Seventh in a series.
For those fortunate enough to look at their retirement accounts and consider retirement, taxes can be a final factor.
It's important to remember that money coming out of 401(k)s, IRAs and pensions is not necessarily tax free.
“It just kind of depends on how you contributed to it as to how much is taxable when you receive it back," said Bill Brunson, IRS spokesman.
While some of that money may be taxable, there's a good chance those taxes will be lower than what a person paid pre-retirement.
“Generally speaking, when you are in a retirement, you’re not paying the upper level of income tax because you’re not making as much as you were," Brunson said. "Your income might be cut in half or two-thirds from what it was. So you’re not going to have as much federal income tax to pay.”
Brunson also said the variations that can come with filing taxes while retired is one more reason electronic filing or using a tax professional may be wise.
Check back for more tax tips as the deadline to file draws closer. Next week, IRS Investigator Brian Watson discusses how to avoid being a victim of tax fraud.