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Planning to Retire in 2027? Tax Steps to Take Before You Retire

If you’re planning to retire in 2027, you’re probably thinking about when your last day of work will be, what you want to do with your extra time, and whether you’ve saved enough to comfortably make the transition. One thing that’s easy to put off is figuring out what your taxes are going to look like once the regular paychecks stop.

Retirement can change your tax situation quite a bit. Instead of receiving most of your income from an employer, you may start receiving money from several different places, including Social Security, a pension, a 401(k), an IRA, investments, rental properties, or even part-time work. Those sources of income aren’t all treated the same for tax purposes.

If you’re retiring next year, now is a good time to start estimating what your income will actually look like in retirement. Knowing approximately how much you expect to receive from each source can give you a much better idea of what you may owe in taxes and how much money you’ll really have available each month.

Social Security is one area that sometimes catches new retirees by surprise. Depending on your total income, part of your Social Security benefits may be taxable. Income you receive from pensions, traditional retirement accounts, investments, and other sources can affect that calculation. That means taking a large withdrawal from a 401(k) or IRA can have a bigger tax impact than you might expect.

You’ll also want to take a close look at your retirement accounts before leaving your job. If you have a 401(k) or another employer-sponsored retirement plan, understand what happens to that account after you retire and what options you have for keeping the money there, rolling it over, or beginning withdrawals. Moving retirement money incorrectly can create unnecessary taxes and withholding, so this is something worth planning before making a large transfer.

Your final year of employment can also be an important opportunity to put additional money into retirement accounts while you’re still earning a regular paycheck. Depending on your age and the type of plan you have, you may qualify to make additional catch-up contributions. Before retiring, it makes sense to review how much you’re contributing and whether increasing that amount during your remaining months of employment fits your overall financial plan.

Another change that comes with retirement is how your taxes actually get paid. When you work for an employer, taxes are normally withheld from every paycheck without you having to think much about it. Once you retire, you may need to arrange withholding from pension or retirement distributions, request withholding from Social Security, or make estimated tax payments during the year.

This is one of the reasons it’s better to plan before retirement rather than waiting until you file your first tax return afterward. Nobody wants to get through their first year of retirement only to discover they owe a much larger tax bill than expected.

Large purchases also deserve some extra thought after you retire. Maybe you want to pay off your house, buy an RV, purchase a new vehicle, travel, remodel your home, or help your children or grandchildren financially. If the money for that purchase is coming out of a traditional retirement account, remember that the withdrawal itself may be taxable. Taking out a large amount at once can significantly increase your taxable income for that year.

Investments outside of your retirement accounts should be considered as well. Selling stocks, mutual funds, real estate, or other investments can create capital gains. Because your income may drop after you stop working, the timing of those sales can matter. Looking at your retirement withdrawals, investment income, Social Security, and other income together can give you a much clearer picture than making each decision separately.

You should also understand how your state treats retirement income, especially if you’re thinking about moving after you retire. State tax rules vary considerably. A move to another state can change how pensions, retirement distributions, investment income, and other income are taxed.

Required minimum distributions are another issue to keep on your radar. Under current federal rules, many retirement account owners eventually have to begin taking distributions from traditional IRAs and certain employer-sponsored retirement accounts. Even if you’re retiring before those requirements apply to you, thinking several years ahead can be useful. A large balance in a tax-deferred retirement account can eventually create significant taxable income when required distributions begin.

The year before retirement is really about getting a clear picture of what comes next. You don’t need to have every detail of the next 20 or 30 years figured out, but you should know where your retirement income will come from, which portions may be taxable, how you’re going to pay those taxes during the year, and whether there are decisions you should make while you’re still working.

If you’re planning to retire in 2027, now is a good time to sit down with a tax professional and go through the numbers before making any major moves. TaxPointe can help you review your current tax situation, expected retirement income, retirement accounts, withholding, and other factors that may affect your taxes after you leave the workforce.

Planning ahead can make the transition into retirement a lot easier—and help make sure your first year of retirement doesn’t come with an unexpected tax bill.

Contact TaxPointe today to start preparing for your 2027 retirement.

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Why I Always Recommend a Mid-Year Tax Check-In

One thing I hear all the time is, “I’ll worry about taxes when tax season gets here.”

I understand why people think that way. Once April is behind us, most business owners are focused on running their business, serving customers, and trying to grow. Taxes are usually the last thing on anyone’s mind.

Ironically, that’s exactly why this is one of my favorite times of year to sit down with clients.

By the middle of the year, we have enough information to see how your business is performing, but there’s still plenty of time to make adjustments that can have a real impact on your tax bill. Waiting until January often means we’re simply documenting what already happened instead of helping you make decisions that could save money.

Every year I meet with business owners who are surprised by how much their income changed. Sometimes business is booming, which is wonderful until they realize they weren’t setting aside enough for taxes. Other times, revenue is lower than expected, and they’ve been making estimated payments based on a much stronger year. Neither situation is ideal, but both can usually be addressed when we catch them early enough.

I also like to use this time to review bookkeeping and expenses. It’s amazing how often I find deductions that aren’t being tracked consistently. Whether it’s mileage, software subscriptions, business meals, or equipment purchases, small expenses have a way of adding up over the course of a year. Good records today make tax season much less stressful later.

Another conversation we often have is about upcoming purchases. If you’re planning to replace equipment, buy new computers, or invest in your business before the end of the year, timing can matter. There are often opportunities to structure those purchases in a way that provides better tax benefits, but those conversations need to happen before the purchase—not after.

One of the biggest misconceptions about tax planning is that it happens when you prepare your tax return. In reality, tax preparation is looking backward. Tax planning is looking ahead.

That’s why I encourage my clients to think of me as more than someone who files returns once a year. My job is to help you make informed financial decisions throughout the year so there are fewer surprises and more opportunities.

If you’ve never had a mid-year tax review, I think you’ll be surprised how valuable it can be. Even if we don’t make major changes, you’ll have a much clearer picture of where your business stands and what to expect when tax season arrives.

Planning ahead is almost always less expensive—and far less stressful—than trying to fix things after the year is over.

If it’s been a while since we’ve talked, or if your business has changed this year, I’d love to sit down with you and review where things stand. A simple conversation now can often make a meaningful difference by the time we prepare your next return.

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Here’s What You Should Know About 1031 Exchanges

If you’re thinking about selling an investment property, one of the first questions you should ask isn’t how much you’ll make—it’s how much you’ll owe in taxes.

Many real estate investors are surprised by the capital gains taxes that can come with the sale of a property. The good news is that, in some situations, you may be able to defer those taxes by using what’s called a 1031 exchange.

A 1031 exchange allows you to sell one investment property and reinvest the proceeds into another qualifying investment property without immediately paying capital gains taxes. Instead of sending a large portion of your profit to the IRS, you can keep that money invested and continue growing your real estate portfolio.

One of the biggest misconceptions is that you have to exchange one property for another that’s exactly the same. Fortunately, that’s not how it works. In many cases, you can sell a rental home and purchase a commercial building, an apartment complex, vacant land, or another qualifying investment property. The key is that both properties are held for investment or business purposes.

Another mistake I see is people waiting until after they’ve sold their property to ask about a 1031 exchange. By then, it may already be too late. These exchanges have to be planned before the sale closes, and there are strict deadlines that must be followed. You’ll also need to use a qualified intermediary to handle the transaction, since you can’t take possession of the sale proceeds yourself if you want the exchange to qualify.

Because of these rules, planning ahead is one of the most important parts of the process. Even a simple mistake can turn what could have been a tax-deferred exchange into a fully taxable sale.

That doesn’t mean a 1031 exchange is the right choice for everyone. Sometimes paying the tax today makes sense depending on your financial goals. Other times, deferring those taxes allows you to purchase a larger property, improve your cash flow, or continue building wealth without reducing your available investment capital.

Every situation is different, which is why I always recommend talking with your tax advisor before listing your property for sale. A little planning upfront can make a significant difference in both your tax bill and your long-term investment strategy.

If you’re considering selling investment real estate and want to understand whether a 1031 exchange makes sense for your situation, I’d be happy to help. Together we can review your options and make sure you have a plan in place before the sale ever reaches the closing table.

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The Mid-Year Tax Checkup Every Small Business Should Schedule Before August

When most people think about taxes, they think about January, February, and April. By the time summer rolls around, taxes are usually the last thing on anyone’s mind. Business owners are focused on serving customers, managing employees, and keeping everything running smoothly. I completely understand that, but after more than 20 years of working with small businesses, I’ve learned that July is actually one of the best times of the year to sit down and review your finances.

I often tell my clients that tax planning shouldn’t begin when you’re gathering documents for your tax return. By then, most of the important financial decisions have already been made, and there isn’t much we can do to change the outcome. The real opportunities to save money happen while the year is still in progress, which is why I recommend scheduling a mid-year tax checkup before August.

One of the first things I like to look at is how the year is actually going compared to what we expected back in January. Has your revenue grown faster than anticipated? Have expenses increased more than expected? Maybe you’ve hired additional employees, purchased new equipment, or expanded into a new market. Sometimes business owners are pleasantly surprised by how well they’re doing, while others discover they’re spending more than they realized. Either way, it’s much better to know where you stand now than to wait until next spring.

If your business is having a great year, that’s certainly something to celebrate, but it can also mean your tax liability is going to be higher than you planned. Finding that out in July gives us several months to prepare instead of discovering it after the year has already ended. On the other hand, if your income is lower than expected or you’ve experienced higher operating costs, we may be able to adjust your estimated tax payments so you’re not sending more money to the IRS than necessary throughout the year.

Estimated tax payments are one of those things many business owners set up once and never think about again. They simply continue paying the same amount every quarter because that’s what they’ve always done. Unfortunately, businesses aren’t static. Sales fluctuate, expenses change, and sometimes an unexpected opportunity or challenge can completely reshape the financial picture. Taking a fresh look at your estimated payments halfway through the year can help avoid unpleasant surprises and ensure you’re paying an amount that actually reflects your current situation.

A mid-year review is also the perfect opportunity to talk about larger business purchases. Maybe you’ve been thinking about replacing aging equipment, upgrading your computers, purchasing a company vehicle, or investing in software that will improve efficiency. One of the biggest misconceptions I hear is that you should wait until December and buy something simply to create a tax deduction. While timing certainly matters, I believe every purchase should make good business sense first. Understanding the tax implications before making a significant investment allows you to plan strategically instead of making rushed decisions during the final weeks of the year.

Payroll is another area that’s worth reviewing. If you’re a business owner paying yourself through the company, is your current compensation still appropriate? Have you hired new employees or started offering bonuses? Small changes throughout the year can affect payroll taxes and your overall tax strategy, and they’re much easier to address now than after year-end. The same is true for retirement planning. Many business owners are surprised to learn how much flexibility they have when it comes to retirement contributions. Looking at your numbers in the middle of the year gives us a better idea of what contribution levels may make sense before December arrives, allowing you to reduce taxable income while investing in your future.

I also encourage clients to use this time to make sure their bookkeeping is current and accurate. Good bookkeeping isn’t just about preparing a tax return; it’s one of the most valuable tools you have for making smart business decisions. If your financial records aren’t up to date, it’s difficult to know whether you’re truly making money, where your biggest expenses are, or whether your cash flow is as healthy as it appears. I’ve had clients come into my office convinced they were having their best year ever, only to discover that unpaid bills or overlooked expenses painted a very different picture. I’ve also seen business owners who were worried because cash felt tight, but once we reviewed the numbers together, it became clear the business was performing much better than they thought.

Another advantage of a mid-year tax review is that it gives us the chance to catch small issues before they become expensive problems. Something as simple as a bookkeeping error, an incorrect payroll entry, or a missed filing can snowball over several months if no one notices. Taking the time to review everything now can save both money and stress later.

One thing I always remind my clients is that tax planning isn’t about finding secret loopholes or complicated strategies that only large corporations can use. In most cases, it’s about making informed decisions throughout the year and understanding how today’s choices will affect tomorrow’s tax return. That’s why I believe proactive planning is so much more valuable than reactive planning. When we meet in the middle of the year, we still have time to make meaningful adjustments. Once the calendar turns to January, our focus shifts from planning to reporting.

If you haven’t looked closely at your financials since filing your last tax return, this is the perfect time to do it. A mid-year tax checkup can give you a clearer picture of where your business stands, help you avoid unnecessary surprises, and identify opportunities that might otherwise be missed. It doesn’t have to be a long or complicated process, but it can make a significant difference in how you finish the year.

At TaxPointe, I enjoy helping business owners understand the story behind their numbers. My goal isn’t simply to prepare tax returns; it’s to help my clients make confident financial decisions all year long. If it’s been a while since we’ve reviewed your business together, let’s schedule a mid-year tax checkup before August. You’ll head into the second half of the year with a better understanding of your finances and a plan that’s designed specifically for your business.

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