What You Should Know About Individual Tax Planning

Tax season can be overwhelming for all taxpayers, especially if you’re unaware of the changes that retirement can bring. Understanding the IRS and Ohio state tax laws is imperative. Staying on top of tax return preparation will reduce the anxiety of any tax liabilities you may owe. Here are some things to keep in mind when individual tax planning.

Tips For Personal Tax Planning in Lancaster, OH:

There is a lot of stress that comes with tax season. Remembering the following things throughout the year will make the process that much easier.

• Know Your Social Security Benefits and How Income Tax Plays a Factor

  In most states, including Ohio, Social Security benefits are subject to federal taxes if your income meets a certain threshold. This includes up to half of your Social Security benefits, taxable income, and some non-taxable income such as bond interests. Understanding how much you owe on Social Security taxes will allow you to plan how much money to withdraw from retirement accounts and figure out how much your estimated quarterly tax payments will be.

  As you plan for retirement, it’s essential to know how your age affects your Social Security plan. While you can start claiming at 62, many financial advisors will recommend waiting longer.

• Stay on Top of Required Minimum Distributions

  If you have a 401k, IRA, or another form of retirement plan, you must start making the required minimum distributions (RMDs) or withdrawals once you reach 70 and a half. Forgetting to make an annual withdrawal can result in a penalty of 50% of what you should have taken out. Yearly tax return preparation is a great way to stay on top of this to avoid any penalties.

• Pay-As-You-Go with RMDs and Pensions

  In addition to making withdrawals, any retirement account distribution is also subject to tax. While you can wait to file tax liabilities at the end of the year, paying these taxes quarterly will help you avoid headaches.

• Understand Tax Rules That Apply to Retirees

  Tax laws and regulations change every year. Several rule changes and inflation adjustments are appearing due to COVID-19. It is imperative to stay informed on these changes over the year instead of waiting until tax season to brush up.

• Consider Working With a Professional Tax Accountant

  If you are confused about filing your taxes, then you may want to consider seeing a professional. Making mistakes when filing your taxes can be very costly. A tax professional on your side will reduce the worry of missing deductions or triggering an IRS audit. Save yourself the stress of being overwhelmed and seek professional guidance.

At Royal Oak Financial Group, our team of tax professionals can help you stay on top of tax planning and preparation with comprehensive tax services in Worthington, OH. In addition, we offer investment, retirement planning, financial planning, and business accounting services to help you keep a healthy portfolio as your circumstances and priorities change. Our clients range from individuals and families to small businesses. Contact the Royal Oak Financial Group professionals today for peace of mind and personal service every step of the way.