In order to save money, take notice to when you’re spending extra.
Here are eight types of retirement income that isn’t taxed.
1. Stimulus checks
Some Americans got Letter 6475 from the IRS with information about a third stimulus check sent in 2021. The letter is supposed to help you or a tax professional prepare your taxes. Read more about it here.
Stimulus checks aren’t taxable but still need to be reported on your 2021 tax return.
2. Social Security
Social Security benefits are not taxed if the Social Security Administration(SSA) finds your combined income below a certain limit.
The limit depends on how you file. The benefits include monthly retirement, survivor, and disability benefits.
This does not include Supplemental Security Income (SSI), which are not taxable.
3. Health savings account
Contributions to your health savings account(HSA) are tax deductible. HSA withdrawals are also tax-free when they’re used for medical expenses.
4. Reverse mortgage payments
Reverse mortgage is a type of loan.
If a homeowner is 62 or older and has “considerable home equity,” they can borrow against the value of their home. According to the IRS, reverse mortgage payments are not taxable. The payment is considered loan proceeds instead of income.
5. Roth IRA distributions
Qualified distributions from a Roth IRA accounts aren’t taxed.
6. Life insurance proceeds
If you receive life insurance proceeds as a beneficiary they are not taxed. However, there is an exception: any interest you get is taxable and should be reported.
7. Selling your house
Profit from selling your primary house may not be subject to federal income tax, depending on the profit.
8. Veterans benefits
Disability benefits gotten from the Veterans Administration shouldn’t be included in your gross income. Some other payments that are considered disability benefits are:
- disability compensation and pension payments for disabilities paid either to veterans or their families
- grants for homes designed for wheelchair living
- grants for motor vehicles for veterans who lost their sight or use of their limbs
- benefits under dependent-care assistance program