8 Things You Can Learn From Your Tax Return

4. You might need taxes withheld on Social Security payments

Most retirees don’t do this, and the results often show up on their tax returns, says Darryl Nitta, a CPA and tax partner at Accuity in Honolulu. A lot of retirees believe that because they’ve paid into Social Security for 40 or 50 years, their monthly payments arrive tax-free. “In most cases, they’re not,” says Nitta.

You have to pay federal income taxes on Social Security benefits if 50 percent of your benefit amount plus any other earned income exceeds $25,000 if you’re a single filer or $32,000 if you’re married filing jointly.

The best time to request to withhold taxes from your benefits is when you first apply for Social Security, but most folks gloss over the withholdings section and don’t ask for them, Nitta says. However, it’s never too late to take a trip to the nearest Social Security office to request withholding “so that you don’t have a big payment come tax time,” he adds. Or, you could download Form W-4V: Voluntary Withholding Request, fill it out and mail it to your local Social Security office.

5. You may need to adjust your tax withholding

If your tax return shows that your gross income has increased or decreased over the past year, you may want to consider modifying the taxes that you have withheld from your paycheck, Grzes says. Or, you might want to start making quarterly payments to cover your expected tax liability for the year. This IRS tool can help you calculate how much federal income tax you should have your employer withhold from your paycheck.

6. Self-employed? You might be overlooking savings

Self-employed workers and small business owners sometimes fail to take advantage of tax-saving opportunities. “When I see a Schedule C, my eyes light up,” Collado says of the tax form typically filled out by self-employed taxpayers. “This opens the door for you to do your own retirement planning depending on your age and income,” she says.

Self-employed workers have the opportunity to create a solo 401(k) plan, also referred to as an individual 401(k) or uni-401(k). Collado describes this plan as a “retirement account on steroids.” Unlike a workplace 401(k) plan with maximum contribution levels of $23,500 or $31,000 (for people 50 and older), solo 401(k)s allow for an additional contribution of up to 25 percent of their net self-employment earnings, for a maximum contribution of $70,000 or $77,500 if you're 50 or older. Plus, contributions can lower your tax bill.

7. You might be able to avoid taxes on RMDs

If you have a retirement account, such as a traditional IRA or 401(k), and are 73 or older, you must take required minimum distributions (RMDs) annually from the account. “Effectively, what this means is that whether you need the money or not, you are required to start withdrawing these funds and paying taxes on these distributions,” Grzes says. “If you don’t take any distributions, or if the distributions are not large enough, you may have to pay a 25 percent excise tax on the amount not distributed as required.”

However, you can avoid paying taxes on the distributions by having them directly transferred to a qualified charitable organization. You can’t claim a deduction for the donation, but Grzes says it’s a way to give to charity while also meeting your retirement account distribution requirements. Bonus: By directing distributions to charity rather than taking them as income, you’ll reduce your taxable income and potentially qualify for more deductions, he says.

8. You could offset capital gains with losses

If your tax return shows that you have significant capital gains, that could be an indication that there’s a lack of tax planning in your portfolio, Collado says.

Indeed, you can offset unlimited capital gains with capital losses, reducing your tax bill. If you have more losses than gains, you can deduct up to $3,000 in losses per year and carry forward the rest of your losses in future years.