Taxes

[getchfw]

Newly retired I get SS, pension, and did work as a perim though April 1. Last year I had to pay close to 4k in taxes. What should I expect this year.

[SusanR2]

Firstly, congratulations on your retirement!

It sounds like your situation will be quite different this year in that last year, I assume, you were working all year and having taxes withheld from your paychecks, etc.  This year, you are on SS and receiving a pension plus working part of the year.  I don't know how much you are receiving from SS and/or pension and whether you have any tax withheld from those payments.  I also have no way of knowing how much, if any, of your SS will be taxable, whether you file jointly and that person's income, etc.  Wish I could be more helpful! 

My suggestion is to use our calculator to try to get an idea of what your tax liability might be for this year and then you can determine whether you want to have more tax withheld from your SS and pension payments or if you are comfortable with the expected outcome.  Many people prefer to pay a little each month rather than make a large payment at the end of the year.  Its a completely personal decision.  First thing though is to do what you are doing and try to determine what you will owe. 

Here's the link to our Tax Caster calculator where you can enter all of your info and get a good idea of what to expect:  

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

Hope this helps you out!

Susan

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[Terri Lynn]

Hello and thank you for joining us today, getchfw!

The outcome for your 2024 tax return will depend on several factors, including, filing status, age, and overall total taxable income, including,  retirement and pension income, interest, dividends, capital gains, etc.   Some of the things to consider when trying to anticipate your future tax situation are:

1.  Social Security benefits are your only income, you typically don't need to file a federal tax return.
2. If you are unmarried and 65 or older, you typically need to file a tax return if you have more than $16.550, in additional non-exempt income along with your Social Security benefits. or if you are married, 65 or older, and file jointly with a spouse who is also 65 or older, you typically need to file if your combined non-exempt income exceeds $33,850,($32,300, if only one spouse is over 65).
3. If half your Social Security benefits plus your adjusted gross income and tax-exempt interest/dividends exceeds $25,000 (single) or $32,000 (married filing jointly), part of your Social Security benefits will be taxable and you will need to file a return.

To avoid paying taxes on your Social Security, keep your gross income below the threshold that requires you to file a tax return. The threshold varies depending on your filing status. One way to reduce your gross income is to withdraw less from retirement accounts. Prioritize withdrawing from tax-free retirement accounts first.

Some additional strategies to reduce taxable income and minimize taxes on Social Security, includ tax-loss harvesting, investing in growth stocks, and donating to charity via your IRA. Tax-loss harvesting involves selling investments at a loss to lower overall taxable income, as it only works with taxable investments. Investing in growth stocks can help avoid dividends that increase taxable income, thus giving greater control over taxable income. Donating directly from an IRA to a charitable organization can also help reduce taxes, particularly for those needing to take required minimum distributions.

For additional information, tips and tools, see:

• Tax Tips for Retirement 
• The Golden Years 
• Saving for Retirement 
• Lifetime Income Calculator 
• Tax Estimator 

Please feel free to reach backout with any additional questions or concerns you might have!

Have an amazing rest of your day!

Terri Lynn, EA

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