You may leave behind a lot of things when you retire, but your tax burden isn\u2019t one of them. In fact, without proper income tax reduction strategies, they can potentially be an even bigger burden in retirement. As tax specialists, we know the keys to avoiding that risk are awareness and planning.<\/p>\n
It\u2019s important to understand how different sources of retirement income are taxed. If your only source of retirement income is Social Security, you probably won\u2019t pay any taxes. That\u2019s because Social Security income \u2013 by itself \u2013 is tax-exempt. Unfortunately, if you\u2019re like most people, Social Security won\u2019t be enough. You\u2019ll need other sources of income, which means a portion of your Social Security income probably will be taxed. As for how much, it varies, but it can run as high as 85%.<\/p>\n
For example, you\u2019ll probably pay that 85% if you get large monthly income payments from a pension. With the pension itself, most are funded with pre-tax income. If that\u2019s the case, it means all your pension income is taxable each year. However, if a portion of your pension was funded with after-tax dollars, then only a portion of the income will be taxed.<\/p>\n
For investment income from interest, dividends, or capital gains, naturally, you\u2019ll have to continue paying taxes on that just like you did before you retired. If you have a strategy that involves systematically selling investment shares to generate retirement income, in that case, each sale will also generate a long- or short-term capital gain or loss, which you would need to report on your tax return. In most cases, and for many reasons, this is a bad strategy.<\/p>\n
The main source of retirement income for most people, besides Social Security, is the money they have in their 401(k)s and IRAs. These accounts are tax-deferred until you start taking withdrawals, which the IRS forces you to do starting at age 73 to satisfy your required minimum distributions, or RMDs. Your RMDs are unavoidable even if you have plenty of income from other sources. Through our retirement tax planning services, we can help you implement tax saving and reduction strategies that can help minimize the amount of taxes you pay overall, including when it comes time to start taking your RMDs.[\/vc_column_text][\/vc_column][\/vc_row]\n","protected":false},"excerpt":{"rendered":"
[vc_row][vc_column][vc_column_text] Tax Planning for Income You may leave behind a lot of things when you retire, but your tax burden isn\u2019t one of them. In fact, without proper income tax […]<\/p>\n","protected":false},"author":15,"featured_media":2030,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_tribe_ticket_capacity":"0","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":""},"yoast_head":"\n