A year into the Covid-19 pandemic the world has changed. For one thing, the IRS has extended the deadline for filing individual taxes for TY 2020 to May 17. (Read more here.) Congress has also passed pandemic-related legislation that may impact you and your taxes. Retirees need to how understand those changes and other revisions may affect them going forward. Take a look at these five tax tips for retirees.

Diffuse the ticking tax time bomb

People forget that retirement accounts such as 401(k)s and Individual Retirement Accounts (IRAs) are tax deferred, not tax free. You are legally required to begin withdrawals, or required minimum distributions (RMD), by age 72 so the government can collect those deferred taxes.

Those withdrawals are considered personal income. If not properly planned, they can push you into a higher tax bracket, boosting your taxes for that year. Failure to withdraw the proper amount will result in a penalty.

The CARES Act suspended RMD for 2020. The SECURE Act of 2019 (learn more here) changed the age for the RMD from 70½ to 72. If nothing else, those changes give you more time to talk with your financial professionals to figure out how to pay the least amount of taxes – an important tax tip for retirees.

Convert to a Roth IRA – and do it gradually

The Tax Cuts and Jobs Act reduced tax rates to historical lows for both individuals and corporations. Unfortunately, those low rates for individuals expire in 2025. Most financial professionals expect taxes will go up to reduce that huge federal deficit. The best time to convert is when taxes are at their lowest.

One obstacle may be that the taxes on the withdrawals become due immediately. You want to pay those taxes while you are in a lower tax bracket. To lessen the impact on cash flow you are not required to make the conversion all at once – you can stretch it over several years, spreading out the taxes due over multiple years.

Consider a Qualified Charitable Contribution (QCC)

Those required to take the RMD who don’t need the money can donate the funds directly to a qualified charity and avoid the taxes. “If It does not touch your bank account, you don’t have to claim that portion as income and it still satisfies your RMD,” says Bryan Bibbo, lead advisor at the JL Smith Group in Avon, Ohio.

The RMD can also have an impact on your Medicare premiums says Mike Repak, vice president and senior estate planner at Janney Montgomery Scott in Yardley, Pa. “If you make the donation, it is not counted as part of your adjusted gross income, which is used to calculate your Medicare premium. Keep that number lower and your premiums can stay lower.”

If you took a loan on your 401(k)…

…repay it sooner rather than later. The CARES act allowed account holders to borrow up to $100,000 from their 401(k) accounts. Typically, the 401(k) allows you to take up to five years to repay that loan. The Cares Act gave account holders an additional year. People who took the loans because of pandemic-related hardships missed the stock market surge. Sure, you are paying yourself back with interest, but every day the money is not invested it is not growing. Since last year’s Covid market crash, stocks are up about 20 percent.

File early

Of all the tax tips for retirees, this might be the simplest: File early. The earlier you file, the less likely you will be a victim of fraud, says Repak. “People concerned about security should file early and get their taxes in before the fraudsters have a chance to,” he says.

Want other tax tips?  Check out an earlier feature here.

Rodney A. Brooks writes about retirement and personal finance issues. His column currently runs in U.S. News & World Report. He has written columns on retirement for The Washington Post and USA TODAY. He has also written for National Geographic, Next Avenue and Black Enterprise magazine. He retired as Deputy Managing Editor/Personal Finance and retirement columnist for USA TODAY in 2015. 

Your use of any financial advice is at your sole discretion and risk. Seniorplanet.org, Older Adults Technology Services and AARP make no claim or promise of any result or success.