5 Tax Tips For Those Living On A Low Income

We get it. Taxes can be confusing. 

That’s why AARP Foundation put together this list of common tax credits and deductions you may be entitled to. Whether you’re doing your tax return yourself or having someone prepare it for you, it’s a good idea to have this list handy so you don’t miss out on getting money back.

Of course, we can’t guarantee you money back. But we can give you the information you need to increase your chances of receiving a refund.

We’ve been helping people secure the essentials for more than 60 years, and we know that tax refunds can be a lifesaver, helping you pay for everyday expenses, like housing, healthcare, and groceries. Many people even use this windfall to start or add to a retirement fund.  

If you think you haven’t earned enough to make filing taxes worth it, think again. You still may be entitled to a refund because of available tax credits and programs. Plus, AARP Foundation Tax-Aide offers free tax prep help so filing is far less daunting.

Ready? Keep scrolling for our top tax tips.

1. Earned income tax credit (EITC)

This tax credit is reason number one why you should file a return. 

The EITC is a refundable tax break for people who have worked in the past year and earned low to moderate income. If you qualify, the tax credit lowers the amount of taxes you are required to pay. 

Because claiming the EITC reduces the amount of tax you owe, you increase your chances of getting a refund. If you’ve never had to pay taxes, you could still get money back as long as you meet the other qualifications. Social Security benefits, pensions, and welfare do not count as income for this tax credit. 

In 2023, if you were single with no kids and earned $17,640 or married with no kids and earned $24,210 you could get up to $600 back. Because of the money you could get back, be sure to mention the EITC to your tax preparer.

2. Property tax relief programs

Every state, including the District of Columbia, offers some sort of property tax relief program, where homeowners receive money back on their property taxes in the form of tax credits and refunds. Some states have programs for renters as well.

Assistance is typically given to older adults, people earning a limited income, veterans, or people with disabilities. AARP Foundation estimates more than 9.3 million older adults living on a limited income may be eligible for money-saving property tax relief — but only 8 percent apply to their state’s relief programs.

To apply, your state may require you to fill out an application, and the deadline may or may not be the same as the April 15 deadline for filing your return. Learn more about property tax relief and find assistance and programs where you live here.

3. Deduction for self-employment expenses

Are you working a side hustle? Are you earning income through self-employment as a freelancer or contract worker? You may be eligible to deduct expenses related to your work, lowering your amount of taxable income. 

As a self-employed worker, you can deduct the cost for more than a dozen kinds of expenses, including your health and dental insurance premiums, advertising expenses, office supplies, and internet and phone bills. Some of the deductions — like calculating your mileage rate when you use your car for business — can be a bit tricky to track, but once you get the hang of it, you will feel prepared come tax time. Bottom line, it’s important to follow the IRS guidelines and save all of the receipts for your expenses in case of an audit.

4. Credit for the elderly and disabled

If you are 65+ or retired due to a medical condition, you could get a big tax break.

The Credit for the Elderly and Disabled ranges from $3,750 to $7,500, depending on your income and filing status. If you owe $4,000 in taxes before the credit and you get a $3,750 credit, your tax bill will be just $250.

This tax credit is nonrefundable, meaning if the credit you get is more than the tax you owe, you won’t get a check for the difference. On the other hand, you won’t owe any taxes, which is nice. Even if you don’t earn enough to file taxes, this credit makes it worth filing a return. 

5. Student loan interest deduction

Student loan interest is the interest you paid during the year on a qualified student loan. Your lender should send you Form 1098-E, which shows the student loan interest you paid during the year, so you can claim this deduction on your return.

The student loan interest deduction lets borrowers write off up to $2,500 from their taxable income. In other words, it  lowers the amount of income you’re being taxed on so you  may owe less tax. There are also programs that may help you lower your monthly student loan payments. Learn more about them here. 

AARP Foundation Tax-Aide is here to help!

We hope this information will help you take advantage of all the credits and deductions you deserve. And if you’re still feeling confused, you’ll be glad to know Tax-Aide offers free tax prep help around the country. Learn more here.

I cannot thank you enough for your tax service. It is such a relief to me knowing a ‘pro’ will do them for me.

– Tax-Aide participant