9 Common Tax Mistakes Retirees Make

You may no longer be drawing a weekly paycheck, but that doesn't mean income and investment taxes have vanished because you're retired. Instead, you've got a whole new list of considerations at tax time, including when to take Social Security, how to draw income from investments, and how to manage your estate. Make a mistake and you may miss out on deductions expressly for retirees and seniors… or worse, face an IRS audit. Protect yourself and your assets by avoiding these common tax mistakes.

Related: 13 of the Biggest Retirement Regrets Among Seniors

Senior homeowners may qualify for homestead exemptions, which are breaks on property taxes. Check with your state, county, and municipal tax offices to find out what kind of savings you may be eligible for. Residents of Kentucky over the age of 65, for example, can deduct $39,300 from the assessed value of their homes. At least six states have programs that freeze property taxes, while 10 others cap property's tax valuations.

Related: 20 Valuable Tax Breaks for Seniors

Another opportunity for tax savings comes in the form of allowances for health insurance premiums, medical care, and devices like eyeglasses. You can even receive partial mileage reimbursement for doctor visits, physical therapy, and other health treatments. However, not everyone will qualify for this deduction, as financial pro Michael Rubin points out. For example, you can only deduct expenses that are more than 10% above your annual adjusted gross income. Over-the-counter medications, toiletries, and elective procedures are not eligible, and you'll need to itemize everything.

Simple math errors are some of the most common mistakes Americans make on their tax forms, according to the IRS. Calculating retirement income from Social Security, investments, pensions, and other assets only increases the odds of your making a potentially costly error — especially if you're preparing your return manually instead of using tax software. To make the task of filing taxes by hand a little easier, the IRS offers the 1040-SR, a large-type tax form that you can download.

If you're taking the required minimum distribution from your IRAs but don't necessarily need that income you can help others and reduce your tax bill at the same time, wealth manager Glen Smith tells USNews. "Go ahead and give it directly to charity (from your retirement account)... [It] counts toward your RMD and doesn't count toward your income," he says. You can transfer up to $100,000 in donations.

Related: 16 Tips for Making Tax-Deductible Charitable Donations

Just because you can start collecting Social Security at age 62 doesn't mean you ought to do so. If you want to collect the maximum benefit, you'll have to hit what's known as "full retirement age," which is 66 or 67 depending on when you were born. And once you do start tapping into those benefits, remember: Social Security income is taxable. The IRS taxes Social Security benefits on incomes of $25,000 or more if you're an individual, $32,000 for couples, and 13 states also impose taxes.

Related: No Pension. No 401(k). How to Get by on Social Security

This savings adage holds that if you withdraw 4% of your savings in your first year of retirement and then do the same every year, adjusting for inflation, you will be able to draw down your investments without running out. But financial planners argue that this tactic, which first emerged in the late 1990s, doesn't work in today's markets. "Bond interest rates have been much lower, and there have been some major fluctuations in the market since the turn of the century," Carlos Diaz, Jr. writes in Kiplinger. "The first five years of retirement are the riskiest, which means that poor investment returns can put your retirement plan in danger." Be flexible with your withdrawals and aim for no more than 3%, Diaz recommends.

You may be retired, but if your partner is still working, they can still take advantage of deductions for contributing to a qualified traditional individual retirement account (IRA) up to $7,000 for persons over age 50. If your significant other didn't contribute to a work plan during the course of the year, no worries; the IRS says they can make an end-of-year contribution.

Debt-free retirement is the dream, but not a reality for everyone. Though you may be tempted to tap into your 401(k)s in order to pay off the mortgage, financial advisor Pedro Silva tells Realtor.com that may be a bad idea unless you have other sources of retirement income. "[You will] pay tax on every dollar coming from these accounts and use the net amount to pay the mortgage. This can be a significant percentage of someone's monthly cash flow."

One way to minimize the taxes your heirs may face when they inherit your estate is to give them annual financial gifts now. For 2019, you can give individuals up to $15,000 tax-free — and there's no limit on how many persons you can give to. Even nicer: Paying for someone else's medical expenses can also qualify as a gift, according to the experts at Motley Fool.

If you're 65 years old or older, the Internal Revenue Service (IRS) is giving you a bigger standard deduction and a higher filing threshold for 2019. Single adults and persons filing as head of the household can claim $1,600 more in income than was allowed in 2018. Married couples filing jointly get an extra $1,300 over last year's allowance. Disabled seniors may also qualify for a credit of up to $7,500 toward your tax liability.