New York - One of the biggest challenges of being retired is dealing with all the paperwork associated. Consider the following:
Paying estimated income taxes- Unless you worked for yourself, you will probably start the process of making estimated tax payments to the Federal and, if applicable, your state government, for income taxes. Payments are required on April 15, June 15, September 15 and January 15. Generally, you need to ensure that you prepay at least 90% of what you actually will owe in the year you are retired or 100% of the prior year's tax amount.
No FICA taxes - When you retire or reach the age of 65, Social Security taxes will no longer be withheld. If you get a pension - no FICA taxes will be owed since pensions are not considered income. No FICA taxes are owed on investment income either.
Higher standard deduction - If you or your spouse is over 65 -you automatically are eligible for a higher standard deduction.
Tax on pension income - Be careful if you move to a new state. Some states attempt to collect income taxes on pension money you earned within their borders, even if you no longer live there.
Mandatory withdrawals - When you reach 70 1/2 years, you will need to begin regular withdrawals from your IRAs and qualified retirement plans. Income taxes are owed on these withdrawals.
Tax law and issues are every changing and is extremely complicated. Even if you always did your own taxes and plan on doing so when you retired, you should consult with an independent Fee-Only financial adviser to ensure there are matters that you have not overlooked.
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