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Why do I need a retirement tax accountant?
January 12, 2022 at 7:00 AM
Why do I need a retirement tax accountant?

There’s a lot that goes into planning for retirement. Not only do you need to make sure that you’re putting away enough money to meet your financial needs, but you also need to ensure that you’re going to have enough money after taxes. A retirement tax accountant understands that paying your taxes during retirement can be tricky and takes a considerable amount of planning. Our team at OWLFI can help you plan accordingly, so you’re not caught off guard when your taxes come due.

Tax planning takes many forms, so read our guide below to learn more about what our retirement tax accountants can do to help you.

Plan for the future

Knowing what to account for with your taxes can give you a huge advantage heading into retirement. Not only do you want to ensure that you’re financially stable and meeting your traditional obligations like paying your mortgage, utility bills, and putting food on the table, but you need to meet your tax obligations as well. While you might not know exactly what the tax laws will be when retirement comes, you can have a solid plan that will make it much easier to account for any potential changes.

Take inventory of accounts

It’s not uncommon to have multiple accounts designated for your retirement savings. Each is unique in its own way and provides various tax benefits. Your retirement tax accountant will take an inventory of where your money is going before and where it will be during retirement. Because accounts like a 401(k) or company pension are pre-tax, you’re going to have to pay taxes on those eventually. Your accountant can do the math for you, so you know what percentage of each you’ll need to pay in taxes.

Consider social security

It’s never recommended that retirees live off their social security. It’s often not nearly enough to pay all your monthly bills, and you’ll be considerably short. While social security can be a solid supplement, it can be taxed heavily after reaching a relatively low threshold. For instance, a married couple filing jointly could have their social security taxed up to 85% with a combined income over $44,000. Bringing home 15% isn’t much to depend on, and you’ll need to be aware of what you’ll have.

Maximize benefits of a Roth IRA

Contributions to your Roth IRA are made after you’ve paid taxes. While contributions might be a little less than what you’re contributing to a 401(k), they won’t be taxed when you take your dispersals. Having a Roth IRA is a great way to limit your tax liability during retirement, so you don’t have to worry nearly as much about your tax obligations when you’re not working anymore.

If you’d like to move money from a 401(k) to a Roth IRA, you’ll need to pay taxes on your 401(k) at the time of the move. However, you won’t have to pay taxes on that money again during retirement.

Diversify retirement income

It’s highly recommended that you find a variety of ways to bring in money when you’re retired. Whether you’re working a part-time job, taking payouts from an investment, or otherwise, it’s ideal when you have multiple income streams. Your retirement tax accountant can help you identify the areas from which your incoming is flowing, so you can account for everything when it comes time for taxes.

Get in touch to start

You can get started with our team of expert retirement tax accountants at OWLFI today. We’ll help you plan ahead, so nothing is a surprise when it comes time to meet your tax obligations. Reach out to our nearby office to set up an appointment or send a message using our contact form with your questions. We look forward to helping you plan for your retirement.