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6 Things to Know Before Filing Your Taxes

6 Things to Know Before Filing Your Taxes

February 20, 2024

6 Things to Know Before Filing Your Taxes

Taxes have a direct impact on the amount of money you keep, which is especially important for taxpayers in or nearing retirement. Keeping more money working for you begins with understanding the tax-savings opportunities available to you and what’s changed from the prior year, before filing your 2023 returns.

  1. The standard deduction increased. The standard deduction is a fixed dollar amount that taxpayers who do not have enough qualified deductions to itemize on their returns can use to reduce their taxable income. For tax year 2023, standard deduction amounts are $13,850 for individuals and $27,700 for married filing jointly. Taxpayers who are 65 and older or blind get an additional standard deduction in the amount of $1,850 for single or head of household, and $1,500 per qualifying individual for married filing jointly or a qualifying surviving spouse.1
  2. Income limits for tax brackets are adjusted for inflation each year. Tax brackets define the range of incomes subject to a specific tax rate, based on your filing status. They are adjusted annually for inflation to help prevent “tax creep.” So, if your income has not increased from the prior tax year, you may not experience a change in your overall tax rate. Note that not all income is taxed at the same rate. Visit IRS.gov for tax brackets and rates based on your filing status.2
  3. April 1 is the deadline to take your first RMD to avoid a penalty. If you turned 73 in 2023 and did not take required minimum distributions (RMDs) from traditional retirement accounts, you have until April 1, 2024 to take your first RMD or face a 25% penalty on any undistributed funds. Roth accounts are not subject to RMDs.3
  4. You may owe taxes on Social Security. Up to 50% of your benefits may be taxable if your combined income, defined as one-half of your benefits, plus all of your other income, including tax-exempt interest, is between $25,000 and $34,000 for individuals or $32,000 to $44,000 for married filing jointly. For individuals with income above $34,000, or married couples with income exceeding $44,000, up to 85% of your benefits may be taxable. Learn more at SSA.gov.4
  5. Don’t forget above-the-line deductions. These are deductions taxpayers can take even if they don’t itemize to further reduce the amount of income subject to taxes. They include early withdrawal penalties on CDs, after-tax health savings account (HSA) and traditional IRA contributions. Visit IRS.gov or consult a tax professional for a full list.5
  6. If you plan to file an extension, keep in mind that any tax liability must be paid by the April 15, 2024 tax deadline to avoid penalties.

To learn more about these and other ways to manage income taxes, meet with a tax professional. If you have questions about tax-smart investment strategies, call the office to schedule a meeting.

1) Taylor, Kelley R., “What’s the 2023 Standard Deduction?” Kiplinger.com, 18 DEC 2023, https://www.kiplinger.com/taxes/tax-deductions/602223/standard-deduction.
2) “Federal income tax rates and brackets.” IRS.gov, 23 JAN 2024, https://www.irs.gov/filing/federal-income-tax-rates-and-brackets.
3) “Retirement Topics — Required Minimum Distributions (RMDs).” IRS.gov, 20 APR 2023, https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds.
4) “Income Taxes and Your Social Security Benefit.” SSA.gov, https://www.ssa.gov/benefits/retirement/planner/taxes.html Accessed 25 JAN 2024.
5) ”Waggoner, John, “8 Common Above-the-Line Deductions Anyone Can Claim.” AARP.com, 29 MAR 2023. https://www.aarp.org/money/taxes/info-2023/above-the-line-deductions.html.

This information was written by KRW Creative Concepts, a non-affiliate of the broker-dealer.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera firms nor any of its representatives may give legal or tax advice.