Tax Help for Seniors: Understanding Complex Terms and Benefits
Taxes can be a challenging subject at any age, but they often become more complex and daunting as we become older. Many seniors find themselves facing unfamiliar tax situations. It is why understanding and seeking out tax help for seniors is indispensable. One daunting tax scenario for many seniors is dealing with elements like a controlled foreign corporation.
A controlled foreign corporation or CFC is a corporate entity registered and conducted in a different country than the residency of the controlling owners. Here’s where it gets taxing for seniors: if they are shareholders in such companies, they may be required to pay taxes on their global income, including any earnings from these corporations. This scenario is quite complex and can create unexpected tax implications for uninformed older adults.
Fortunately, there are avenues of tax help for seniors that simplify these matters and even provide certain benefits for older taxpayers.
Benefits for Senior Taxpayers
Social Security benefits, in most cases, are not taxable and can provide a substantial relief for many senior citizen taxpayers. Moreover, seniors might be entitled to higher standard deductions than younger taxpayers, as well as a tax credit for the elderly or the disabled, which can further ease their tax burden.
The filing status (if a widow or widower, for instance) could also allow a higher standard deduction. The Internal Revenue Service has an interactive tool to assist seniors (or indeed anyone) in determining their correct filing status.
Seeking Professional Tax Help for Seniors
While these tax benefits can make a significant difference to many seniors, dealing with terms like a controlled foreign corporation can still make the tax season stressful for older adults. Therefore, it may be worthwhile to seek professional help in dealing with taxes.
Tax professionals understand the intricacies of taxation laws, including those for seniors, incomes from foreign corporations, and more. A qualified tax professional can provide guidance and help navigate complex tax situations that come with owning stock in a CFC.
Free Tax Help for Seniors
The AARP Foundation Tax-Aide provides free tax preparation service to seniors aged 60 and above. IRS-certified volunteers help prepare tax returns, particularly focusing on low to moderate-income taxpayers. The Tax Counseling for the Elderly (TCE) program also offers free tax help for seniors, with priority assistance to individuals aged 60 and above.
To summarize, seniors can manage their taxes effectively by understanding the standard deductions and credits available to them and seeking professional help when needed. As complex as handling a controlled foreign corporation may seem, there are resources available to make the process less daunting.