Tax season has officially started and if you’re an early bird looking ahead to April, you might have already started filing your 2018 taxes. Regardless where you are in the process, here are a few tips to keep in mind for tax season this year.
Taxes in retirement are not exactly the same as when you’re working, but you will find some similarities. In retirement you are taxed on income the same way as you are during your working years, but because you will have several types of income (if you balance your portfolio), your taxes can work in a few different ways.
For fixed indexed annuities (FIAs), your growth is tax-deferred which means you can grow your income based on your policy to secure a higher payout. Once you start to receive a payout, it will be taxed as ordinary income. The tax deferral period can have a dramatic impact on the growth of your FIA. Use our tax advantage calculator to compare the tax savings of an annuity to other types of retirement products.
No matter if you are retired, nearing retirement, or still working full-time, here are three benefits to filing your taxes well before the deadline.
- A Faster Refund
There are more than 150 million individual 2018 tax returns that are expected to be filed this year. Even with the recent federal government shutdown, the IRS estimates the first round of refunds to go out in the beginning of February and expects to have most refunds back within 21 days. The sooner you file, the earlier you’ll see your tax refund. But, what if you end up owing money? If this happens, plan to pay what you owe in segments, instead of paying in one lump sum.
- Peace of Mind
When April comes around, who wants to be inside filing their taxes when it’s finally warm out? Not many. Use this time huddled on the couch for warmth, productively. January is also a great time to review your finances for the year and create your budget. As you’re planning, use our free calculators to see how you are tracking for retirement, calculating everything from risk tolerance to your Social Security Payment.
- Don’t Rush
Waiting until April can often lead to rushing and missing refunds. Having ample time will help make sure you understand each deductible you are eligible for so you can take full advantage. To make the process even smoother, consider filing your tax return online.
While April may seem far away, taking steps now to get yourself organized for the year and knowing what to expect in retirement can pay off throughout 2019 and beyond.