7 Line Items Retirees Should Double-Check on Their 2025 Tax Returns
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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Filing a tax return in retirement can be complex, especially when income comes from multiple sources such as pensions, Social Security, taxable investments and retirement accounts, all of which follow different tax rules.
“When these streams converge, even small reporting errors can change tax brackets, affect Medicare premiums and alter how benefits are taxed,” according to Christopher Stroup, a CFP and owner of Silicon Beach Financial.
Jason Dall’Acqua, a CFP, founder and financial advisor at Crest Wealth Advisors, agreed. “It is not as straight forward as filing a return while in a W-2 employment role.”
Here are the line items retirees should pay extra attention to and double-check on their 2025 tax returns.
1. The Taxable Portion of Social Security Benefits
Definitely double-check your Social Security income, one of the most common income sources for retirees and one of the most misunderstood areas of the tax return, Stroup said. “Small errors there can ripple through income taxes, Medicare premiums and long-term financial planning.”
Eric Gargus, tax director at Mowery & Schoenfeld, finds that many retirees mistakenly assume their benefits are not taxable. “While there are cases where your Social Security benefits are not taxable, small changes in your income can cause 50%, or even 85%, of your benefits to be taxable,” he warned.
2. Retirement Account Distributions and Required Minimum Distributions
Be sure to scrutinize line items related to any IRA, 401(k) or inherited retirement account withdrawals, the experts suggested.
“Missed or misreported required minimum distributions (RMDs) are costly,” Stroup warned. “Failing to withdraw the correct amount or reporting it incorrectly can trigger severe penalties and distort taxable income.”
“Timing is everything when it comes to required minimum distributions,” Gargus said. He pointed to several factors that can influence how RMDs affect your tax return, including missing an application or calculation deadline, not staying current on changes to tax law that impact distribution timing or amounts or increasing your tax burden by withdrawing too much too quickly.
3. Pension Income and 1099-R Reporting
For retirees with a pension, this income may feel predictable, but the taxable versus non-taxable portions must be reported correctly. “Mistakes usually appear as underreported income, incorrect taxable Social Security calculations or mismatched Forms 1099,” Stroup said. Errors often originate from misunderstanding how pension income flows onto the 1040.
4. Investment Income, Cost Basis and Withholding
If you earn dividends or capital gains from your investments, review these line items carefully, as this income often fluctuates year to year. Missing or misclassified investment income can push retirees into higher tax brackets.
“Cost basis on sold assets and withholding amounts are common trouble spots that quietly distort taxable income,” Stroup said.
Additionally, verify that your tax-exempt interest and qualified dividends are reported correctly, “as these receive preferential tax treatment compared to ordinary income,” Dall’Acqua said.
Under-withholding or skipping estimated tax payments can also create problems for retirees, Gargus noted, often resulting in an unexpected tax bill.
5. Medicare Premiums, IRMAA and Medical Deductions
Medicare costs are closely tied to income reported on tax returns, often with a two-year delay.
“Medicare premiums deducted from Social Security benefits are often overlooked as potential medical deductions,” Stroup said.
A large one-time tax event, such as the sale of a home or a sizable Roth conversion, can also affect future Medicare costs, Gargus pointed out. “Higher taxable income can trigger additional Medicare premiums called Income-Related Monthly Adjustment Amounts (IRMAA) based on your modified adjusted gross income two years prior,” he said. While temporary, these IRMAA costs can add up to thousands of dollars for a married couple.
6. Filing Status, Age and Overlooked Credits
Major life changes can occur in retirement, including widowhood, remarriage and divorce, Stroup said. These events affect eligibility for deductions, credits and tax brackets.
Something as simple as checking the retiree’s age can also make a difference, Gargus explained, helping ensure that age-based rules and benefits are applied correctly.
7. Red Flags That Signal a Return Needs Another Review
Some warning signs suggest more than a simple math error, Stroup said. Paying attention to these signals can help retirees catch problems before they escalate, including:
- Large year-over-year tax swings
- Unexpected balances due
- Sudden changes in Medicare premiums
- IRS notices
“These usually indicate underlying reporting issues or missed planning opportunities that deserve immediate attention,” he said.
Taking the time to carefully review these line items before filing can help retirees avoid costly surprises and keep their tax picture aligned with their long-term financial plan.
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