|
  |
|
|
Some Tax Saving Strategies for the Retired
By Darrin Mish
Many people spend a large percentage of their time searching for strategies and trends in the market that will help them earn more income at a faster way. Because of the focus on this task, people fail to remember that a higher income will also mean bigger tax liability. Thus, it becomes imperative for you to look for ways in saving from your taxes, and you will see the significance of this effort during your retirement. Social Security is perhaps the most relevant example of this situation. During all those years of work prior to retirement, you're paying taxes into social security. Unfortunately, if you don't handle things correctly, once you retire and start receiving your social security benefits, there is a probability that you will be taxed on that money as well. In fact, if you have at least $34,000 as yearly income from social security benefits, 85% of this income will be taxable. Obviously this isn't an ideal situation for retirees relying on a fixed income, who thought they were done dealing with IRS issues when they stopped working. A simple tip is to put your money in tax shields that can protect them from future taxes. For instance, converting your traditional IRA to a Roth IRA is a better choice. With a Roth IRA, you can withdraw money from this account, tax-free. Getting a Roth IRA will need you to fulfill certain requirements but if you do meet them, you can definitely save some money. There are also setbacks in converting your money. You will now be obligated to pay taxes on the entire amount that gets converted. The amount that you have to pay could even be enormous, depending on your specific case. However, for many people, it is still a better option to switch over to a Roth IRA. To lessen the incidence of this problem, you may want to lessen your taxable income. This can be effectively done by selling off stocks that are in a taxable account and have also the least appreciation. You will have a reduced taxable income as a result of reduced capital gains. You'll also have better chances of qualifying for the 0% tax bracket if you were able to subside by living on principal. You just have to be careful with this so as to avoid potential IRS problems. Another method is to simply spend your money relatively soon after you earn it. You might want to spend the earnings in your money market account or CDs in the same year that you have earned that interest. You'll be obligated to pay taxes on that money whether or not you spend it, so do not forget that you have the choice of spending it. To illustrate, it is better to spend the 5% earnings (or $5,000) on a $100,000 principal rather than putting it up for IRA distribution. Doing the latter will only give your more taxable income. There are a number of simple money saving tips that retirees can implement at different times in their lives. Most are easy tips and will only have a minor impact on a person's life. However, the tax savings and extra money that isn't being given to the IRS will definitely have positive effects on quality of life during the retirement years. |
|
 |
|
PLEASE VISIT THE CONTRIBUTOR'S WEBSITE
No reactions yet.
Please login or sign up to rate this intel.
Please login or sign up to add a comment.
The copyright for this content entitled "Some Tax Saving Strategies for the Retired" has been specified by the contributor as:
All Rights Reserved
This content may not be copied, distributed or adapted by anyone under any circumstances.
|
|
May, 2012
2008
January, February, March, April, May, June, July, August, September, October, November, December
2009
January, February, March, April, May, June, July, August, September, October, November, December
2010
January, February, March, April, May, June, July, August, September, October, November, December
2011
January, February, March, April, May, June, July, August, September, October, November, December
2012
January, February, March, April, May
|
|
Not a member yet?
Qondio is a powerful network for making it online. If you have a website to
promote, we can help.
Sign up and get in on the action.
|
|
Welcome to Qondio! Discover the awesome power this network can deliver by going to our About page. Or you could skip straight to the Sign Up form.
|
|
