Senior Citizens have to safeguard themselves from IRS attacks more than other citizens. The IRS sees you as an easy target, so don't let yourself be one! Follow these tips and come out on top with the IRS.File Your Taxes Every Single Year
You may only be receiving social security checks or pension, but your must file your taxes every single year. Fail to file and you could be slapped with a tax evasion charge, which comes with jail time and a fine of up to $300,000 if you're convicted.Take Advantage of Tax Credit and Tax Deductions
Take advantage of every possible deduction you qualify for when you file your taxes to lower your tax liability. There are many deductions and credits to use that target senior citizens, so use them to reduce the amount you owe the IRS.Taxes on Social Security income
The IRS has guidelines in place to help you determine if your social security income is taxable. Check your benefit statement next time you receive your social security check to see if taxes are being withheld. If taxes are not being withheld from your social security income and you have other income sources, you could owe the IRS next tax season. Have a tax professional review your finances and see if you need to report your social security income or not.
How much you withhold from your pension pay will depend on a variety of factors, like your filing status, the number of dependents you have, personal exemptions, the amount of retirement payments you earn and additional sources of income. If you don't withhold enough, you could owe back taxes by the end of the year. Again, consulting with a professional is a good choice.Early Distributions
When you're under 60 and must take an early distribution from a retirement account, you need to make sure that you have the proper amount of taxes taken out of your withdrawal. All too often, I speak with people that were told to take out an incorrect amount and suffered the consequences. If you want to find out what you should withhold for taxes, consult with a professional before making a withdrawal.Prevention is the Key
The cure for Senior Citizen tax debt is obvious. File your taxes. Always have your taxes reviewed for accuracy by a professional as it's tricky when pension and social security come into play. If you are ever unsure of something, contact a professional instead of ignoring the problem or you could end up owing the IRS thousands!