Paying taxes as an employee during your working years is fairly straightforward. You fill out a W-4 when you start your job and adjust it over time as your circumstances evolve. As a business owner, it’s less straightforward, but tax professionals can help you develop a routine. Regardless of your path to retirement, paying taxes in retirement is sure to throw off your routine. Some of your funds will have taxes withheld, as happened when you were working. Some will not and will have to be accounted for in the aggregate amount you pay.
I believe that most retirees who come to us and have an accountant think they must pay quarterly taxes. But it depends. Below is a three-step framework to simplify your tax life in retirement.
