Ronald Fatoullah & Associates - Elder Law

New tax guidelines could cause retirees to underpay

The new tax law may have an unintended effect on retirees. The Internal Revenue Service (IRS) is warning retired seniors about potential underpayment.

How does this happen, and what should retirees do about it?

Check for underpayments

The Tax Cuts and Jobs Act of 2017 (TCJA) changed the tax brackets for federal tax guidelines. One of the side-effects of the TCJA is that tax-deferred pensions and retirement accounts are taxed at different rates. Your account may no longer be taxed at the right percentage for your situation.

The IRS is warning all retirees to check on their tax withholding, to make sure they are paying the right amount. Speak with a representative of your pension account if they withhold earnings. If you make quarterly payments, you may need to review the rate you are paying, compared to the new tax code.

Avoid expensive penalties

If someone is underpaying on a retirement account, the IRS assesses a repayment penalty. That penalty is decided by multiplying an IRS-appointed interest rate by the amount you owe. This can become expensive fast, without a retiree even knowing they owe the money. A retiree can face an unexpected (and costly) penalty on top of any owed tax returns.

Review tax payments

The best thing to do, according to the IRS, is to review your retirement accounts and social security payments. Make sure you are paying the correct amount. If you are underpaying, correct it as soon as possible. Create a repayment plan and implement it. The sooner you begin repayments, the less you need to pay in penalties and interest.

If you have any questions about tax law or how it affects your estate, a skilled attorney can help you navigate the new tax code.

No Comments

Leave a comment
Comment Information

Smart, Caring Strategy For Seniors: Call 516-466-4422.

Email Us For A Response

Looking For Answers?

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Great Neck
60 Cuttermill Road
Ste 507
Great Neck, NY 11021

Phone: 212-257-0195
Fax: 1-516-466-2219
Great Neck Law Office Map

Manhattan
7 Penn Plaza
Ste 1602
New York, NY 10001

Phone: 718-690-9066
Map & Directions

Queens
80-02 Kew Gardens Road
Suite 307
Kew Gardens, NY 11415

Phone: 718-690-9066
Map & Directions

Cedarhurst
466 Central Ave
Cedarhurst, NY 11516

Phone: 718-690-9066
Map & Directions

Brooklyn
1861 86th Street
Brooklyn, NY 11214

Phone: 917-336-0208
Map & Directions

Phone: 516-466-4422 Fax:1-516-466-2219