Here's how to cut your tax bill in retirement and lower your property taxes. November 30, 2007 Around tax time, we get flooded with tax questions. Here are some issues you might be thinking about now.How can I cut my tax bill in retirement? My property taxes are too high. Jim Marschall is fully retired and, at 66, about four years from being required to take distributions from his retirement accounts. The former manager with Rayovac, in Madison, Wis., has three-fourths of his investments in retirement accounts. Withdrawals from those accounts will be fully taxed as ordinary income (rates range from 10% to 35%). The remainder of his investments are in taxable accounts, where qualified dividends and profits from the sale of investments held more than one year are taxed at a maximum capital-gains rate of 15%. Jim and his wife, Sue, 63, are in a great position to trim their tax bill over the next few years, particularly because Sue plans to give up her part-time job as a nurse at the end of the year. If the Marschalls can hold their taxable income below $65,100 next year -- the ceiling for the 15% income-tax bracket for married couples filing jointly in 2008Qthey will qualify for tax-free treatment of dividends and capital gains. With some exceptions, the 0% tax rate is scheduled to continue through 2010 for taxpayers in the two lowest brackets (see Now-or-Never Tax Breaks). Advertisement Claiming the standard deduction and personal exemptions will knock nearly $19,000 off the MarschallsU adjusted gross income next year. Itemizing deductions would reduce their AGI even more. And a portion of their Social Security benefits -- which represent nearly half of their income -- is tax-free. So the Marschalls should be able to stay in the 15% bracket. While they're in that low bracket, they may also want to convert a portion of Jim's traditional IRA to a Roth IRA. Although they will owe taxes on the converted amount, once the Roth IRA is open for at least five years, it will provide tax-free retirement income or a tax-free inheritance. The Marschalls can repeat this strategy in 2009 and 2010. Moving money out of the traditional IRA will also reduce the amount of the annual distribution Jim will have to take once he turns 70½. Distributions are based on your account balance divided by your life expectancy, as detailed in IRS tables. So the smaller the balance, the smaller the required distribution and the accompanying tax bill. -- Mary Beth Franklin My Property Taxes Are too High You typically have 60 to 90 days after you receive your notice to file an appeal based on a mistake or an inequity in the assessment. Check the math and the recorded dimensions of the house and land, and note any overlooked defects, such as a wet basement or pest problem, that could reduce your appraisal. Research current values for comparable homes online at your local assessor's office or at sites such as Zillow.com. Most appeals win some tax reduction.