If you have saved your whole life to build your retirement nest egg, the last thing you need is to hand over that hard-earned money in taxes.
Withdrawing too much of your retirement funds in a single year, living in a ‘high-tax’ area or not using all the available tax-advantaged investment options can lead to a big gaping hole in your retirement nest. You may be wondering how to go about reducing taxes in retirement. Fortunately, we at Tax Help MD have listed a few ways to reduce tax liabilities below!
Withdraw Less, Pay Less
Simply put, the less you withdraw from your retirement account, the less you pay in taxes. One of the ways to reduce tax liabilities is to pay off your mortgage before you retire, so as to completely eliminate any chance of sizable monthly withdrawals. Reducing taxes in retirement can also be done by maintaining and insuring one vehicle and downsizing your home.
Moving Across a State Border
It is not as extreme as it sounds, but moving across a state border can have a significant impact on your taxes. If you live near a state border, it is worth considering for reducing taxes in retirement. An example is of Oregon’s state tax which is 9.9%, as compared to Washington which doesn’t have a state tax at all.
Investing and Saving in a Roth IRA
One of the most effective ways to reduce tax liabilities is investing and saving your money. Roth contributions are non- tax deductible and all qualifying withdrawals in retirement are 100% tax-free. Furthermore, Roth IRA allows you to lock in your current tax rates.
Tax Help MD
Getting worried about reducing taxes in retirement and can’t decide how to do it? Don’t fret! Our experts at Tax Help MD are here to help you save your hard-earned money with our ways to reduce tax liabilities. Call us now on 888-632-4506.