Seniors & Retirees: A Quick Tax Checkup List
Retirement is supposed to simplify life—but taxes can get more complicated once you stop working. Social Security, pensions, IRA/401(k) withdrawals, and Medicare premiums all interact in ways that can increase your tax bill if you’re not planning.
Below are 7 tax items every senior and retiree should review each year—especially early in the year—so there are no surprises later.
1) Know what income is taxable (and what isn’t)
Many retirees assume their income is “already taxed” or “not taxable anymore.” In reality:
- Social Security may be taxable depending on your total income.
- Traditional IRA/401(k) withdrawals are generally taxable as ordinary income.
- Roth IRA withdrawals are usually tax-free if rules are met.
- Pensions and annuities may be partially or fully taxable.
- Interest/dividends and capital gains can change your bracket even if you don’t “feel” like you earned income.
Action step: Make a list of all retirement income sources and estimate what’s taxable.
2) Watch the “hidden tax” on Social Security
Social Security taxation is based on a formula that considers other income. When you add IRA withdrawals, dividends, or part-time work, it can push more of your Social Security into taxable territory.
Why it matters: Small income changes can create a larger-than-expected tax increase.
Action step: Before making a big withdrawal (or selling investments), run a quick tax projection.
New deductions (effective 2025–2028)
New “senior” deduction: If age 65+, an additional $6,000 per eligible person ($12,000 if both spouses qualify), phaseout starts at MAGI $75,000 (single) / $150,000 (MFJ).
3) Required Minimum Distributions (RMDs): don’t miss the rules
If you have traditional retirement accounts, you may be required to take RMDs once you reach the applicable age (and the rules differ depending on your age and account type).
Missing an RMD can trigger major penalties.
Action step: Confirm:
- Which accounts require RMDs
- Your required amount
- Your distribution schedule for the year
4) Medicare premiums (IRMAA): income can raise your monthly cost
Many retirees are surprised to learn that Medicare Part B and Part D premiums can increase when income crosses certain thresholds. This is called IRMAA (Income-Related Monthly Adjustment Amount).
Why it matters: A one-time event—like selling a property, large IRA withdrawal, or big capital gain—can increase Medicare premiums later.
Action step: If you’re considering a large taxable event, plan the timing and amounts carefully.
5) Check withholding and estimated taxes (retirees often underpay)
During working years, withholding happened automatically through payroll. In retirement, you’re often responsible for making sure enough taxes are paid throughout the year.
Common underpayment culprits:
- Taking IRA withdrawals without withholding
- Large year-end distributions
- Pension withholding set too low
- Investment income that isn’t withheld
Action step: Consider withholding from pension or Social Security or using IRA withholding on distributions to avoid quarterly estimates.
6) Charitable giving: consider the tax-smart method
If you’re age-eligible and charitably inclined, there are ways to give that may reduce your taxable income.
Also, note that many retirees don’t itemize because of the standard deduction, which changes whether donations provide a tax benefit.
Action step: Review your giving plan and see if a tax-smart strategy fits your situation.
7) Review credits and deductions retirees often miss
Some tax benefits may still apply in retirement depending on income and circumstances. Examples include:
- Medical expense deductions (when eligible)
- Credits for certain energy improvements
- State-specific deductions/credits
- Tax planning around capital gains and brackets
Action step: Keep a simple folder (paper or portal) for medical costs, tax documents, and major receipts.
The bottom line
Retirement taxes aren’t just “file and forget.” The best results come from planning before the money moves—not after.
If you’re retired (or retiring soon) and want to avoid surprises, we can run a quick review of your:
- Social Security tax exposure
- RMD requirements
- Withholding/estimated tax setup
- Medicare premium risk (IRMAA)
- Best timing for withdrawals
Schedule an appointment
If you’d like help reviewing your retirement tax plan, schedule here: https://redonicataxpros.com/schedule-appointment/
Or, if you prefer, you can upload documents securely through our client portal.
