Receiving sound financial advice from a professional is something that many people would benefit from. One issue that a lot of people have is that they are not always able to apply the lessons they learn in a practical manner. However, one popular financial advisor has continued to offer sound tips that can help people manage their taxes and build their personal net worth.
Don Dirren is a licensed financial advisor that has been providing financial services to clients for more than 30 years. In that time, he has offered many pieces of wisdom that have helped people improve their financial positions. Recently, Don Dirren gave a few different tips that could help someone save money on taxes when earning their Social Security benefits. Since Social Security income is a major part of many retirees income, following the tips provided by Don Dirren and saving even a little could be very beneficial.
Don Dirren Suggests You Know Income Impact
One factor that will influence your taxation on Social Security benefits is the amount of income that you are making outside of Social Security, this is called provisional income. If your provisional income plus 50% of your social security income exceeds $32,000 as a married couple filing jointly than your social security benefit is 50% taxable or as a single individual it is $25,000 MAGI.
Consider Withdrawal Impact
According to Don Dirren, Another factor to think about when you are going to start drawing on Social Security is the impact of your withdrawals from retirement accounts. If you have a standard 401k account, any money that you take out will be taxed as ordinary income. When you add on your Social Security benefits on top of this, the taxation can get even higher. Due to this, it would be a good idea to consider withdrawing retirement accounts at today’s low tax brackets while delaying social security until full retirement or later provided you are in good health.
It is important to fully understand what your tax liability will be on your Social Security income. While you can manage this tax burden as well as possible by following these tips provided by Don Dirren, paying some taxes could be inevitable. In these cases, it could make sense to withhold some of your possible taxes or pay quarterly estimates, therefore, avoiding a possible large tax bill come April 15th.
Don Dirren can help anyone to better manage their tax burden when it comes to retirement benefits. If you choose to meet with Don Dirren, you could get the support that you need to create a formalized plan. Don Dirren has more than 30 years of experience helping others reach their financial goals by minimizing their taxes and maximizing their retirement income through utilizing comprehensive financial planning strategies.