As retirees worry about tax surprises, these filing resources may help
Allison Michael Orenstein | Getty Images
As the tax season kicks off, seniors may be facing new questions this year.
A record 5.9% Social Security cost-of-living adjustment last year likely pushed up their income.
Meanwhile, other income, such as required minimum distributions, other retirement account withdrawals or part- or full-time work may make filing more complicated.
A recent survey by The Senior Citizens League found 57% of older taxpayers worry that more of their Social Security benefits will be taxed.
More from Personal Finance:
Almost half of Americans think we’re already in a recession
It’s still a good time to get a job, career experts say
If you want higher pay, your chances may be better now
The good news is that quality help is available to help with tax filing, and in some cases it’s free.
On Feb. 1, the AARP Foundation Tax-Aide program is scheduled to start providing free in-person and virtual tax help.
The program focuses on tax filers ages 50 and up with low to moderate incomes.
However, it is open to tax filers of all ages who have less complicated returns, according to Lynnette Lee-Villanueva, vice president of Tax-Aide at AARP.
“This is the first year where we think we’ll really be back to the majority of our sites being open in person,” Lee-Villanueva said of the post-pandemic return.
“Our volunteers are looking forward to being back in person with people,” she said.
Seniors may also seek help from other tax professionals this year to meet the April 18 deadline to file their federal returns.
As the tax season gets underway, it’s important to have a meeting, even if just a few minutes, before working with someone to make sure you’re on the same page, said Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals.
“Get a gut feeling of are you going to be able to develop a relationship with this individual and that you feel that you can be candid,” O’Saben said.
Where to find free tax help
AARP’s Tax-Aide program is the largest volunteer-based tax assistance program in the country, according to Lee-Villanueva.
The program works in collaboration with the IRS’ Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs, which provide free basic tax return preparations to individuals who qualify.
AARP’s Tax-Aide is slated to have 25,000 volunteers in 3,500 sites this year in all 50 states and Washington, D.C.
We save people quite a bit of money.
vice president of Tax-Aide at AARP
To find a location near you, and find out whether you need to schedule an appointment or walk in, more information is available at the AARP Tax Aide website or by calling 888-AARPNOW (888-227-7669).
“We save people quite a bit of money, several hundred dollars usually that they would have had to have paid in order to have that return prepared by a paid individual tax preparer,” Lee-Villanueva said.
“That’s money that’s back in their pockets that they really do need to have,” she said.
In addition to the current tax year, the program can also help with the filing of returns for the past three years.
Anchiy | E+ | Getty Images
That may help filers who may be eligible for previously expanded tax credits , but who have not yet received that money. The government temporarily made the child tax and earned income tax credits more generous. That includes workers over age 65 who may have benefited from the earned income tax credit if they were still working in 2021, according to Lee-Villanueva.
To get the best service from the Tax-Aide program, individuals should gather all the relevant information they may need, such as paper documents for their Social Security, 1099 Forms, pension income and bank account statements.
To be sure, not all filers — such as those who have rental income from property they own or, in most locations, active duty military members — may qualify for the Tax-Aide program, according to Lee-Villanueva.
Tips for finding tax professionals
Before seniors seek free tax assistance or hire a tax professional to help them with their returns, there are a few things they should know, according to O’Saben.
First, tax laws are not age-driven. “There’s no such thing as being too old or too young to have a tax-filing requirement,” O’Saben said.
Instead, your income will determine whether or not you have to file a federal return.
If Social Security is your only source of income, you will likely not be required to file, according to O’Saben. But that may change with additional income.
“The overriding theme for seniors in filing taxes is communicate,” O’Saben said, and don’t be afraid to ask questions.
If you’re looking for a new tax preparer, ask friends and family who they recommend.
When meeting with a professional for the first time, ask questions to make sure you’re on the same page. Don’t be afraid to ask questions throughout the filing process, O’Saben said.
Also be sure to come prepared with all the relevant forms and information. If you’ve opted into digital-only communication with some accounts, be sure to include those forms.
Do a little homework and be prepared.
director of tax content and government relations at the National Association of Tax Professionals
Keep in mind not all transactions, such as charitable distributions from individual retirement accounts, will come with a government document showing that transfer happened, O’Saben said.
“Do a little homework and be prepared,” O’Saben said.
Also remember that while you may hire a tax professional to help you, it is your signature that goes on the tax return at the end of the process, which means you’re personally liable for all of the information on the form.
Also be wary of tax professionals or software that promise big refunds without knowing your personal financial circumstances, O’Saben said.
“If you don’t feel comfortable, then you need to seek out another professional,” O’Saben said.