Tax planning is the process taxpayers adopt to analyze their financial situation and find legitimate ways to minimize their tax liability. It involves calculating their annual taxable income, determining the relevant tax bracket, and estimating the total tax payable to the government. They can then implement strategies to avail tax exemptions, credits, and deductions in Internal Revenue Service (IRS) laws. These benefits enable them to pay fewer taxes on their annual taxable income and even become eligible to claim tax refunds. The taxpayers can then increase their revenue and accumulate their wealth over time.

Robert Nico Martinelli is a leading financial specialist from America with many years of industry-based experience under his belt. He specializes in retirement tax planning for senior citizens, working professionals, and individuals on the verge of retiring from their current employment. He has been instrumental in helping all of his illustrious clients accumulate their wealth and generate an income stream for their retirement. As a result, retirees can now live a financially comfortable lifestyle throughout their golden years.

According to him, retirees cannot avoid paying taxes on their income just like other classes of taxpayers. They must know which income streams are taxable and fall under the exempt category. Then, they can calculate their tax liability to the government accurately. Then, they can adopt suitable tax-saving strategies to minimize their tax burden. Otherwise, they will end up paying taxes at higher rates on their:

  • Social security benefits,
  • Pre-tax contributions and cash withdrawals from their IRA and 401(K) retirement plans, and
  • Pension income.

Moreover, the disposable income after paying tax should be enough to cover the retirees’ necessities and any unforeseen medical emergencies. They will not face financial hardship in their twilight years.

How Can Retirees Reduce Their Tax Liability?

Retirees can significantly reduce their overall tax liability to the government by implementing the following tax-saving strategies:

  • Avail and take advantage of tax deductions available to them under IRS 915 publications,
  • Invest in suitable municipal bonds to generate a tax-free income source,
  • Make practical charitable gifts and donations to reduce their taxable income,
  • Sell a portion of their stock at a loss to offset any current or outstanding capital gains,
  • Choose to invest in specific capital gain assets to minimize their tax liability, and
  • Consider making withdrawals from IRA retirement schemes after attaining the age of 72,

According to Robert Nico Martinelli, retirees who adopt tax-saving strategies end up paying fewer taxes to the government than their fellow pensioners. They have greater control over their finances by saving more money. They can then use the funds to buy necessities or purchase suitable taxing-efficient investments. However, retirees should always consult a qualified and experienced financial specialist with a good market reputation before implementing the strategies. They can browse the Internet to find one who meets their specific needs budget and understands their financial condition. Only this expert can help them make the right decisions to increase their income and wealth over time.