I was recently asked to write an article for Intuit's Tax Pro Center on Year-end Tax Strategies for Retirees that was published yesterday. Although the intended audience was tax preparers, the strategies I discuss are relevant to all retirees, so you may wish to check it out. In the article I first discuss the best strategies to reduce taxes in the current year, such as:
- Tax Loss Harvesting
- Qualified Charitable Distributions (QCD)
- 529 College Savings Plan Contributions
- Retirement Plan Contributions
However, I then point out that in a tax system such as ours, one of the best ways to reduce your overall tax liability (not just this year, but also considering future years), is to smooth your income from year to year. This means that sometimes it is actually to your advantage to accelerate income into years that are lower than "normal" such as the window that is often created when you stop working, but have deferred Social Security and have not yet begun distributions from your retirement plan. In these cases, Roth Conversions and Capital Gain Harvesting can be great tools that allow you to recognize and pay tax this year at a lower rate than if you were to wait until future years.
Read the Full Article to Learn More: Year-End Tax Tips for Your Clients Who Are Retired
Posted: December 2016