Watch your withholding.
The making work pay credit has expired, therefore, you should see your withholding from your pension increase back to it's pre-2009 amount.
Remember your RMD.
Every year, you are required minimum distribution on your IRA if you are over the age of 70 ½. See you bank or broker for details. If you forget to take this distribution, you will be penalized 50% of what your distribution should have been.
Don’t get “double taxed”.
If you receive social security, it is considered tax free unless you have income totaling over $25,000, or $32,000 if you are married filing joint (Note: these figures include half of your social security income). This is known as your base amount. If your base amount is between $25,000 and $34,000 ($32,000 and $44,000 if Married Filing Joint) up to 50% of your social security will be taxable. If your base amount is higher than $34,000 ($44,000 if married filing joint) up to 85% is taxable. So, before you decide to take extra money out from your IRA, you should contact one of our tax professionals for a free consultation. Click here to setup a free consultation.
Note: If you are married filing separate, your base amount is $0. Also, you could pay up to 85% on your social security.
Sell stock and pay NO TAX.
If you are in the 10% or 15% bracket, you can sell stock and pay no capital gains tax. You must have held the stock for more than a year to qualify. However, this will raise your other taxable income, which may raise the tax rate on your other income, and raise your taxability on your social security.
Don’t forget to take your sales tax deduction.
Most retirees do not need state income tax withheld on their pension and other income. Therefore, it would be advantageous for most seniors to take the sales tax deduction on the Schedule A. Don’t forget to add in big-ticket items such as automobiles, boats, and airplanes. These can add to your sales tax deduction.
To use the IRS sales tax deduction calculator, Click Here.