Tax planning is different after retirement. You might think that a lower income level and fewer deductions are the only changes, but unfortunately it is not that easy. A recent article in Kiplinger, “3 Tax-Planning Mistakes Retirees Too Often Make” examines why you have to understand how federal and state laws impact retirement benefits and investment returns. There are three frequently made mistakes:
Tax Loss Harvesting. Tax loss selling means selling a capital asset, like a stock, for a loss to offset a gain realized by the sale of other investments. The result is that the investor avoids paying capital gains on recently sold investments. Retirees with stock holdings should review their holdings every year to determine their market exposure and any tax consequences of selling stocks with substantial capital gains.