Taxes on retirement money look to be a growth sector for the IRS

September 11, 2011

Today is a somber anniversary. But it also coincides this year with a much happier celebration, Grandparents Day.

So while we remember those who died on Sept. 11, 2011, today's tax focus is on the country's older filers.

There are, of course, many young grandfathers and grandmothers. But the more senior Maw-maws and Grampas get today's attention. The reason? Readily available Internal Revenue Service data breaks out taxable retirement income.

Specifically, for the 2008 tax year, the latest complete tax filing info, slightly more than 15 million taxpayers reported taxable Social Security income. And that precise number of filers is today's By the Numbers figure:

15 million filers with taxable Social Security 2008

And just how much money did those millions of filers owe taxes on three years ago? $168.1 billion. That was an increase of 0.6 percent over the previous tax year.

Other retirement earnings also showed increases in 2008.

The IRS' 2008 Statistics of Income revealed a 9.6 percent increase from the previous tax year in taxable individual retirement account (IRA) distributions: $162.2 billion reported on 11.3 million returns.

There also was a 3.2 percent hike in 2008 over 2007 in taxable pensions and annuities: $506.3 billion reported on 25.5 million returns.

The 2008 tax year IRA distributions could have included money taken early from these retirement funds. That economy thing again, forcing some folks to tap the accounts before they were ready to retire.

Some folks also could have taken some taxable early pension payouts three years ago.

But the Social Security benefits go to older Americans.

While the retirement related earnings were up in 2008, the overall adjusted gross income for that tax year dropped by almost 5 percent from 2007's filings. This was the first drop in AGI since 2002.

An indication of our aging country, perhaps?

So on this Grandparents Day remember not only all they do for you, but also how these older members of our society still contribute to America's bottom line.

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