A CPA Reviewed 200 Retiree Tax Returns — The Same 9 Mistakes Showed Up Every Time

Retirement can make your finances feel simpler. You stop getting a regular paycheck, your work expenses fall, and you finally start using the money you spent decades saving.

Then tax season arrives.

Suddenly, you have Social Security, IRA withdrawals, pensions, bank interest, dividends, investment gains, and required distributions feeding into one return. The problem is that these sources do not stay in separate boxes. One decision can change the tax treatment of another.

There is no verified public study showing that a CPA reviewed exactly 200 retirement returns and found the same nine errors every time. But current IRS and Medicare rules reveal a clear set of retirement tax mistakes that can become expensive.

1. Assuming Your Social Security Is Tax Free

Many retirees know they paid Social Security taxes during their working years. That can make it seem strange that Social Security benefits might also appear on a federal income tax return.

But they can.

The IRS uses a calculation based on half of your Social Security benefits plus other income. That other income can include pensions, IRA withdrawals, wages, dividends, interest, capital gains, and even tax exempt interest.

For a single filer, benefits may become taxable when this amount exceeds $25,000. For a married couple filing jointly, the base amount is $32,000. Depending on income, as much as 85 percent of Social Security benefits can be included in taxable income.

That does not mean the government charges an 85 percent tax rate on your Social Security. It means up to 85 percent of the benefit may be included when taxable income is calculated.

Here is where retirees can get surprised.

Suppose you take another $20,000 from a traditional IRA to pay for a car. That withdrawal may be taxable itself, but it may also cause more of your Social Security benefits to become taxable.

The real question is therefore not just, “How much tax will I owe on this IRA withdrawal?”

You also want to ask, “What else will this withdrawal change?”

2. Missing the New Senior Deduction in 2026

Retirees have another deduction worth checking carefully.

For tax years 2025 through 2028, eligible taxpayers age 65 or older can claim an additional deduction of up to $6,000 per qualifying person. An eligible married couple could therefore receive up to $12,000 if both spouses qualify.

This is separate from the regular additional standard deduction available because of age.

The enhanced senior deduction starts to phase out when modified adjusted gross income exceeds $75,000 for an individual or $150,000 for joint filers. It is available to qualifying taxpayers whether they use the standard deduction or itemize.

The regular 2026 standard deduction is also larger than it was in 2025:

Taxpayers who qualify because of age or blindness also receive an additional standard deduction under existing rules. For 2026, that amount is generally $1,650, increasing to $2,050 for an unmarried person who is not a surviving spouse.

Do not assume tax software will make every planning decision for you. Make sure your age, filing status, income, and deduction eligibility are entered correctly.

3. Waiting Too Long to Deal With Your RMD

Required minimum distributions can look simple. You reach the required age, calculate an amount, and withdraw it.

The timing rules can make things less simple.

For many current retirees, required minimum distributions from traditional IRAs begin at age 73. Under current law, the applicable age moves to 75 for a later group of retirees beginning under the SECURE 2.0 schedule.

Your first RMD can generally be delayed until April 1 of the year after the year it becomes due.

That sounds helpful, but it creates a trap.

If you delay that first RMD, you can end up taking two taxable RMDs during the same calendar year. The delayed first distribution may arrive before April 1, while the second must generally be taken by December 31.

Two distributions in one year could raise taxable income enough to affect:

• your federal income tax bracket
• taxation of Social Security
• capital gains taxes
• Medicare premiums in a later year
• deductions or credits tied to income

There can also be penalties when a required distribution is missed. Current rules generally impose a 25 percent excise tax on the amount that should have been withdrawn, with the rate potentially reduced to 10 percent when the error is corrected within the allowed period.

One more detail matters. Traditional IRAs and employer retirement plans do not always follow the same timing rules.

Before your first RMD year, list every retirement account you own and check the rule for each one.

4. Donating to Charity From the Wrong Place

If you already give money to charity and have an IRA, the order of the transaction can matter.

A qualified charitable distribution, often called a QCD, lets an eligible IRA owner send money directly from an IRA to a qualifying charity.

You must generally be at least age 70½ when the transfer is made. A qualifying QCD can also count toward your required minimum distribution.

For 2026, the QCD exclusion limit is $111,000 per eligible individual.

Why can this be useful?

Suppose you need to take a $10,000 RMD and already plan to give $10,000 to charity.

One method is to withdraw $10,000, deposit it into your bank account, and then write the charity a check. The IRA withdrawal may be included in income, while the charitable gift may provide limited or no extra federal deduction depending on your tax situation.

Another method may be having the IRA custodian send a qualifying QCD directly to the charity.

When the rules are met, the QCD amount can generally stay out of taxable income while satisfying part or all of the RMD.

That lower income can sometimes help with other income based tax calculations.

The important word is directly. Do not withdraw the money first and assume you can turn the transaction into a QCD later.

5. Making a Big Roth Conversion Without Checking the Side Effects

A Roth conversion can be a smart planning tool.

It can also create a much larger tax bill than expected.

When you convert pretax money from a traditional IRA to a Roth IRA, the taxable portion of the conversion is generally included in your gross income for that year.

Suppose you normally have $80,000 of taxable income and decide to convert another $100,000.

You have not simply moved money from one retirement account to another. You have potentially added a large block of taxable income to the return.

That can push some income into a higher federal bracket.

For 2026, a married couple filing jointly moves from the 12 percent bracket into the 22 percent bracket once taxable income exceeds $100,800. The 24 percent bracket begins above $211,400.

But federal income tax is just one part of the calculation.

A large conversion can increase modified adjusted gross income. For Medicare beneficiaries, that may result in higher Part B and Part D costs later.

This does not make Roth conversions bad.

It means the size and timing matter.

Some retirees choose to model several smaller conversions across lower income years instead of making one very large conversion. Whether that helps depends on your current tax rate, future RMDs, Social Security, Medicare, investment income, and expected future tax rates.

Run the numbers before pressing the button.

6. Selling Investments Without Checking the Zero Percent Capital Gains Bracket

Retirement sometimes creates years when taxable income is lower than it was during your career.

That can create a tax planning opportunity in a taxable brokerage account.

For 2026, the federal zero percent long term capital gains threshold is $49,450 of taxable income for many single filers and $98,900 for married couples filing jointly. The thresholds differ for other filing statuses.

That does not mean a married couple can automatically sell investments and take $98,900 of gains tax free.

The capital gain sits on top of other taxable income.

Suppose a married couple has relatively low taxable income before selling appreciated stock. Part of a long term gain might fit within the zero percent federal capital gains bracket.

That can make some lower income retirement years useful for selling appreciated assets and resetting their cost basis.

This approach is often called tax gain harvesting.

But look at the whole return first.

A gain that receives a zero percent federal capital gains rate can still increase adjusted gross income. That higher income may cause more Social Security to become taxable or affect future Medicare premiums.

State income taxes may also apply.

The lesson is simple: zero percent capital gains does not always mean zero financial effect.

7. Forgetting That Taxes Still Have to Be Paid During the Year

Workers usually have federal income tax removed from every paycheck.

Retirement can break that routine.

Your Social Security may arrive with no federal withholding. Your brokerage account may produce dividends without enough tax being prepaid. An IRA custodian may withhold less than you actually need.

Then April arrives with a surprise.

The IRS generally expects income tax to be paid during the year through withholding or estimated tax payments.

For 2026, you generally need to consider estimated payments when you expect to owe at least $1,000 after withholding and credits and your prepayments will fall below the required amount.

Many taxpayers can avoid an underpayment penalty by paying at least the smaller of:

• 90 percent of the tax due for the current year
• 100 percent of the previous year’s tax

For certain higher income taxpayers, the prior year figure rises to 110 percent.

Retirees have several ways to manage this.

Federal income tax can often be withheld from pension and IRA distributions. You can also request voluntary withholding from Social Security using Form W 4V.

Estimated payments are another option.

The best choice depends on when your income arrives.

If you plan a large Roth conversion or investment sale late in the year, check the payment rules before the transaction instead of waiting until tax filing season.

8. Treating an Inherited IRA Like a Normal IRA

Inherited retirement accounts have their own rules.

This is one area where copying what another retiree does can create trouble because the correct rule depends on who died, when the death occurred, whether the original owner had started RMDs, and the beneficiary’s relationship to that person.

Under current rules, many nonspouse beneficiaries must empty an inherited retirement account by the end of the tenth year after the owner’s death.

The mistake is assuming that this always means you can leave every dollar untouched for nine years and empty the account in year ten.

That is not always true.

In some cases, annual distributions can also be required during that ten year window, especially when the original owner died after reaching the point when RMDs had begun.

Other rules apply to certain eligible designated beneficiaries, including some surviving spouses, minor children of the account owner, disabled or chronically ill beneficiaries, and beneficiaries who meet specific age rules.

A $300,000 inherited IRA that must eventually be emptied can also create a tax planning problem even when annual withdrawals are flexible.

Waiting until the final year could mean adding hundreds of thousands of dollars to one year’s income.

Check the inherited IRA rules early. Do not wait until December of year ten.

9. Ignoring Medicare IRMAA When You Take a Large Withdrawal

Your federal tax return can affect more than your federal income tax bill.

It can also affect Medicare.

Medicare uses an income related monthly adjustment amount called IRMAA for higher income beneficiaries. Higher modified adjusted gross income can increase both Part B and Part D costs.

For 2026, the standard Medicare Part B premium is $202.90 per month.

For an individual, the first 2026 IRMAA tier begins when the income figure used by Medicare is above $109,000. For a married couple filing jointly, it begins above $218,000.

Here is what Part B can look like in 2026:

CMS says about 8 percent of Medicare Part B beneficiaries pay an income related adjustment.

Another detail surprises retirees.

Your current Medicare premium normally depends on tax information from an earlier year. Social Security’s 2026 table generally uses 2024 modified adjusted gross income, or 2023 when 2024 information is unavailable.

That means a large Roth conversion, IRA distribution, business sale, or investment gain can keep affecting your finances after that tax return is filed.

There is relief in some cases.

If income has fallen because of a qualifying life changing event, the Social Security Administration says you may be able to request a new IRMAA decision using Form SSA 44.

This is why retirement income should be planned as a system.

A withdrawal can have an income tax cost, a Social Security tax effect, and a Medicare effect at the same time.

Austin Becker

I’m Austin Becker, an advocate for living life with intention and resilience. I write for men who are actively navigating life’s major transitions, tackling the realities of reinvention and finding renewed purpose with grit and honesty. I believe that personal growth doesn’t have a deadline it’s about continuously gearing up for the chapters that matter most.
Through my work, I aim to strip away the clichés of modern manhood, offering practical, no-nonsense insights on health, mindset, and legacy for those who want to move forward with strength and clarity.