Estimated Payments or Withholding in Retirement? Here's Some Guidance

You generally must pay taxes throughout the year on your retirement income. But it isn't always clear whether withholding or estimated tax payments is the best way to pay.

senior man sitting at table and calculating finances
(Image credit: Getty Images)

The United States income tax system operates on a pay-as-you-go basis, with taxes due periodically throughout the year as you receive income, even though you file a tax return only once each year. When you're working, your employer withholds income taxes from your paycheck and sends it to the IRS on your behalf. For most people, that takes care of the periodic payment requirement. But when you retire, it's generally up to you to make sure Uncle Sam gets his cut from your Social Security benefits and taxable retirement account distributions.

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Rocky Mengle

Rocky Mengle was a Senior Tax Editor for Kiplinger from October 2018 to January 2023 with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, Rocky worked for Wolters Kluwer Tax & Accounting, and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky holds a law degree from the University of Connecticut and a B.A. in History from Salisbury University.