When it comes to taxes, the reality is that you will continue to pay taxes during retirement.
It’s also true, however, that you have more control over your taxes in retirement than in any other phase in life.
The reason for this? While income is taxed much in the same way as it is during your working years, the difference is that each source of income (i.e., social security, pensions, 401K, etc.) may have different tax rules. Calculating your taxes can be overly complicated which increases the risk of accidental errors being made — possibly costly errors.
Request a Tax Plan
Talk to a professional!
Are you overpaying your taxes? To find out, schedule an appointment with BFG Tax Service for a no-obligation second opinion. In addition, if you have questions about tax reduction strategies or want to review your previous years’ tax return, request a meeting today!
Are you overpaying
The primary purpose of tax planning is to maximize your after-tax finances. Unfortunately, it’s a common mistake only to be concerned with taxes while preparing your annual tax return. The problem at this point is that it’s often too late to make adjustments to affect the prior year’s return. Forward-looking tax strategies may save you a significant amount of money over the course of your life regardless if you are retired or not.
Who doesn’t enjoy getting a raise? Just because you’re retired doesn’t mean you can’t get a possible bump in income. This is why it’s important to realize that taxes may matter more after retiring then they do before. Many people who are working on their tax preparation in Kansas City, don’t understand that the order that they begin to receive their withdrawals from their retirement accounts can significantly affect the amount of taxes paid on their annual income taxes.
Five Professionals Under One Roof
At Barber Financial, our integrated wealth management services are working together for you.
Normally, one would hire 5 different companies: 1. Financial Planner 2. Accountant 3. Insurance Agent 4. Estate Attorney 5. Social Security Consultant.
At Barber Financial, you can replace 5 relationships with 1.
Our integrated team of professionals save you time, energy, and hassle by working together to meet your biggest and most important financial challenges. No need to manage 5 different relationships. We’ve got you covered.
New Tax Laws-How
Will They Affect You?
Have you ever suffered from “Tax Season Turmoil” while trying to figure out the ever-changing tax laws and if they affect your situation? Should you convert your IRAs? Will you pay taxes on your Social Security? Is itemizing your tax return going to pay off in the end? It’s easy to understand why the most seasoned retirees can become confused. Without the proper guidance of a CPA familiar with retirement income, you may be setting yourself up for mistakes and unfortunately, expensive ones.
Tax Planning For The Future is Crucial.
What is the purpose of tax planning?
Tax planning is a financial term that is used often, but unfortunately, it is not always correctly understood. The primary purpose is to maximize your after-tax finances. By utilizing a proper tax plan, you may have more money to spend, keep, or to use in the way of your choosing. A common mistake is waiting until it’s time to file your tax return to try and find ways to save, but by then, it’s too late. Remember, forward-looking tax strategies may save you a significant amount of money over the course of your lifetime, retired or not.
Meet our CPAs
JoAnn Huber, CPA, CFP® Nicole Dobson, CPA Suzanne Bartling, CPA
JoAnn knows that sound tax planning can be the foundation of a successful retirement and is why BFG Tax Service specializes in assisting retirees with investments and income. With over 20 years of experience, JoAnn is not only a CPA, but she is also a Certified Financial Planner, so she truly understands how to create a long-term tax reduction strategy that works seamlessly with your investment strategies for an upcoming or current retirement plan.
Nicole Dobson joined Barber Financial Group in 2018 as a Tax Advisor/CPA, where she prepares tax returns and helps clients with tax planning. She has worked with reputable accounting firms in her professional path after graduating from UMKC with a Bachelor of Science in Accounting. Nicole is also a member of the American Institute of Certified Public Accountants.
Frequently asked questions.
During retirement, your tax situation will most likely become far more complex than when you were a simple W-2 employee. You will have different tax rates on Social Security, dividends and capital gains, as well as ordinary income and distributions from your retirement plans. While regular tax brackets for retirees remain the same as people who are working, it’s the source of which you take income that determines how much tax you pay in retirement. Perhaps one of the most complex parts of a financial plan is creating an efficient distribution strategy to minimize one’s taxes.
Everyone in America who pays taxes feels like they have paid their fair share, and in some cases, far more than their fair share. This causes people to be very shortsighted when it comes to reducing your tax bill.
Most CPAs are tasked with the difficult duty of trying to find ways to save you money, on your current tax returns. The problem is, it’s too late! At this point, all of your taxable income and investment assets have made their money, and it’s almost impossible for the CPA to affect the amount of taxes needing to be paid.
In order to truly reduce taxes, your CPA needs to be projecting into the future, several years down the road. They need to understand every single part of your financial life and not only what assets you have but what purchases you want to make in retirement.
A good CPA working hand-in-hand with a good financial planner can help you make sure that not only are you putting money into the right accounts while you’re working, but you also created the proper distribution strategy so that you pay fewer taxes throughout your retirement years. There is no one strategy that is right for everyone and there are no two cases that are exactly the same. You will have different amounts of money, different amounts of income, and different spending goals for the future.
Additionally, what most taxpayers don’t realize is most CPAs will just simply do tax compliance. Tax compliance is defined as making tax payments and producing and submitting information to the tax authorities on time and in the required formats. In another words, they would prepare it with only compliance and IRS guidelines in mind, and with no thought of future tax reduction strategies. Make sure you don’t get shortsighted and only focus on today, but instead, look to the future and understand that taxes will always be a fact of life. If you understand this and plan for it, you will pay what you legally owe but not one dollar more.
It is imperative that your forward-looking tax plan be kept up-to-date through ongoing conversations between your financial advisor and your CPA. It is also important that you give total transparency to these professionals so that they can do their job to the best of their ability. Done properly, proactive forward-looking tax planning can have an enormous impact on the amount of taxes you pay over your lifetime.
If you have questions about your taxes and how it relates to your overall retirement plan, or need assistance in the preparation of your 2016 tax return (even if you aren’t a client of Barber Financial Group!) call our office today at 913-393-1000 or click below to make your appointment.