If anyone needs a little extra tax know how, it’s retired senior citizens, more and more of whom are just trying to make ends meet.

Many retirees may think they can forgo those annoying 1040 forms now that they’re no longer earning a regular paycheck, for instance.

Not true, says Certified Financial Planner Michael A. Darany, an enrolled IRS agent whose practice is based in Tustin, Calif., just down the road from the local tax courts—an area he calls “accountants row.”

Darany observes that his own dad, who is a “spry” 86 and lives independently in the countryside with his rat terrier, Tippy, had to be egged on before he would to file his taxes last year and thus receive a check under the federal stimulus plan.

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“That’s a beautiful $300 for single filers and $600 for a couple, if no one’s working,” says Darany. It may mean no more than a monthly dinner out, but clearly “that is some good walking around money you don’t want to leave on the table,” he says.

The IRS also points out that seniors who do not itemize their deductions—in part because many are now free of debt on their home—can get a higher standard deduction amount if they or their spouse are 65 years or older. Seniors also need to take care when calculating the taxable amount of their Social Security check, according to the IRS, which offers a short primer on its Web site.

For wealthy seniors in need of tax relief, oil and gas investments offer many opportunities, Darany says. In fact, he says, it's possible for someone who is in the 30% tax bracket and who invests $250,000 as a so-called general partner, to offset the entire federal and state income tax on that investment. Someone who is 70 and a half and needs to take a lump sum, taxable distribution from a 401(k) can similarly offset their 401(k) taxes by investing the proceeds this way.

Not only can you deduct a considerable amount of your initial investment on your present year’s tax bill, but when the investment income begins to flow, it too is sheltered somewhat for at least 15% to 25% of the income, Darany says.

One more tip for seniors that parents and children might want to discuss: Consider opening a health savings account into which seniors can deposit money tax free, and tap tax free, for out-of-pocket medical expenses.

Again, as in Darany’s case, it sometimes falls to the children to keep Mom and Dad up to speed on taxes and investments, since as people age, some will begin to lose interest in finances and may need a bit of urging and direction.

Even those with Medicare and Medicare supplemental plans will have something to pay out of pocket, such as their annual deductible, according to Darany. He observes that if you don’t have a health savings account, you will have to amass out-of-pocket medical expenses equaling 7.5% of your adjusted gross income before you are eligible to receive even “a dime” of tax relief.

The bottom line: seniors can go from no medical deductions whatsoever to thousands of dollars of offsets, resulting in a great deal of savings, says Darany. Your insurance agent can explain the value of a health savings account, which can be opened at your local bank branch. “Financial planners should have this down cold as well,” Darany says.

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