Often, the choices you make when you’re younger can have a significant impact on your later life, especially when it comes to financial planning and retirement. Even after your career years end, you still have tax matters to deal with. Tax planning when you’re retired works a little differently than it did when you were younger, however. Here are a few strategies for saving as much money and stress as possible.

How to Manage Taxes After Retirement

1. Understand Income Limits

When you retire, you’re likely to start receiving Social Security. Whatever you’re bringing in, combined with the other income you’re getting from any freelance work or investments you have going, may be taxable. However, you can avoid paying taxes on it by remaining below the taxable threshold. 

Your income is taxable when half of the income you bring in between Social Security and supplementary sources totals $32,000 on a joint return or $25,000 on a single return. Limiting your income is a smart form of tax planning that can help you save.

2. Make Required Minimum Distributions

If you have a retirement plan outside of the Roth IRA options, you’ll have the obligation to make required minimum distributions after you turn 70 and a half. The first must be made by April 1, while those in the years after must be made by the end of the year. The best way to avoid penalties for nonpayment or underpayment is to use the worksheets on the IRS’s website to determine how much you are required to withdraw. 

3. Track Medical Expenses

Tax planning isn’t just about tracking your income. It’s also about tracking your costs. Retirees typically incur more medical expenses than other people, and not everything is covered by Medicare. When these expenses exceed 10% of your taxable income, you can deduct them. Since this is an itemized deduction, it only makes sense to take it if the deduction is higher than the standard deduction. 

When you need help with tax planning for retirement, contact Tudor Wilson & Associates CPAs in Honolulu, HI. Whether you need an accountant for wealth management or an expert to help you get the biggest tax refund possible, they can help. Visit their website to learn more about their services, or call (808) 592-2000 to speak with a representative.