Freedomtax Accounting’s staff have been providing honest Kissimmee tax services in Orlando, FL for 15 years, and we know that reducing taxes in your retirement phase is extremely important because you are not employed anymore. However, before you go onto this, you should know how taxes are incurred on your income.
If you are a retiree, you will be receiving income from different sources such as Social Security, pensions, IRAs, annuities and other similar programs. For all these sources, income taxes are calculated in a different manner. Understand this process first, and then choose a suitable strategy to reduce income taxes. Seek help from professional Kissimmee tax service in Orlando, FL if you are still unsure.
Orlando Accountant Tip 1 – Social Security Benefits
Income received from social security may be tax free to a certain extent. In some cases, it is completely tax free as well if your total income meets a certain criteria. During your Kissimmee tax preparation in Orlando, FL,, you should know how much of your social security benefits will be applicable to taxes.
Orlando Accountant Tip 2 – Pensions
Taxes are incurred on your pension or on at least a certain amount of it. If you did not pay income taxes on your contribution, then you will have to pay them on your distribution. However, if you did pay some income taxes at that time, then you will have to pay lesser amounts in income taxes now.
Orlando Accountant Tip 3 – 401(k) Distributions
Income from this plan is completely taxable since no income taxes are deducted when contributions are made.
Orlando Accountant Tip 4 – Strategies for Minimizing Income Tax Bills
As a retiree, you can enjoy more control over your taxes because you decide the amount which you withdraw from retirement plans. You can reduce your taxes by any of the following methods.
- Take advantage of personal exemptions and deductions, which can be standard or itemized. These deductions and exemptions are a representation of your tax free income. You can coordinate these distributions with your mortgage payments, real estate taxes or medical bills.
- If you have deductions in excess, then try to accelerate your distributions. In the case that your standard deduction exceeds your income, then you can withdraw more funds than what you actually need. You can avoid taxes in the future with this strategy.
- Avail Credit for the Elderly, which is applicable to those individuals who are 65 years of age or greater. However, you will need to prepare your application carefully. A tax accountant can help you in this regard.
- You can increase your tax free income. These include selling your home or receiving interest from municipal bonds.
- Delay your distributions until you actually need the money. This will allow you to receive more income in future years.
If you need the services in a Kissimmee tax accountant in Orlando, FL, please contact us at 407-344-1012. At Freedomtax Accounting we specialize in business accounting, personal tax services, income tax preparation, IRS audit defense, tax problems, tax debt relief, back taxes, tax planning, incorporations, and non-profit 501 (C3) tax exempt status applications. Our main office is in Kissimmee, FL, but our services can be provided nationwide. We have helped Individuals from Central Florida, Orlando, Poinciana, St. Cloud, and Hunters Creek, FL for 15 years.