Retirement income can be subject to taxes depending on the specific type of retirement account or benefit you receive and your tax bracket. Here are a few examples of common types of retirement income and how they may be taxed:
1. Social Security benefits: Social Security benefits are generally taxable if you have other substantial income in addition to your benefits. The amount of tax you pay on your benefits depends on your taxable income and tax filing status.
2. Traditional Individual Retirement Account (IRA) and 401(k) withdrawals: Withdrawals from traditional IRAs and 401(k)s are generally taxed as ordinary income at your current tax rate.
3. Roth IRA withdrawals: Withdrawals from Roth IRAs are generally tax-free if you are over the age of 59 1/2 and you have held the account for at least five years.
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The previous post Opt Out of Underpayment Penalty in TurboTax covered how TurboTax calculates an underpayment penalty that the IRS may not actually assess. You have to take an extra step to decline th...
If you want to lower your taxes, it’s important to have more than a vague understanding of how our tax ... Read more...
April 15th, that dreadful tax day is fast approaching. But it doesn’t have to be stressful. In previous years, I’d be going over our accounts and entering the numbers into H&R Block by...
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The tax-now Roth IRA will increase in popularity over the coming years. Let me explain why. When Congress passed the Tax Cut and Jobs Act (TJCA) of 2017, it inaugurated an eight-year period of the low...
You, on the other hand, probably have to pay Social Security taxes all year long....
I funded my Roth IRA for 2022 back in January 2022. Can I take that money out? And then add it to my traditional IRA? How does Vanguard know that I'm taking the money out for 2022 so that I can put th...
When you do your taxes in tax software, the software sometimes calculates an underpayment penalty. It thinks you owe the penalty when your tax withholding plus any estimated tax payments were below a ...
[Editor's Note: Looking to change your life by creating multiple income streams? Looking for inspiration from other docs who have become successful entrepreneurs? Then, mark your calendar for the onli...
It was suggested to me that I look into becoming a real estate professional for tax purposes. From what I've read, this is a special designation on tax returns if the tax payer performs more than 750 ...
I am considering semi-retiring this year. I am 62. I own a business and plan to continue working part time. My business is a LLC (files taxes as an S Corp) and I pay myself through the company. Taxes ...
Here’s how retirees can benefit from changes in required minimum distributions (RMDs), qualified longevity annuities and IRA catch-up contributions....
With tax season in high gear, you might not have eyes towards 2023 taxes. But there's a key deadline for the self-employed or small business owners, which can ease next April's worries....
Doing taxes in 2023 feels a lot like it did before the pandemic. Still, there are some meaningful changes to keep in mind....
Thanks to the SECURE 2.0 Act, you’ll soon be able to roll over funds from your 529 into a Roth IRA, as long as certain conditions are met. Here’s what you need to know about the new change...
This year was the first year where we exceeded the income ceiling for being able to contribute to a Roth IRA. Of course, I didn't know that that would be the case until well after I'd already made my ...
Taxes are most likely our largest ongoing liability. Therefore, we should understand the latest tax brackets for 2023. I go through this exercise every year. Based on a thorough understanding of the 2...
The previous post State Tax-Exempt Treasury Interest from Mutual Funds and ETFs covered how to get state income tax exemption on the portion of mutual fund and ETF dividends that are attributed to int...
Back in 2009, the Tax-Free Savings Account (TFSA) was introduced to Canadians. Since then, TFSAs have grown in popularity, and as a result, there have been many great debates over the Registered Retir...
During tax season, Canadians are constantly reminded to contribute to their RRSPs in order to receive a tax deduction. But how exactly does an RRSP tax deduction work, and how much do you need to cont...
When you earn interest from U.S. Treasuries in a taxable account, the interest is exempt from state and local taxes. How the interest is reported on tax forms depends on whether you hold Treasuries di...
5 years from retirement; are there any towns with a vibrant nightlife, moderately priced housing market (and land?) that is also tax friendly for a military retirement? I currently live in Visalia, CA...
It can be a great problem to have, except for the tax implications. Here are some common ways to keep tax liability in check....
By Dr. James M. Dahle, WCI Founder I've written elsewhere about all of the possible ways to deal with wealth inequality and its problems. I put a wealth tax pretty far down that list. Nevertheless, it...
When you do a direct rollover from the pre-tax account in a workplace retirement plan to a Traditional IRA, you’ll get a 1099-R form after the end of the year that shows the rollover isn’t...
The choice between pre-tax and Roth 401(k) contributions may be trickier than you expect, financial experts say. Here's what to know....
The amount of information on your Form W-2 can be overwhelming. Here's what you need to know for the current tax season....
Your tax burden in retirement can vary depending on where you live. Be sure to plan ahead for income on your retirement income....
(edit: should be "IRA" in title) Just want to check before I do something potentially stupid. I have my regular account (account1) and IRA (account2) which has an annual contribution limit and tax ben...
Making annual exclusion gifts allows you to move money to family members and friends so that it is out of your taxable estate with no estate or gift tax consequences....
There are many articles claiming to have the Best Roth Conversion Tax Strategy. In the end it all comes down to individual situations and where they are...
I am apparently not super clear on what I'm asking, so I've rewritten this post. Of the amount earned from investment funds, how many percent of this cover your annual expenses? If this is below 100%,...
When you invest and where matters for taxes. But a few rules of thumb can stave off some nasty surprises, our columnist says....
Hi, This year, i want to fund my tax-deferred retirement accounts IRA, 401k, HSA with my brokerage account sales? My taxable income being in the 0% capital gain bracket (thanks to the retirement contr...
All it takes is protecting what you save, having an income plan, knowing your health care options, reducing your tax burden and making an estate plan....
Dec. 7, 2022 — For the people who see red when they think about paying taxes, the good news is that there are plenty of tax friendly states to retire in. There are enough choices that they can p...
You may have dreamed of a tax-free retirement, but if you live in one of the states that tax social security, your benefits could take a hit....
Some states have pension exclusions with limitations based on age and/or income. But these states don't tax pension income at all, no matter how old you are or how much money you have....
A warning to high earners and super savers: That massive 401(k) or traditional IRA that you worked so hard to build may become a big problem in retirement, resulting in huge tax bills and Medicare sur...
It often makes financial sense to relocate in retirement, especially if your state has high taxes. But what are the best states to retire in 2022?...
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Tax-loss harvesting is ofen considered an "advanced" investment technique, but it's not as complicated as it seems. It's worth understanding....
The rich do take advantage of their knowledge of the tax code to pay less in taxes. But six strategies higher earners use are available to everyone....