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How the TCJA impacts retirees

On Behalf of | Sep 21, 2018 | IRS Issues

The Tax Cuts and Jobs Act (TCJA) will have an impact on those who are retired as well as those who are still working. Retirees in Georgia who receive pension or annuity checks must generally pay income taxes on those earnings. While many choose to have taxes withheld on their behalf, others decide to receive the full amount of each check. This means making quarterly tax payments directly to the IRS.

With the passage of the TCJA, income tax brackets fell by about 3 percent for most taxpayers. This means that some retirees may owe less than they did before, and paying too much to the government could result in a refund. However, those who pay too little in estimated taxes could owe the government the following spring. Furthermore, those who don’t pay enough might be assessed an additional penalty.

It is possible that those who have had taxes withheld won’t have enough taken out of their checks. This may be true for those who have Social Security or other forms of income in addition to an annuity or pension payment. An online withholding calculator is available to help individuals determine how much they should send to the IRS in a given quarter or year. Speaking with a CPA may also be helpful for people with questions about their taxes.

Those who have wages or other forms of income are generally expected to pay taxes owed throughout the year. Failure to do so could result in financial or other penalties. Those who are struggling to pay a tax debt or have been audited by the IRS may consult with an attorney about how to resolve the matter. Legal counsel could help a taxpayer obtain a favorable outcome in their case.