As part of a series of videos, Dave was recently featured in a video by the Journal of Accountancy regarding the new tax laws and how they affect retirement planning for individuals. The doubling of the standard deduction could be a benefit to certain individuals and could potentially have a positive impact on their overall tax situation.
From the Video....
"Overall, I do think the tax bill is going to be beneficial to people who are retiring. If you just look at the doubling of the standard deduction, that is where most people are going to see a benefit in retirement. Standard deductions usually include income tax deductions for state and local taxes, it includes charitable, and it includes mortgage interest deduction. A lot of people in retirement have their mortgage paid off, and so their interest will be little or none, which leaves them with local tax deductions and charitable deductions. And since the new standard deduction has been doubled ($24,000 for a married couple), a lot of retirees will take the benefit of the doubled standard deduction, and they won't need to itemize, which will be a benefit to them."
"The planning opportunities that exist for people who be retiring in the next several years has to do a lot with the tax brackets. For example, you might be in a higher tax bracket during your last several working years than you will be during retirement. So there are opportunities to "push" some of your income during your last working years out into your retirement years. Depending on your age, you might want to defer any IRA deductions, you may want to postpone social security to a later date, because that gives you an opportunity to take advantage of the change in tax brackets that occurs when you transition from your working years to your retirement years."
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