonprofits, IRS Free File is a partnership between the IRS and companies that provide free online tax prep and filing software.
The IRS has a list of IRS Free File providers or you can use the Online Lookup Tool.
No matter which service you use, there are some basic documents/records you need to have with you.
- Income statements, including W-2s
- Form SSA-1099 for Social Security benefits
- Form 1099-R for pension, IRA, and/or annuity income
- Form 1099-R for disability income (if applicable)
- Income from all other sources, such as 1099-INT for interest income
- Mortgage statements and property tax bills if you’re a homeowner
- Contributions made to a retirement account or health savings account
- Social Security card
- Government-issued state ID or driver’s license
- Tax returns from the previous two years
- Any communication from the IRS
- Checking or savings account information for direct deposit
Tax time is never fun. Hopefully, one of these free services will make it a little less traumatic.
Disclaimer
This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice, or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences or risk parameters. Some investments are not suitable for all investors, all investments entail risk and there can be no assurance that any investment strategy will be successful. This information is based on sources believed to be reliable and Alhambra is not responsible for errors, inaccuracies, or omissions of information. For more information contact Alhambra Investment Partners at 1-888-777-0970 or email us at info@alhambrapartners.com.
