The amount of money we need to save for our retirement is really important. Generally, people do not realise the importance of savings and don’t invest much in defined pension plans and retirement funds like 401k and IRAs. Old age is a phase that is neglected the most but it is then when you require the money. Some of it may be for luxurious purchases but majority of it would be for survival. Any form of tax deductions for seniors and retirees can be very useful.

Here are five senior tax breaks that every retiree should know about:

1. Business expenses
Your business expenses can be claimed as your senior tax break if you are planning to own a business during retirement. In case of any current business, the deduction can involve some or all the expenses as long as they are reasonable and necessary. The expenses usually involved in normal businesses include money spent on business equipment, travel, and the cost of office irrespective of the place.

2. Standard deductions
In case you do not itemize your tax deductions, you get the opportunity to avail higher standard deductions. This is prevalent only when you or your spouse are 65 years of age or older. This serves as an excellent means for tax deductions for seniors and retirees as the amount for standard deduction is $1,250 higher as compared to people below the age of 65. In case the retiree is not married or is a non-surviving spouse, the rate increases even more to $1,150 when compared to younger taxpayers.

3. Investment expenses
The most efficient way to receive money after you reach the age of retirement is through dividends, investments, and capital gains on investments. The amount received from it is taxed at a comparatively lower rate and is also not subjected to taxes of Medicare or Social Security. In addition, if any investment expenses exceed two per cent of the AGI, they can be included in your itemized deductions. This may include things like accounting fees, fees for safe deposit, purchase of home computers for the purpose of investments, financial planner fees and much more. However, the itemized deductions cannot include the amount that is paid to the agents or brokers to get hold of the investment property. This amount will be added to the property cost which you can avail on selling it.

4. Retirement contributions
It is not necessary to make contributions to your retirement accounts like 401k and IRA only during your retirement, you can do it now as well. According to the law, people aged 50 and above can contribute a higher amount to the accounts as compared to people under the age of 50. Contributions can also be made to Roth IRA accounts. One of the benefits you can derive is that you won’t be paying taxes for the money that you withdraw.

Make tax deductions for seniors and retirees easy with the above tax rates and make living easy.