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Hello I’m Nick from Turbo Tax, with some helpful tax tips for retirees.
Now that you’re retired, the last thing on your mind is likely to be your federal
income tax. But there are still ways you can minimize the amount you owe each year.
It’s likely you receive monthly Social Security benefits, but did you know that it’s possible
for the IRS to tax some of those payments? This only happens if the other income you
receive is too high. Generally, if all your other income plus 50% of your social security
benefits exceed a certain threshold for your filing status, then you will end up paying
some tax on your benefits. If you do pay some income tax on those benefits,
there are other things you can do to limit the impact of those taxes.
One option is to make some tax-exempt investments to replace some of the taxable ones you own.
This way you reduce your overall tax and can possibly keep your Social Security benefits
in the lower tax brackets. An example of this type of investment is state and local municipal
bonds. The interest you earn on those bonds are exempt from federal tax, and in some cases
it may also be exempt from state income tax. One other way to reduce your tax liability
is by claiming a tax credit for the elderly and disabled, should you qualify for one.
As long as you’re at least 65 years old, file a joint return if married, and meet other
income requirements, it can be a valuable tax reduction tool.
For more tips and information that can help you get your taxes done smarter, visit TurboTax.com
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