Taxes are one of the biggest headaches for retirees. Figuring out the taxes you'll pay on your income during retirement is complex. Your income can be taxable, partially taxable or tax-free.
If you make withdrawals from your retirement plan, this income can become taxable if funded by you or your employer from pretax dollars.
By contrast, Roth earnings can be withdrawn tax-free.
Most pensions are taxable. Some exceptions to this rule are military and disability pensions.
Investment income from nonretirement accounts is taxable as well.
The amount of tax you pay will depend on your earnings, whether from interest, capital gains or dividends from tax-deferred accounts.
Also, capital gains that fall in the zero percent tax rate won't be taxable, if your income is below a certain limit.
Some withdrawals from your annuities are taxable.
According to the IRS, you must first withdraw any gain from your annuity. This withdrawal is taxable as income.
After you withdraw your annuity gains, you'll be withdrawing from your principal and cost basis. Basis withdrawals aren't taxable.
Fifteen-percent of your social security earnings is tax-free.
The tax rate on your remaining social security income will depend on your tax bracket.
If your total income for the year falls under a certain threshold, your income may be tax-free.
Other income that may be taxable in part is nondeductible IRA withdrawals and earnings from cashing in a cash value life insurance policy.