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Get the Tax Refund You're Owed

How to get every deduction you can, especially if you're 50+

En español | With the 2013 tax filing season under way, Americans are scrambling to find every deduction or credit available to them. Here are 10 steps that older taxpayers may be able to take to get the most in a refund on their 2012 returns.

Some of these steps are complex and require that you itemize your return, rather than take the standard deduction. And some deductions are claimable only in the amount that exceeds 10 percent of your adjusted gross income. Other restrictions may apply, so consult a tax adviser or use tax preparation software to see whether these tips can be put to work for you.

1. Claim a portion of long-term care insurance premiums. The older you are, the higher the amount you can claim. Here's the scale: Age 40 or under, the maximum claimable amount is $350; 41 to 50, $660; 51 to 60, $1,310; 61 to 70, $3,500; 71 or over, $4,370.

2. Deduct the room and board costs of an assisted living facility if the resident is there mainly for medical purposes and is getting staff assistance to perform normal activities of daily living, such as bathing and dressing, or has cognitive impairment that requires supervision. The services are deductible, too. They must be part of a plan of care prescribed by a licensed health care provider for a chronically ill person.

3. Many taxpayers don't realize that medical expenses for items such as hearing aids and batteries, artificial teeth, prescription drugs, oxygen and wheelchairs can be deducted, says Mark Steber, chief tax officer for Jackson Hewitt, a tax preparation service.

4. Do you work but pay a home health aide to take care of your spouse or dependent? You may be able to claim a credit of up to $1,050 on up to $3,000 in dependent (or spouse) care expenses. That credit is shaved directly off your bottom-line tax bill; it is not a deduction from your taxable income.

5. If you contributed after-tax income to your retirement account, a percentage of your annual distribution may be tax-free. The logic for this, says Steber, is that if you already paid taxes on money before you put it into the account, it shouldn't be taxed again when it comes out. But tax rules are never simple. You will have to pay taxes on any earnings that those after-tax contributions generated while in the account. On a related note, you can deduct legal fees for retirement tax planning.

6. If your adjusted gross income, untaxed interest and half your Social Security benefit add up to less than $25,000 ($32,000 if married and filing jointly or qualifying widow), you'll pay no taxes on your Social Security income. After that level, a sliding scale kicks in. But you can take a little bit of comfort in knowing that no matter how much you make, 15 percent of your Social Security benefits will remain untaxable.

7. If you're in a tax bracket of 15 percent or lower, you'll pay no federal taxes on long-term capital gains you racked up during the year. Long-term means that you held the asset for more than a year before selling it.

8. If you turned 65 before Jan. 1, 2013, you're eligible to take a higher than normal standard deduction: single, $7,400; married filing jointly, $13,050 for one spouse 65 or older, $14,200 if both spouses are age 65 or older; head of household, $10,150. Be aware that if you take a higher standard deduction, you're not allowed to itemize deductions, so do the math and figure out which way is best for you.

9. If you pay all or some of your parents' medical bills, you can deduct those as health care expenses, even if they don't qualify as your dependent under income rules.

10. You may get a tax credit if you made certain energy-efficient improvements to your home, such as installing a new roof or insulated windows or exterior doors.

Carole Fleck is a senior editor at AARP Media.

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