merica's senior citizens have for years enjoyed some of the most favorable tax rules that the tax code allows.

The Taxpayer Relief Act of 1997 attempted to restore some balance to the system by adding benefits for younger taxpayers, such as educational IRAs, per-child tax credits, college tuition tax credits, and the elimination of the over-55 age requirement for excluding capital gains on the sale of your home.

However, substantial tax breaks still benefit the elderly and here's how - if you qualify - you can take advantage of those breaks.

The first of these breaks is the extra standard deduction for those 65 or older. On your tax return, you're allowed an additional standard deduction of $800 each for you and your spouse aged 65 or over. If you're filing a "single" return, you get an additional standard deduction of $1,000. In the 28 percent bracket, this can decrease your tax or increase your refund by as much as $280 to $448.

Before Jan. 1, 1984, Social Security benefits weren't taxable. They were considered a partial repayment of the after-tax contributions you made into the fund as well as a welfare or annuity payment from the government. Since 1984, however, up to half of your Social Security benefits have been subject to tax if your income was over a certain amount. Of course, that also means that half wasn't taxed.

In 1994, Congress shaved the benefit a little further with the Omnibus Reconciliation Act of 1993, which made as much as 85 percent of your Social Security benefits subject to tax, again depending on your income.

For example, if you're married and your total gross income, including half of your Social Security benefits, is $32,000 or less ($25,000 if you're single) you will pay zero tax on all of your Social Security benefits. Senior taxpayers who are not covered by Social Security and who spend their retirement years living off past savings and investments are eligible for a special tax credit intended to compensate for tax exclusions offered to recipients of Social Security benefits.

Another attempt to level the playing field has been the elimination under the Taxpayer Relief Act of the requirement that you or your spouse be at least 55 to claim the $125,000 capital gain exclusion on the sale of your principal home. Under the new law, age is not a factor. This new provision requires that you use the house as your principal residence for two out of the past five years prior to the sale.

Under the previous law, you either qualified for the $125,000 exclusion or were forced to reinvest all of the proceeds of the sale of your old home into a new principal residence to avoid current taxation. Now, you can sell your house and either rent or move into a smaller residence without having to pay any federal tax on up to $500,000 in profits (half that if you're single).

You don't have to be elderly to qualify, but the focus of the new law is clearly aimed at those who have some gray in their hair and substantial gains accumulated in the real estate price inflation of the '70s and '80s.

The tax code also aids the elderly by providing a tax deduction for long-term care insurance premiums. These premiums count toward itemized medical expenses and, to the extent that such expenses exceed 7.5 percent of your adjusted gross income, a tax deduction is available. There is a cap on the amount of premiums that can be applied to the medical expense deduction. The limit varies by age as follows:

Age maximum deduction

Under 40 - $200
From 40 to 49 - $300
From 50 to 59 - $750
From 60 to 69 - $2,000
Over 70 - $2,500

These dollar limits are indexed for the medical care component of the Consumer Price Index. Moreover, long-term care insurance premiums will now qualify for the self-employed health insurance deduction.

The tax benefits accorded to the elderly have been earned over a lifetime, of course, and few would argue with the good intentions they represent. From the perspective of those who don't qualify, however, it may appear that the IRS has found a way to tax youth itself. A little tax relief may seem cold comfort, but we all hope, sooner or later, to be among the elderly and enjoy such benefits.