Tax Help for Seniors Guide: Tax Prep and Tax Relief

Taxes are a part of life, no matter how old you are. If you’re receiving income, you’ll be paying taxes.

Many seniors are retired and living on their savings and Social Security. While you’ll still pay taxes, it will work differently from how you paid W-2 taxes.

If you’re looking for assistance with tax preparation or tax relief, check out these resources and tips from experts.

Use the list below to navigate between sections by clicking on the titles most interesting to you.

• Tax preparation
• Tax preparation resources
• Tax relief
• Tax relief resources
• What to look for in a tax professional
• Bonus: top-rated tax relief companies on helping seniors

Tax preparation

Tax preparation as a senior will likely have some differences from how you’ve prepared taxes before. You’ll likely have received income from various sources and may also qualify for different deductions. As you age, you may have a harder time adjusting to changes in technology and changes to our complex tax code.

Income

You’ll start receiving Social Security and take required minimum distributions from your retirement savings. You may even have other kinds of income.

“Many seniors have pensions, pre-death life insurance benefits, IRA or 401K savings, or other financial assets. This can make preparing and filing taxes more complicated,” says Jayson Mullin, Top Tax Defenders owner.

You likely haven’t dealt with these kinds of income previously, so reporting this income and filing taxes can be an unfamiliar process. An accountant or IRS-certified tax preparer can help you understand and complete this process correctly.

“Seniors have special tax issues including social security income, pension checks, retirement benefits, and spousal death that can complicate tax preparation and can increase the chance of an incorrect return. Knowing where to look for help can make tax time easier and less stressful,” adds Mullin.

If you’re just starting to think about retirement, it can be a good idea to meet with a financial adviser or tax professional to discuss the best way to handle your retirement accounts and Social Security benefits before retiring and create a plan for making withdrawals.

“Tax planning is another important area. Seniors, especially those who have retired but are not yet taking their RMDs (under 70.5 yrs), can rollover traditional IRA money into a Roth and reduce future taxes,” says Beth Logan, enrolled agent at Kozlog Tax Advisers.

Deductions

In addition to accounting for different sources of income, you may also be able to deduct other expenses, like medical and home improvement expenses.

“Senior citizens often have higher medical expenses than other taxpayers. Luckily some of these expenses may be tax deductible. If you itemize your deductions, you might be able to deduct out-of-pocket medical expenses that exceed a percentage of your adjusted gross income,” says Josh Zimmelman, Westwood Tax & Consulting owner.

You’ll also have a higher standard deduction, which helps lower your tax bill by lowering your taxable income.

Once you turn 65, you may qualify for the Tax Credit for the Elderly or Disabled. This tax credit gives you credit on your tax liability between $3,750 and $7,500.

Challenges

You may also encounter new challenges as you age. These include becoming a target for scams, adjusting to changes in the tax code, and evolving technology.

“Age isn’t the only factor that makes tax logistics so difficult for many seniors to manage. Changing technology, complex rules, and a lack of sufficient funds to hire a professional accountant or tax preparer can make even common tax issues seem like insurmountable problems,” says Mullin.

Tax scams are also common, and seniors are often targeted. Knowing how the IRS communicates will help you keep yourself from becoming a scam victim.

“In a phone scam, a caller will pose as an IRS agent and tell you that you owe money and threaten you with arrest (or other consequences) if you don’t pay it right away. The IRS will never directly contact you by phone unless you’re part of a specific group of taxpayers with longstanding debts. That means you’ll never get surprised by the news that you owe money. If you’ve been filing and paying taxes consistently (or know that you’re not required to file because of your income level) and have never received written notice from the IRS that something was missing, then you can be sure these calls are a scam,” says Zimmelman.

You should also watch out for email scams.

“Phishing is when someone tries to steal your information through a fake email or website. There is only one official website for the Internal Revenue Service (IRS.gov) and the IRS will never contact you via email. So if you get an email from the IRS asking you for personal or financial information, assume it’s a scam. You can forward any suspicious emails to phishing@irs.gov,” advises Zimmelman.

Knowing that you’ll receive a written notice first and being vigilant and talking with trusted friends and family members before taking any action based on scare tactics will help prevent you from falling for scams.

Taking age, legal and technological changes, and scams into consideration, here’s a breakdown of what you should look for in a tax professional and what free resources are available to help with tax preparation.

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Tax preparation resources

You can always file your taxes yourself or pay an accountant to take care of it for you. Depending on the complexity of your tax return, it may be best to pay an accountant to do it for you.

“If a senior has trusts that require filing, businesses, rentals (more than one vacation home), complicated investments, etc., they would be better served by a professional regardless of income. The VITA volunteers are good but they are volunteers with limited training. If a senior needs more help, they should contact an Enrolled Agent (EA, https://taxexperts.naea.org) or a CPA,” advises Logan.

However, if your tax returns are simple and you want assistance, check out these programs that can help you prepare your taxes:

• Volunteer Income Tax Assistance (VITA)
• Tax Counseling for the Elderly (TCE)
• AARP Foundation Tax-Aide

Volunteer Income Tax Assistance (VITA)

VITA is a tax preparation service from the IRS that trains volunteers to help people prepare their tax returns.

“Generally, this service is offered to those who make $56,000 or less, persons with disabilities, and limited-English speaking taxpayers. Volunteers are provided training and must be certified by the IRS before helping provide tax-preparation services,” says Josh Trubow, MSFP, CFP®, advisor at Sensible Financial.

Before setting up an appointment, check to see what services your local VITA site offers. VITA volunteers do not prepare all tax forms, so verify that they’ll help with the tax forms you need by looking at this document from the IRS.

“Each location may have [its] own rules to qualify for this free service, so I recommend calling the closest location to confirm eligibility. Appointments are also highly recommended (and may be required, depending on location),” says Trubow.

Be sure to go to the VITA site prepared with your ID and all relevant tax documents.

VITA sites generally operate during tax season, starting in February and ending in April, though some may be active through October.

Tax Counseling for the Elderly (TCE)

TCE is another tax program run by the IRS. Unlike VITA, TCE is specifically for seniors.

Organizations can apply to receive grant money from the IRS to reimburse its volunteers’ out-of-pocket expenses for meeting with seniors locally.

TCE centers offer many of the same services that VITA sites do. Seniors interested in working with a TCE center should go prepared with identification and the necessary tax documents.

Like IRS VITA sites, IRS TCE services are usually available February through April, while some areas may extend availability through October.

AARP Foundation Tax-Aide

The AARP Foundation Tax-Aide runs many TCE locations. Tax-Aide helps seniors prepare taxes regardless of AARP membership and age. Seniors who work with Tax-Aide receive assistance from IRS-certified volunteers.

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Tax relief

Tax relief can be helpful if you owe more taxes than you can afford to pay right now and if you’ve started to deal with income garnishments and other consequences.

Unfortunately, the IRS does not treat senior citizens differently from others. Tax debt accrues late payment penalties and interest over time, so you may owe more tax debt than you think.

If you’re dealing with tax debt, you may also experience some financial consequences, including liens and levies.

A lien means the IRS has first claim on funds resulting from the sale of property.

A levy allows the IRS to seize your property and sell it to cover the tax debt. Levies can also be used for assets, like your income.

If you’ve worked hard your whole life and have paid off your mortgage and saved for retirement, you especially do not want the government to seize your property.

“Unlike younger adults, who tend to be income rich and asset poor, many seniors are asset rich and income poor – with homes paid off and retirement accounts fully available for use. This poses unique challenges, as the IRS will seek liquidation of retirement accounts and other more liquid investments to cover the tax liability,” says Michelle Kendall, attorney at Optima Tax Relief.

Luckily, a skilled tax relief professional can help you deal with the IRS and protect your hard-earned savings and assets.

“Assets are generally considered collectible property by the IRS, but with the right resolution plan and a skillful negotiator these assets can be excluded from collections consideration in an IRS resolution,” says Jessie Seaman, Community Tax, LLC Vice President of Servicing.

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Tax relief resources

You can work directly with the IRS to work out payment agreements or settlements. However, it can be helpful to work with an experienced tax professional who will help you resolve your debt.

Tax relief companies specialize in these services. Not only do their teams negotiate payment plans and settlements with the IRS, they also help remove penalties like liens and levies.

Many tax relief companies employ tax attorneys, enrolled agents, and certified public accountants (CPAs). Enrolled agents are authorized to represent clients before the IRS and can help you negotiate payment with state government and the IRS. These solutions are Installment Agreements and Offers in Compromises.

An Installment Agreement is a payment plan that you and the IRS agree on. Once you complete the installment payments, you will no longer owe the IRS.

An Offer in Compromise is a settlement agreement between you and the IRS. If your Offer in Compromise is accepted by the IRS, you will make a one-time settlement payment and the rest of your debt will be forgiven.

Tax relief companies can also help you remove penalties, like liens and levies. Unfortunately, the IRS does not remove interest or late fees from taxes owed.

Best Company’s list of top-rated tax relief companies includes Tax Defense Network, Optima Tax Relief, and Community Tax, LLC.

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What to look for in a tax professional

If you’re hiring an accountant, enrolled agent, or tax attorney to help you with tax relief or tax preparation, you’ll want to look for qualifications, experience, transparency, and trust.

Qualifications

Josh Zimmelman, Westwood Tax & Consulting owner
“It is not required for an accountant to be a CPA (certified public accountant) but it doesn’t hurt! Preferably your accountant with hold an MBA or at the very least have taken several continuing education courses in tax preparation. A tax attorney should have an LL.M in Tax.”

Experience

Jayson Mullin, Top Tax Defenders owner
“Seniors should look for preparers that specialize in working with seniors. You’ll want someone who has the right experience for your particular needs and can work at a price you can afford. You should expect your preparer to be skilled in tax preparation and to accurately file your income tax return. You should trust him or her with your most personal information.”

Zimmelman
“Preferably your tax accountant will have at least five years of experience handling a broad set of issues. You should look for an accountant who has experience handling your particular type of tax return. Someone familiar with your business or industry is the best fit.”

Beth Logan, enrolled agent at Kozlog Tax Advisers
“Consider more than tax preparation. Look for a tax professional that will do tax planning with [you]. There is always a concern as seniors age that they might get dementia. A preparer should work with [you] early to make sure there is a plan in case [you] cannot handle [your] own finances.”

Michelle Kendall, Optima Tax Relief attorney
“The most important thing to consider is the firm's reputation and experience in tax resolution services. Not all tax professionals are well versed in IRS collection procedures, and not all companies in this space are trustworthy. An incompetent professional or disreputable company can turn your IRS problem into an expensive nightmare. Look for credentials, such as having licensed tax attorneys on staff. You want to find a truly qualified firm that can resolve your tax issues and defend you against collections, legally and comprehensively.”

Transparency

Zimmelman
“Some accountants will charge by the hour, others charge a flat rate based on how simple your tax return should be. Fees will vary, but you should know what you are getting into and ask your accountant if there is anything you can do to keep costs down. The more organized you are, the easier it will be for your accountant to sort out all of your transactions and receipts and save you money in the end.

Accountants have to charge for their work obviously, but many will be willing to take a few minutes to review your past tax returns for free. Having some information on your finances is necessary for an accountant to know if they are comfortable preparing your current tax return. A good accountant will be honest about whether they’re not the right fit for your situation.”

Trust

Logan
“Look for someone who explains [your] taxes to you. Some only prepare the return and then say 'sign it.' Preparers should go through the return and answer any questions.”

Zimmelman
“Is this someone I can trust and with whom I can feel comfortable? This question is one you really have to ask yourself. Do you know anyone who has worked with this accountant who can vouch for their professionalism and honesty? Do they have references they can provide? Do they talk down to you or treat you with respect? Trust your instincts. If you don’t feel right about someone, then don’t hire them, no matter what their credentials are.”

Jessie Seaman, Community Tax, LLC Vice President of Servicing
“When considering a tax relief company, seniors should start their search with companies that are highly rated on sites like Google or the Better Business Bureau. Quality tax relief companies should willingly review your case and provide service recommendations for resolving your case risk-free for a relatively low fee. Stay away from companies that charge thousands of dollars or promise a specific result up front. And like most services, always use your best judgement and remember to tell yourself that if it sounds too good to be true, it probably is.”

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Bonus: top-rated tax relief companies on helping seniors

Optima Tax Relief

Kendall
“At Optima Tax Relief, we take our responsibilities very seriously, and take particular care when serving seniors. We’re acutely aware that seniors have worked a lifetime to achieve what they have, and that their assets cannot be easily replenished. When approaching a senior's case, we evaluate the entirety of their situation. Once we have a thorough understanding of their personal finances and their needs and goals, we can focus on protecting their assets in accordance with their priorities. We negotiate with the IRS on their behalf, working tirelessly until we’ve obtained the best possible resolution for them.”

View Optima Tax Relief Reviews

Community Tax, LLC

Seaman
“Seniors tend to have different sources of income than the general taxpayer population such as Social Security and pension income. Community Tax can obtain access to IRS information databases (with a signed information authorization form from the client) to pull information on these income sources and make preparation of back tax returns and financial statements as easy as possible.”

View Community Tax, LLC Reviews

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