Tax returns are critical for any retiree in the United States. If we are collecting Social Security retirement benefits, every dollar is vitally important. That’s because there is no way to grow month after month’s Social Security retirement cheque.
For that reason, every dollar we earn is key to being able to pay all of our bills. If we want to forget about paying taxes, the bad news is that it’s impossible. What is not impossible is to stop paying taxes on some items. There are certain money incomes that during retirement will not involve a payment of taxes.
It is important to remember that it does not matter if retirees do not pay taxes on this income. Regardless of that, retirees who collect Social Security have to file a tax return. So do not forget these details in order to fulfill your obligations as a citizen.
Income during retirement that is not taxable
We do not have to pay the IRS new taxes on this income. This is a great advantage if we want to have extra money every month during retirement.
- Roth Withdrawals. This option is, without a doubt, the best when it comes to having extra income and not paying taxes. Whether through an IRA or a 401(k), having a retirement plan with Roth Withdrawals included is a win-win. The taxes we have previously paid by saving the money, so we don’t need to pay them again.
- Inheritances. Inheritances work much the same way as Roth Withdrawals, but watch out. In some states, it is mandatory to pay taxes on inheritances.
- Insurance payments. Whether we are talking about payments for an accident or the death of an acquaintance with life insurance, the situation is the same. However, there are specific cases in which taxes do have to be paid. But the usual rule is that we do not have to do so.
- Social Security checks. In most cases we do not have to pay taxes on Social Security checks. This is because the income usually does not reach the taxable minimum.
In any case, it is important to be absolutely certain that we do not have to pay taxes in these cases. For that reason, if we have the possibility of hiring an advisor to help us, we should do so.