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Recently retired? Pay attention to tax obligations

On Behalf of | Oct 18, 2021 | Tax Audits

For Georgia residents who recently retired, this time of life may be filled with more new experiences than they expected. As they try to fill the time they once spent at their jobs, they may come across new hobbies and activities that they enjoy as well as find plenty of time for leisure. Of course, just because a person is no longer earning an income from employment, it does not mean that he or she will no longer have tax obligations.

Unfortunately, many retirees can overlook important details in their tax information that results in their facing an audit. An audit at any time can be stressful to handle, but it is not necessarily something that always ends negatively. After all, the IRS may simply need more information or could find that there are no discrepancies where the agency believed some existed. Still, it is important for individuals in their retirement years to file their taxes appropriately.

If individuals are worried about facing an audit, they may want to avoid these possible red flags:

  • Failing to report retirement-related income, including that from retirement plans, pensions, and Social Security
  • Not reporting income made from hobby activities that resulted in compensation
  • Deducting significant losses
  • Reporting a substantial income
  • Not taking and properly reporting required minimum distributions from 401(k) accounts and other employment-related retirement funds

Of course, these examples are only a few of the many issues that could throw up a red flag in the eyes of the IRS. As a result, Georgia retirees will want to ensure that they fully understand their tax obligations during their golden years. In the event that an audit does take place, they may also want to remember that they can obtain professional legal assistance for defending against allegations from the IRS.