Retirees headed into their golden years are often discouraged to hear that a large portion of their Social Security benefits are subject to tax. Even though the opportunity exists to have taxes withheld from Social Security benefits, most clients elect not to, and as a result some of them can find themselves owing Uncle Sam money at tax filing time.
If the total of your taxable pensions, wages, interest, dividends, and other taxable income, plus any tax-exempt interest income, plus half of your Social Security benefits, is more than a base amount, some of your benefits will be taxable.
As always, a challenging tax situation presents us with an opportunity to plan effectively and maximize deductions so that we can help our clients pay the minimum tax.
A tax preparer who works effectively with clients in their retirement years will review all income streams and potential deductions to minimize the taxability of Social Security benefits, and prepare clients for when Uncle Sam asks for a piece of their benefits.
read the entire article in the June/July South Coast Prime Times