Tax Issues Unique to Seniors: RMDs, QCDs, Social Security Tiers, IRMAA, and Loss Carryforward

Retirement brings a set of tax questions that working-age filers never face. The five most common are Required Minimum Distributions from retirement accounts, Qualified Charitable Distributions from an IRA, the Social Security taxability tiers, the Medicare IRMAA surcharge tied to two-year-old income, and capital loss carryforward from a prior year's down market. A senior with a tax preparer who specializes in retirees handles these in stride, but a senior using a free preparer should at least know the names so the volunteer can ask the right intake questions.

Required Minimum Distributions, known as RMDs, apply to traditional IRA, traditional 401(k), 403(b), and most other pretax retirement accounts. The first RMD is due by April 1 of the year after the year the taxpayer turns 73, under the Secure 2.0 Act effective January 1, 2023. Roth IRAs do not require RMDs during the original owner's lifetime. The RMD amount is the prior year-end account balance divided by a life-expectancy factor from IRS Publication 590-B. A missed RMD carries a 25 percent penalty, reduced to 10 percent if corrected within two years. Most custodians calculate the RMD automatically and send a year-end reminder.

A Qualified Charitable Distribution, or QCD, lets a taxpayer aged 70 and one half or older send up to 105,000 dollars per year directly from a traditional IRA to a qualifying charity. The 2026 cap is indexed for inflation. A QCD counts toward the RMD but is excluded from taxable income on the federal return, which lowers AGI, lowers Social Security taxability, and may lower IRMAA two years later. The donation must move directly from the IRA custodian to the charity. A check made payable to the senior first does not qualify.

The Social Security taxability tiers are based on combined income, which is AGI plus tax-exempt interest plus half of Social Security benefits. Below 25,000 dollars for a single filer or 32,000 dollars for a joint filer, Social Security is fully tax-free. Between those thresholds and 34,000 dollars single or 44,000 dollars joint, up to 50 percent of benefits are taxable. Above the upper thresholds, up to 85 percent of benefits are taxable. The thresholds have not been adjusted for inflation since 1993, so most middle-income retirees today see 85 percent of benefits taxed.

IRMAA, the Income Related Monthly Adjustment Amount, is a Medicare premium surcharge on Part B and Part D for taxpayers whose modified adjusted gross income two years earlier exceeded a threshold. The 2026 threshold for single filers begins at 106,000 dollars and for joint filers at 212,000 dollars. A one-time spike in income, such as a Roth conversion or a property sale, can trigger an IRMAA surcharge for one year, then resolve. Form SSA-44 lets a senior request a reduction after a life-changing event such as retirement, divorce, or a spouse's death. Source pages include irs.gov/retirement-plans/required-minimum-distributions-rmds and Medicare.gov/your-medicare-costs/part-b-costs.