Retirement Accounts and Taxes

July 10, 2012 by  Filed under: Taxes 

If you own a retirement account, it can be a difficult process when tax time comes. Certain types are taxable while others are tax deductible and if you need to sort out the confusion, you should get IRS tax help from an accountant or legal expert who understands the current tax laws as it relates to retirement accounts. You can also get free tax help on this topic by reading books and magazine articles. If you want to know more about this topic, you can read the tips and guide below.

If you have an individual account or IRA, your account is not taxable until you withdraw money from it, which is when you reach age 70 ½. While you’re contributing funds to your IRA, the account is tax deductible. The same is true of the 401K account. With this account your employer can take out part of your income and place it in the 401K retirement account. The benefit of these retirement accounts is that your tax liability won’t be as high upon retirement.

If you have a Roth IRA, you’re at a better advantage than other retirement account holders because you pay taxes on this account before depositing money into it and you won’t have to pay taxes on the account when you start to withdraw funds from it.

If you’re wondering if you still need to file taxes even if you’re retired, here are some things to consider. You should consider your gross income and your gross income doesn’t just mean money you earned but it also means unearned income such as Social Security benefits, alimony, child support and retirement accounts. However, if your only source of income is from Social Security, you won’t need to file taxes when you retire.

Here are ways you can IRS help tax if you’re retired. You can visit a local law clinic and meet with a professional who has years of experience in taxation issues. Make sure you mention as many details about your financial history so you can get the best help possible. Another way to get assistance with filing taxes is by talking with a qualified tax accountant.

Finally, here are some forms you may need to fill out when filing taxes as a retired person. The form 1099-R would be given to you by your IRA custodian while the form 5329 is given if you incurred penalties on your retirement account through transactions that were made.

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