It’s tax season again. Seniors face some tax issues related to their age.

First, many seniors are working beyond traditional retirement age while also collecting Social Security. It’s easy to forget that Social Security benefits are taxable income (based on income level). Seniors earning wages should save money from their benefits to ensure they can pay all of the taxes due April 15.

One way to avoid an unexpected tax bill: Ask the Social Security Administration to withhold a portion of your monthly payment; this money will go into your tax reserves and will minimize your out-of-pocket costs on April 15. The aim is to hold money in reserve that roughly equal the taxes you will owe.

If you are still working, another way to accomplish this is to confer with your employer. Declare few or no “exemptions” on your W-4 tax-withholding form. This will result in higher amounts withheld from your paycheck, thereby creating larger tax reserves.

You can also arrange to withhold an additional amount from each paycheck. This tactic can supplement or replace tax withholdings from Social Security checks.

If you discover you owe more than you can comfortably pay, the IRS is good about setting up payment plans. This is considered a “loan,” so you’ll need to pay interest.


Reaching full retirement

Seniors who are still working should understand that their wages may result in smaller Social Security payments. Until you reach “full retirement age,” Social Security reduces your monthly benefit if wages exceed a specified dollar limit. For 2015, the wage limit is $15,720. During the calendar year in which you reach full retirement age, earnings can be higher before benefits are reduced.

Previously, the full retirement age was 65, but now, it’s an upward sliding scale based on the year in which you were born.

The earliest you can start receiving Social Security retirement benefits is age 62. If you defer receiving payments until a later date, the amount of your monthly benefit increases. At full retirement age, you are entitled to full, or unreduced, retirement benefits.

Choosing the age at which to start receiving Social Security benefits depends on a number of factors: whether you are still working, your income level and whether you need or want supplemental income.

One thing to consider: You need to live a long time to make up the monthly income lost by deferring payments until you are older. Circumstances vary, so talk to your CPA. It’s important to have a professional advisor.

If you are not currently receiving benefits, be sure to contact the Social Security Administration at the beginning of the year in which you reach full retirement age. Failing to reach out to Social Security may negatively affect your benefits. Go to and use the “Retirement Benefits” link to get answers to your questions.

Gifts to one’s family and donations to charities can have tax benefits when estates are sizeable and are liable for future estate taxes. Gifts are subject to federal limitations and have tax implications. Take the initiative and confer with estate specialists (lawyers and accountants) and get directions for proper documentation and implementation.

In King County, seniors may find they can defer property taxes or get a reduction in property taxes, based on income and/or disability. If you qualify, you must file your application with the King County Assessor’s office 30 days before the taxes are due (real estate taxes are due April 30).


Getting help

If you find that bookkeeping and tax preparation are formidable and overwhelming, seek outside help. There are bookkeepers and tax specialists who focus on working with seniors.

Ask for references before opening your financial information to outside analysis. You want trusted advisors who have your best interests at heart.


MARLA BECK is the founder and president of Andelcare Inc. Submit questions by calling (206) 838-1844 or via e-mail to