If you’re saving for retirement, preparing yourself financially to meet your goals is a priority. But it’s also important to plan for taxes.
If you’re using a traditional taxable brokerage account, your investments could face significant taxation.
On the other hand, some types of retirement income are not taxable. Focusing on these could mean sending less of what you’re earning to the government.
Eliminate your late tax debt
Each year, the IRS forgives millions in unpaid taxes. If you have more than $10,000 in tax debt, or have 3+ years of unfiled taxes, you could get forgiveness too. You might be eligible to lower the amount you owe, or eliminate your tax debt completely.
Easy Tax Relief could help you lower or get out of your tax debt for good. They’re well respected in the industry and have been recognized for their ethical standards when dealing with tax debt. While most tax companies just put you on a payment plan and file your taxes for you, Easy Tax Relief talks to the IRS directly. They can help you pay off your tax debt faster while potentially reducing what you owe.
Important: Not everyone will qualify. To take advantage of this special program you must owe more than $10,000 in past-due taxes.
Fill out this form to get started
Health savings account distributions
![stethoscope, calculator and dollars on a paper with electrocardiogram](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/electrocardiogram-with-stethoscope-calculator-and-dollars.jpg)
If you plan to retire — or even retire early — soon, be sure to contribute to your employee-provided HSA. You‘ll be glad you have access to tax-free funds for medical expenses.
A health savings account (HSA) offers tax advantages. Your contributions are tax-deductible, and the funds grow in your HAS tax-free.
When it comes time to use those funds for qualified expenses, no taxes are applied to your withdrawals as long as you use the funds for medical expenses.
Social Security payments
![social security cards](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/cards-with-social-security-label.jpg)
Social Security payments are typically not taxable. However, depending on how much you receive, you may have to pay taxes on them.
If you have a combined income of $25,000 to $34,000, you may have to pay taxes on half of your income. If you earn more than that, you could pay tax on up to 85% of your earnings.
Joint filers earning between $32,000 and $44,000 may pay taxes on half of their earnings, while those bringing in more than this amount could pay taxes on up to 85%.
Roth withdrawals
![100 dollar bills with smartphone having IRAs retirement profile](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/smartphone-with-iras-profile-over-hudered-dollars.jpeg)
As you’re selecting the best type of retirement account for your future, there may not be a better option for reducing your tax burden than a Roth.
You can structure an IRA or a 401(k) as a Roth account, so you have some options. With this retirement strategy, you’ll invest your money after you’ve paid taxes on it. The money then grows in your Roth account until you reach at least 59 1/2 years of age.
At that point, any withdrawals you make are tax-free. In short, you’re paying taxes on these funds upfront and letting them grow tax-free to build your retirement portfolio.
Earn $200 cash rewards bonus with this incredible card
There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.
The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.
This card also offers an intro APR of 0% for 12 months from account opening on purchases and qualifying balance transfers (then 20.24%, 25.24%, or 29.99% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.
The best part? There's no annual fee.
Reverse mortgage payments
![tiny model house on dollar bills with keys besides a blue background](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/model-house-on-dollar-bills-with-keys.jpg)
With a reverse mortgage, you’re borrowing money using the home as security. What’s more, payments you receive from your reverse mortgage are not taxable.
You don’t make monthly payments on a reverse mortgage. Rather, the repayment of the borrowed funds comes due when you no longer live in that home. If the loan isn’t repaid, the lender can sell the home to recoup the investment.
A reverse mortgage isn’t for everyone. They have high fees and should be carefully considered, even with the benefit of not having taxes levied on payments.
Life insurance benefits
![couple browsing life insurance policies on tablet](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/couple-looking-at-life-insurance-polices-on-tablet.jpg)
Life insurance is typically meant to pay a lump sum to your named beneficiary after your death. However, you may also receive proceeds from a life insurance policy during your lifetime.
If you’re listed as the beneficiary on a life insurance policy and receive the payout, you don’t have to pay taxes on those funds. That could mean thousands of non-taxable dollars added to your retirement funds.
Trending Stories
See a selection of News and Featured Stories:
Veteran's benefits
![silver color chain and one hundred dollar bills on american flag](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/chain-with-dollar-bills-on-american-flag.jpg)
Any benefits paid to you through the U.S. Department of Veterans Affairs are not taxable. This could include any disability compensation you receive and pension payments for disabilities.
No taxes are applied to insurance proceeds you receive or dividends paid to you or your beneficiaries. Any interest that builds on deposits you’ve left with the organization that leads to dividend payments is also not taxed.
Public assistance benefits
![happy young lady hugging old woman](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/happy-young-lady-hugging-old-lady.jpg)
Seniors who qualify for public assistance benefits don’t have to worry about paying taxes on those funds. This includes any support you receive through mortgage assistance programs, crime victim payments, Medicare benefits, or state reemployment assistance.
If you qualify for and receive support in the form of food benefits through the Nutrition Program for the Elderly, those are not taxable benefits either. Most types of welfare benefits are also not taxed.
Though designed to meet the needs of lower-income individuals, you should take advantage of these programs if you qualify.
Profits from selling your home
![white color house with a for sale sign](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/beautiful-house-with-home-for-sale-sign.jpg)
Are you planning to sell your home, perhaps to downsize? If you meet the ownership and use tests established by the IRS, you may not have to pay capital gains tax on the sale of your home.
You’ll need to have owned your home for at least five years, and it must be your primary residence for at least two of those years. If you sell it, you won’t have to pay taxes on up to $250,000 of your gains if you’re an individual or $500,000 if you’re married and filing jointly.
Bonds
![man arranging wooden blocks in a sequence to spell out the word bond](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/man-arranging-blocks-to-spell-out-the-word-bond.jpg)
Municipal bonds may not be something you’ve thought about purchasing, but they can provide a nice little chunk of tax-free earnings depending on how many you purchase.
Most people have to pay taxes on federal and state bonds when they receive income, but that doesn’t apply to municipal bonds issued by states or other government organizations.
Be sure to double-check your state and local laws regarding these taxes, even though bond income isn’t taxed at the federal level.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
You’ll also get insider info on social security, job listings, caregiving, and retirement planning. And you’ll get access to AARP’s Fraud Watch Network to help you protect your money, as well as tools to help you plan for retirement.
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.
Inheritance
![senior couple in office discussing papers with young female advisor](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/senior-couple-meeting-with-a-female-worker.jpg)
You may not be able to count on the proceeds from an inheritance for your retirement income — unless you already know what’s coming your way.
While you won’t have to pay taxes on any inheritance you receive, estates over a certain size may be subject to estate taxes. However, these taxes are paid by the estate itself and not you.
The federal estate tax exemption is $13.61 million for 2024. Any amount over the exemption is subject to tax.
Bottom line
![happy senior couple using laptop](https://cdn.financebuzz.com/filters:quality(75)/images/2022/11/21/happy-senior-couple-using-laptop-on-couch.jpeg)
These are solid ways to add some income to your retirement and make money moves by not having to pay extra taxes.
However, if you use an inheritance or other sources of non-taxed income to make money during your retirement — such as investing them — those new dividends could be taxed.
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 20.24%, 25.24%, or 29.99% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.