Tax Deductions for a Retired Married Couple

Retired couples can deduct the cost of prescription eyeglasses from their taxable income.

In most cases, if you are married and file jointly with your spouse, you will have a lower total tax liability than a single filer or a married individual who files separately from his spouse. However, when you reach retirement age, you can enjoy even more tax breaks that aren't available to younger couples.

Standard Deduction

The standard deduction for married couples who have reached retirement age is higher than the standard deduction for younger couples and single filers. As of 2011, a married couple can claim a standard deduction of $11,400 if they file jointly, and a couple over age 65 can claim an additional $1,100 for each spouse. However, you should only take this deduction if it exceeds the total of your possible itemized deductions.

Medical Expenses

In most cases, a married couple over retirement age will incur more medical costs than younger individuals or couples. If you have a large amount of medical expenses, the Internal Revenue Service allows you to deduct those expenses that exceed 7.5 percent of your adjusted gross income. Common medical expenses for retired couples include doctor and hospital bills, insurance premiums, long-term care services, prescription drugs, eyeglasses, false teeth and hearing aids.

Selling Home

Older couples may sell their homes to move to a smaller residence or nursing home. If you sell your home and earn a profit, you can exclude up to $500,000 of the profit from your taxable income if you file jointly, as long as you used the home as your primary residence for at least two of the five years directly preceding the sale. If you and your spouse file separately, you can each exclude up to $250,000 of profits from your income.

Retirement Contributions

If you are retired but continue to contribute to a retirement plan, you may be able to deduct your contributions from your taxable income. At the time of publication, married couples over age 50 can deduct up to $12,000 of retirement contributions if they file a joint return or $6,000 each if they file separately. However, you can't deduct more than your taxable compensation for the year.

References

• Nolo: Top Seven Tax Deductions for Seniors and Retirees
• IRS.gov: 1040 Instructions
• IRS.gov: Topic 502 -- Medical and Dental Expenses
• IRS.gov: Get Credit for Your Retirement Savings Contributions