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Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.
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Today’s question is about how the new tax law will affect an old tax deduction: the extra personal exemption we all get when we turn 65.
If you’re a senior, here’s some good news, along with some additional tax advice.
For more information on this topic, check out “Beware These 10 Common and Costly Tax Mistakes” and “How Not to Blow Your Tax Refund.” You can also go to the search at the top of this page, put in the words “Tax Hacks 2018” and find plenty of information on just about everything relating to this topic.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello, everyone. Welcome to your money Q&A question of the day. I’m your host, Stacy Johnson, and this question’s brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.
Here’s our question of the day: It’s from Margaret. Margaret says:
“My husband and I are over 65 and get an additional deduction on our taxes currently. We have not been able to find out if that will still apply with the new tax law. What can you tell us about this?”
Before I answer this question: Remember when they were passing the new tax law, and they said, “Oh my gosh, we’re going to simplify taxes. You’re going to be able to put your taxes on a postcard and send them in. It’s going to be so easy.”
It isn’t, is it?
I’ve been doing this for 27 years, and every time there’s tax reform, they say, “Oh, we’re going to make things simple.” They don’t ever make things simple, folks. The next time you hear a politician tell you that they’re going to make your taxes simpler, don’t listen; they’re not going to.
Back to Margaret’s question. She wants to know if she’s still going to get her extra deduction for being over 65. Short answer: Yes, you are. If you are over 65 or blind, you get to claim an additional $1,300.
It’s also important to note that many itemized deductions are no longer going to be available under the new tax law. But one great thing is that married couples filing jointly will now get a $24,000 standard deduction, nearly twice what we had before.
A bigger standard deduction is going to help a lot of people who had to search and search and search for enough expenses to itemize their deductions. Now, unless you’ve got $24,000 worth of itemized deductions, you don’t even have to bother. You can just use the standard deduction. That is one way taxes are indeed getting simpler.
Now the bad news, at least for seniors. AARP, the group that represents older people, doesn’t like the new tax bill, because it limits medical deductions. It’s also going to create higher deficits, which will ultimately raise interest rates. It could also result in higher insurance premiums for seniors and everyone else.
(Editor’s note: The final version of the tax bill did not add additional limitations to medical deductions. In fact, it made them more generous for some taxpayers for tax years 2017 and 2018. You can read more about that here.)
So the new tax law has some good stuff and it has some bad stuff. What it doesn’t have much of, though, is simple stuff.
Let’s close with our quote of the day. This is from Franklin Roosevelt.
The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have too little.
Not a sentiment we hear a lot these days, but a great one. Hey guys, make it a profitable day and meet me right here next time!
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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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