We've all heard the messages to pay yourself first, save a percentage of your income, build your nest egg, and some of us heeded the messages. Whether you’ve saved a lot or a little, we have many ways to reduce taxes in retirement, and by doing so, we maximize the power of our retirement savings. Accumulating retirement funds is step one. And there are tax-advantaged ways to save for retirement: employer plans (401(k), 403(b), 457), individual retirement accounts (IRAs), self-employed retirement plans (Keogh, SEP, SIMPLE, Solo 401(k)), and non-retirement accounts. While you’re saving, you may have accumulated multiple “buckets” of assets, some in taxable accounts, some tax-deferred, some nontaxable. Looking ahead toward retirement withdrawals/distributions (the funds you’ll need for essential and discretionary living expenses) adds tremendous value, and tax planning is a big part of the picture. Read on for more specifics and stay tuned for Part 2 with additional tips and examples.

I have always thought of separate filing as something that filers should seriously consider for the final year of marriage or in circumstances where you think your spouse has significant audit exposure that you don’t want to share. The circumstances in which two married filing separate returns would yield a lower aggregate tax than a joint return were so rare that everyone I knew entirely discounted it. Things are different in 2021 (Also in 2020, but that is water under the bridge). What is driving the phenomenon are recovery rebate credits (which many received as economic income payments) and child tax credits. Be sure and read this before sending those electronic returns before the 18th. You may just have some savings there. Click here to keep reading.