Welcome to your “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.
Today’s question is about how last year’s tax reform 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.
If you can’t deal with video, no problem: Just scroll down this page for the full transcript of the video, as well as some reader resources.
You can also learn how to ask a question of your own below.
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 “taxes” 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, and welcome to your “2-Minute Money Manager.” 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:
“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?”
Remember when they were passing the tax reform 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 tax reform. 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: Tax reform is going to create higher deficits, which will ultimately raise interest rates. So, tax reform has some good stuff and it has some bad stuff. What it doesn’t have much of, though, is simple stuff.
Hope that answers your question, Margaret. Make it a profitable day and meet me right here next time!
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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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