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3 Ways You Can Cut Your Tax Bill in Retirement

With retirees suffering from low interest rates and rising expenses, the last thing they need is to pay more in taxes than absolutely necessary. Fortunately, by taking steps both during your career and after you retire, you can reduce your tax bill and keep more of your money to pay living expenses.

In the following video, Fool contributor Dan Caplinger discusses three ways to keep your taxes lower in retirement. Through judicious use of Roth IRAs, being smarter about using preferential tax rates on dividends, and taking care when you withdraw money from traditional tax-favored retirement accounts after you retire, you can avoid tax pitfalls and keep your overall taxes as low as possible. Dan discusses specifics of all of these strategies and notes some often-missed provisions that can help you cut your tax bill.

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Read/Post Comments (2) | Recommend This Article (13)

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  • Report this Comment On June 08, 2013, at 9:59 AM, ndallasj wrote:

    Good tips....here's another. Take advantage of the increased standard deduction offered to over 65 taxpayers by alternating between itemized and standard deductions. We lump all discretionary deductible expenses for which we can control the timing into odd numbered years by paying real estate taxes in January and then December and make larger charitable deductions in those years as well. In even numbered years our itemized deductions fall well short of the now-higher standard deduction, so we use that instead (simplifies the filing process in even numbered years as well).

  • Report this Comment On June 10, 2013, at 1:14 PM, jwhittier100 wrote:

    You say that GE dividends get the special tax consideration.

    I receive quarterly dividends from GE and am not given that special tax consideration in GE's 1099's.

    I receive the money quarterly but the stock is in a 401K.

    Is this the reason.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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