TurboTax, H&R Block, and free AARP Tax-Aide services that handle every senior tax situation — Social Security income, pensions, RMDs, and investment gains.
The most-used tax software among US seniors — TurboTax Premium handles every retirement income type with guided Q&A, including Social Security, pension distributions, RMDs, and investment gains.
Seniors 65 and older qualify for a higher standard deduction ($1,550 additional per person over 65 in 2024). The Credit for the Elderly or Disabled is available for qualifying lower-income seniors. Medical expense deductions can be significant if itemizing. Some states offer additional senior property tax exemptions and income tax exclusions for pension or Social Security income.
Up to 85% of Social Security benefits may be subject to federal income tax if your combined income (adjusted gross income + non-taxable interest + half of Social Security) exceeds $34,000 (single) or $44,000 (married filing jointly). Below certain thresholds, benefits are entirely tax-free. Many states do not tax Social Security benefits.
Starting at age 73, the IRS requires annual withdrawals from traditional IRAs, 401(k)s, and most other tax-deferred retirement accounts. These withdrawals are taxed as ordinary income. Strategies to manage RMD tax impact include Roth conversions before RMD age, qualified charitable distributions (QCDs) from IRAs, and coordinating withdrawals with other income sources.
Converting traditional IRA or 401(k) funds to a Roth IRA can make sense for seniors in lower-tax years (early retirement before Social Security or RMDs begin). Converted amounts are taxed at current rates; future growth and qualified distributions are tax-free. This strategy also reduces future RMDs. A tax advisor can model whether the after-tax math works for your specific situation.
