Are your retired clients paying enough tax during the year? If not they might end up with a big (and not so nice) surprise next tax season. As a tax professional, ensuring that your retired clients are paying the correct amount of taxes on their retirement income is a crucial part of your role. With the ever-changing tax landscape, it’s essential to stay informed about the tools and resources available to help you provide accurate guidance. In this comprehensive article, we’ll introduce you to the IRS Retirement Income Tax Calculator, a valuable tool designed to assist in determining the appropriate tax liabilities for retired individuals. By mastering the use of this calculator, you can help your clients confidently navigate their retirement tax obligations, providing peace of mind and further solidifying your tax resolution practice’s reputation for expertise and reliability.
The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers including retirees. DYI-ers can either use the IRS Withholding Calculator or they can give you a call to handle it for them. It’s critical that everyone pay the right amount of tax to avoid an estimated tax penalty.
The IRS says the easiest way to do that is to use the Withholding Calculator on their site.
Talk to Your Clients
Change is not always easy, especially when it comes to IRS requirements. Since some retirees may require handholding during this process, it’s your job to help them understand so stress is minimal. Be sure to inform them that they should treat their pensions like income from a job.
The biggest concern many of your clients will have is security. To protect taxpayer privacy, the Withholding Calculator does not request any personally identifiable information such as name, Social Security number, address or bank account numbers. Also, the IRS does not save or record any of the information