Save Taxes and Avoid Penalties by Knowing What Tax Changes Occur With Age

Save taxes and avoid penalties by knowing what changes as we age!  Age must be understood or errors on tax returns will occur.
(By Phoenix Tax and accounting CPA firm Jeffrey Brooks, CPA, CFP, MBA)

Commonly my clients of Our tax CPA firm do NOT say “Jeff, I got that tax benefit last year so why not this year because I warn the client in advance what will be different this year.

I have memorized these age based tax saving rules:

AGE RULE:

13. Cannot claim a child care credit for children age 13 or older.
17. Cannot claim $1,000 child tax credit for children age 17 or older.
18. Children working for parents’ unincorporated business now subject to FICA
18. Generally cannot contribute to an  educational ESA for children age 18 or older.
18. Taxpayer qualifies for saver’s credit (if neither a dependent nor student).
18. Kiddie tax doesn’t apply if child’s earned income  more  than half his support.
19. Exemption for dependent children who are not full-time students expires.
19. Kiddie tax generally no longer applies except to full-time students.
21. Children working for parents’ unincorporated business subject to FUTA.
24. Exemption for dependent children who are full-time-students expires.
24. Can purchase savings bonds and exclude income used for education.
24. Kiddie tax no longer applies.
27. Income exclusion for health insurance coverage and self-employed health   insurance deduction for coverage of children age  26 and younger expires.
30.  Generally must distribute ESA when beneficiary reaches age 30.
50. Eligible for catch-up contributions to IRAs, SIMPLE-IRAs, 401(k), 403(b) and 457 plans.
55. Eligible for penalty-free withdrawal from employer retirement plan (but not an IRA) if separated from service.
55. Eligible for catch-up contributions to HSAs.
59  1/2 Penalty for early withdrawal from retirement accounts expires and Roth IRA distributions are tax-free (if any Roth     held for at least five years)
65. Non-itemizers become eligible for a higher standard deduction andHSA and MSA withdrawals not used for medical costs are  taxed but no longer subject to a 20% penalty.
65. Eligible for credit for the elderly.
65. 7.5% (rather than 10%) of AGI threshold applies to medical expenses.
70  ½ Contributions no longer allowed to traditional IRAs and
RMD= required minimum distribution begins

If you enjoyed this article, please consider sharing it!
Icon Icon Icon
RSS FEED

Search

No Obligation FREE Evaluation: Guaranteed to Reduce Your Taxes

602-292-2009

Name:*

Email:*

Company:

Comments:

Security Code:
captcha
Please enter the code shown above:

About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

Get In Touch

JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009
Email: jeff@jbrookswa.com