{"id":10004,"date":"2024-02-13T08:13:55","date_gmt":"2024-02-13T12:13:55","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=10004"},"modified":"2024-02-13T08:13:55","modified_gmt":"2024-02-13T12:13:55","slug":"3-ways-retirees-can-dent-2023-taxes","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=10004","title":{"rendered":"3 ways retirees can dent 2023 taxes"},"content":{"rendered":"
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Many retirees may face larger tax bills this year (and next), but there\u2019s still time to make some strategic moves.<\/p>\n

What\u2019s going on?<\/p>\n

For starters, seniors\u2019 budgets may take a new hit this tax season \u2014 a federal income tax bill on a portion of their\u00a0Social Security benefits<\/a>.<\/p>\n

Social Security recipients received a high\u00a0cost-of-living adjustment<\/a>\u00a0(COLA) of 8.7% in 2023 \u2014 an average of $140 more per month. That extra padding could push them over the income threshold that makes their benefits taxable.<\/p>\n

And while we were all delighted to see the balances in our retirement and non-retirement investment accounts swell last year, that, too, translates to a potentially steeper tax bill for 2023 and your 2024 return.<\/p>\n

Cooling inflation, a solid job market, and the allure of a future with lower interest rates made it a darn good year for retirees\u2019 investments. The S&P 500 ended the year with a more than 24% gain. The Dow Jones Industrial Average popped up more than 13%, and the Nasdaq swelled 43%.<\/p>\n

Read on Yahoo Finance<\/a><\/strong><\/p>\n

But before you dance around with your account statements, remember those gains are not all yours to keep.<\/p>\n

“You should be aware of the tax exposure you have in your non-retirement accounts, such as stocks and mutual funds,” Jeffrey Mellone, an executive wealth management adviser with\u00a0TIAA<\/a>, told Yahoo Finance. “The dividends and capital gains you get from these investments carry tax liability. While most people are concerned with their rate of return \u2014 which is important, of course \u2014 it\u2019s more important to know how much of that return you get to keep.”<\/p>\n

Here are three basic but effective ways to lower your tax liability for your 2023 return.<\/p>\n

Full coverage:\u00a0<\/em>Taxes 2024 \u2014 Everything you need to file your taxes on time<\/em><\/a><\/p>\n

Make an IRA contribution<\/h2>\n

Putting money in an individual retirement account lowers your taxable income, which can mean a lower tax bill.<\/p>\n

“A number of my retired clients or their spouses have either part-time jobs or they do some consulting work to keep themselves busy,” Mellone said. “Most of those part-time jobs do not offer 401(k)s or retirement benefits, but you still may be entitled to make IRA contributions. That would allow you to lower your gross income on your tax statement.”<\/p>\n

For tax year 2023, the limit on\u00a0annual contribution<\/a>s to an IRA is $6,500. The IRA catch\u2011up contribution limit for individuals aged 50 and over is $1,000. You have until April 15 to make a tax-deductible contribution for 2023.<\/p>\n

Read more:\u00a0<\/em>These are the new traditional IRA and Roth IRA limits in 2024<\/em><\/a><\/p>\n