You’re in your golden years, you’ve worked hard and you’re close to retirement or have already retired. Making a plan and taking some simple steps now will help to reduce your tax liability so you can enjoy your retirement and pay Uncle Sam as little as possible.
- Create a retirement budget plan factoring your income sources such as Social Security, pensions, property rentals, taxable brokerage accounts, tax-free Roth accounts, saving accounts, bonds and examine areas where you can reduce your monthly expenses as much as possible. Doing so will help you live within your income and take less withdrawals from your retirement savings.
- Understand your tax bracket threshold for your filing status and what are the bracket’s cutoff points. Try to stay in the lower tax brackets where the percentage is lower.
- Prioritize your retirement withdrawals. If you have both a Roth IRA/Roth 401K and a traditional IRA, consider taking withdrawals from the tax exempt Roth accounts first if you’re 59-1/2. Consult with your tax advisor to verify any other rules which may apply. After you reach the age of 70 ½, you must take minimum distributions from your IRA or pay a penalty.
- Understand that not all income is taxed the same such as social security income, capital gains income, gain on the sale of your home, and income from rental property.
Every situation is unique, that’s why it’s important to work with your tax accountant to devise a strategy now to make sure you don’t pay Uncle Sam more than you have to when you are retired.
At Account On Us, you can rest assured that you are dealing with a tax preparer that is highly trusted and respected in the community. We are here to serve, guide and direct you. If you’re looking for the best in tax preparation and tax planning, call us at 407.892.1066!