Retiree Tax Document Checklist: What Documents Do I Need to File Taxes?

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Filing taxes is a life-long responsibility; not one to fret, but one you can learn to enjoy and make beneficial to your retirement plans. There are numerous reasons that a financial advisor in Bountiful UT should assist.

Similar to pre-retirement, your annual tax burden will be calculated based on your income, though there are different tax rules for each type of income you receive. To minimize the amount you pay in taxes – and to avoid any surprises – you should familiarize yourself with how each of your income sources will show up on your tax return.

As is the nature of the IRS, tax preparation for retirees is not straightforward. Read on to see what items you can check off your tax document checklist.




What Documents Do Retirees Need to File Taxes?

To file your taxes in retirement, you should have all income documents on hand. The most common income documents include:

  • Forms 1099-DIV for dividends and distributions
  • Forms 1099-INT for interest income
  • Forms 1099-R for distributions from pensions, annuities, IRAs, retirement, and profit-sharing plans
  • Forms W-2 from part- or full-time employment

If you’re married and filing jointly, remember to include your spouse’s forms, as well.

You will want to gather documentation detailing your deductible expenses for the year and find the applicable forms (such as Form 1098 for mortgage interest). Common deductible expenses include medical bills, charitable donations, property taxes, and dependent care if any.

How Should Retirees Minimize Taxes?

Nobody wants to pay more taxes than necessary. For retirees, and those still in the workforce, the best way to minimize taxes is to plan. This is commonly referred to as tax planning.

Tax planning can be done with your financial advisor in Bountiful Utah as you discuss and create your retirement plan. Advisors with the CERTIFIED FINANCIAL PLANNER (CFP®) designation are especially adept in handling technical tax strategies as a part of the holistic financial planning process.

If you have a particularly complex tax situation, you may want to discuss this with your tax professional or estate attorney. 

If you’re still making contributions towards funding your retirement, be sure to utilize the tax-advantaged accounts the IRS has made available, such as 401(k)s and 403(b)s, IRAs, HSAs, TSPs, and others.

Common Types of Income

In retirement, most forms of income are “unearned,” but that doesn’t prevent them from being subject to income tax. Though different sources may be taxed differently, ultimately, your tax liability will depend on your total taxable income and the associated tax bracket.

Earned Income vs. Unearned Income

Before discussing various income sources, it’s important to distinguish between earned and unearned income. 

  • Earned income refers to earnings from employment and self-employment. This is subject to Social Security, Medicare, and income taxes. Earned income is viewed by the IRS as regular wages, regardless of your retirement status.
  • Unearned income refers to income from pensions, IRAs, annuities, other retirement accounts, and other investments. This is subject to tax rules which vary by source.

Social Security Income

If Social Security is your only source of income, you likely won’t owe taxes. However, if you have other sources of income, a portion of your Social Security benefits may be taxable.

The level of your “combined income” (the sum of 50% of your Social Security benefits, your adjusted gross income (AGI), and tax-exempt interest income) determines the portion of your Social Security benefits that is taxable. Up to 85% of your benefits may be subject to tax.

Taxation of one’s social security is oftentimes a surprise to many recipients. Proper tax planning can help to reduce or even mitigate taxation of Social Security. 

Railroad Retirement Benefits

Railroad Retirement benefits are Social Security for the nation’s railroad workers and their families. The Railroad Retirement Board (RRB) has administrative responsibilities for the social insurance program.

To qualify, you must have been a railroad worker for at least ten years, or five years after 1995. For full retirement benefits, eligible workers are those 60 years and older with 30 years of service.

401(k) and IRA Withdrawals

Withdrawals from tax-deferred retirement accounts – like 401(k)s, 403(b)s, and traditional IRAs – are subject to ordinary income tax. Roth IRA withdrawals, on the other hand, are taken tax-free.

Don’t forget about your HSA, which you can spend down on non-medical expenses after reaching the age of 65, though it will be taxed like your other tax-deferred accounts. However, if you have medical-related expenses, be sure to use your HSA money on those first, as you’ll enjoy the triple-tax benefit.

Pension Income and Annuity Distributions

For both of these sources of income, most withdrawals are taxable. There are a variety of detailed rules surrounding both pensions and annuities that are dependent on your specific plan or annuity. Be sure to know the details, including what steps you can take to minimize your tax liability.

Investment Income

You will pay taxes on dividends, interest income, and/or capital gains via your 1099 tax forms (sent to you directly by the financial institutions where your various accounts are held). Remember the difference between long-term and short-term capital gains taxes.

Gains Upon the Sale of Your Home

If you’ve lived in your home for two of the last five years, you likely won’t pay taxes on gains from the sale of your home. If you’re single, a gain of up to $250,000 will be tax-free. If married, the limit jumps to $500,000.

Retiree Tax Prep Checklist

By way of not leaving anything out, here are a couple of items to remember:

  1. Watch the Contribution Deadline – You have until the filing deadline to contribute to IRAs, HSAs, or other tax-advantaged accounts. If you have contributions to make, don’t put them off any longer.
  2. Take Required Minimum Distributions (RMDs) – Tax deferral doesn’t last forever, the government wants a piece of your money. For subject accounts, you must take taxable, annual withdrawals.

RMD rules are complex, and the penalties for failing to take them correctly can be very costly.

Do you have additional questions about your taxes in retirement and feel ready to get started with your tax document checklist? Check out our helpful resource to begin a productive year, Be Proactive: A Guide to Tax Planning For The New Year!


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CERTIFIED FINANCIAL PLANNERS™ at Advanced Retirement Strategies

Working with a Certified Financial Planner™ is an excellent investment of your time and money. With the high standards for CFP® certification, you’ll know you’re getting the expertise and knowledge of a highly-trained and educated professional who will always act in your best interests and with the loftiest ethical standards. 

Our team of retirement planners and investment advisors in Bountiful, Utah specializes in helping diligent savers with $250,000 or more of investment and retirement assets (not counting your primary residence) prepare for and then transition into retirement. 

If you’re looking for a CFP® to help you live the retirement you have dreamed of, contact us now.

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