Tax Tips for Those Nearing Retirement

Posted on March 22, 2016


Follow These Tax Tips to Minimize Payments and Simplify Filing

tax tipsAs you get ready to transition into retirement, you may have questions about how to switch to a new reality where your tax filing looks significantly different than it has in the past, while you were working full-time and planning for retirement. You’re now in the phase where you’ll be drawing your income from your retirement wealth, so there are a few tax tips you should consider as you move closer to retirement.

Your mind may be on a whole host of hobbies, travels and long-planned projects that await you in retirement. However, don’t forget to schedule in some time for managing your wealth now that you are retired. Here are tax tips to get you started:

  1. Keep an eye on tax law. Of course, this could become a full-time job. However, if you’re using an off-the-shelf tax program at home to file your return, you may miss out on some of the newest tax laws that could benefit you. For instance, you could miss out on a catch-up contribution provision that allows you to bump up your contributions to retirement savings. This is the time where it really pays to have an accountant handling your return because they are always keeping an eye on the tax law.
  2. Determine your status change. Depending on how you are designated for tax purposes, you could take advantage of certain credits or deductions, but keep in mind that a “retiree” is a different designation than a “senior.” Talk with your accountant about the benefits of each.
  3. Do a little research. There are many resources provided by the IRS to help you navigate your tax return once you enter retirement. There are opportunities online to ask questions about pensions, annuity income and military benefits. Also, the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly provides free tax help for taxpayers over the age of 60. You may also want to check out these resources simply to determine which questions you’ll want to ask your accountant when you meet about your tax return or to plan for retirement.
  4. Look at your accountant in a new light. If you’ve been with the same accountant for decades or if you are considering hiring an accountant, talk with them about your retirement situation. You will want to know whether they have worked with other clients with similar circumstances and if they are well-versed in retirement taxes. You are entering a new phase of life, so make sure that you have the best fit in your accountant for retirement.
  5. Protect yourself. The IRS contacts you via snail mail, not with a phone call, so be wary of anyone that calls you from the IRS. It is likely a scam. In general, don’t give out your Social Security Number or any other identifying information that may put your retirement wealth at risk. You’ve spent your entire career preparing for this moment, so talk with your accountant about the steps you should take to ensure that your wealth is protected.

Bert Doerhoff, CPA and the team at AccuBiz are experienced at working with clients as they transition to retirement. If you have questions about filing taxes as you head into retirement or you would like your tax return completed by an experienced professional, give AccuBiz a call for an appointment.

Posted in: IRS