Seniors are often surprised by taxes on mandatory withdrawals - Clear Start Tax explains how RMDs can increase IRS balances in retirement.
IRVINE, CA / ACCESS Newswire / July 23, 2025 / Many retirees assume their tax worries end with their final paycheck, but Required Minimum Distributions (RMDs) are catching them off guard. According to Clear Start Tax, mandatory withdrawals from retirement accounts like 401(k)s and traditional IRAs are pushing thousands of seniors into higher tax brackets - and in many cases, deeper IRS debt.
"RMDs aren't optional, and neither are the taxes they create," said the Head of Client Solutions at Clear Start Tax. "We see clients who've paid off their homes, receive Social Security, and still end up owing thousands to the IRS just because they didn't plan for the tax hit."
How RMDs Can Trigger IRS Debt
Once a taxpayer turns 73 (as of 2025), the IRS requires them to begin withdrawing a calculated amount each year from qualified retirement accounts. These distributions are taxed as ordinary income, even if the funds are not spent.
Clear Start Tax outlines several ways RMDs can create or increase back taxes:
Unexpected Withholding Gaps - Many custodians don't withhold enough to cover the tax burden.
Combined Income Penalties - RMDs added to Social Security and pensions can push retirees into higher tax brackets.
Loss of Tax Credits - Increased income can disqualify seniors from deductions, credits, or affordable health plans.
Missed Payments - Seniors on fixed incomes may not make estimated tax payments, causing interest and penalties to build.
"RMDs aren't just income - they can tip the scales, especially when combined with unfiled returns or prior IRS debt," added the Head of Client Solutions. "And since they're required by law, you can't just opt out."
Why Retirees Often Miss the Warning Signs
Clear Start Tax notes that many seniors don't realize their tax situation has changed. Without a W-2 or employer, there's often no system in place for regular withholding, and no alert until a CP14 notice or lien arrives.
Additionally, seniors withdrawing from multiple accounts may fail to track their total taxable income. A small oversight can lead to large consequences.
What Seniors Can Do to Avoid RMD-Related Debt
Many retirees aren't aware that Required Minimum Distributions (RMDs) are fully taxable, and skipping tax planning can lead to debt quickly. Clear Start Tax urges seniors to treat RMDs like any other income source and take proactive steps before tax time.
Clear Start Tax recommends:
Review all retirement account distributions annually
Adjust withholdings to better match tax liability
Use IRS Form 1040-ES for quarterly estimated payments
Recalculate tax strategy each year based on age, income, and filing status
File missing returns before enforcement escalates
Fresh Start Program Offers Relief for Retirees
If tax debt has already built up - whether from unplanned RMD taxes or previous underpayment - retirees may still have viable relief options. Clear Start Tax helps seniors use IRS Fresh Start programs to resolve debt without jeopardizing essential income or retirement assets.
Clear Start Tax helps qualifying retirees:
Apply for payment plans based on current income and expenses
Submit Offers in Compromise to reduce the total amount owed
Request penalty abatement for first-time or hardship-related cases
Regain filing compliance to avoid enforcement actions or levies
Protect Social Security income from garnishment, where applicable
By answering a few simple questions, taxpayers can find out if they're eligible for the IRS Fresh Start Program and take the first step toward resolving their tax debt.
About Clear Start Tax
Clear Start Tax is a full-service tax liability resolution firm that serves taxpayers throughout the United States. The company specializes in assisting individuals and businesses with a wide range of IRS and state tax issues, including back taxes, wage garnishment relief, IRS appeals, and offers in compromise. Clear Start Tax helps taxpayers apply for the IRS Fresh Start Program, providing expert guidance in tax resolution. Fully accredited and A+ rated by the Better Business Bureau, the firm's unique approach and commitment to long-term client success distinguish it as a leader in the tax resolution industry.
Need Help With Back Taxes?
Click the link below:
https://clearstarttax.com/qualifytoday/
(888) 710-3533
Contact Information
Clear Start Tax
Corporate Communications Department
seo@clearstarttax.com
(949) 535-1627
SOURCE: Clear Start Tax
View the original press release on ACCESS Newswire:
https://www.accessnewswire.com/newsroom/en/business-and-professional-services/retired-but-owe-back-taxes-clear-start-tax-warns-about-required-1051580
