Smart strategies to stay under the threshold
1. Delay IRA withdrawals when possible: If your income is close to the phase-out range, avoid unnecessary distributions from traditional IRAs or 401(k)s.
2. Use Qualified Charitable Distributions (QCDs): If you’re 70½ or older, QCDs allow you to donate directly from an IRA to a qualified charity. These distributions can satisfy RMD requirements while reducing AGI, helping preserve the senior bonus deduction.
3. Plan large taxable events carefully: Roth conversions, capital gains, and asset sales should be strategically spread across multiple years. Tax-loss harvesting can also help offset gains and reduce taxable income.
Despite confusing messaging from the Social Security Administration in prior years, Social Security benefits are still taxable. Understanding how income interacts with benefit taxation is essential for effective retirement tax planning.
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