As a retirement and life planning firm, one of our primary goals is to “Help people retire successfully and stay successfully retired.” Retirement is a life changing event that demands thorough planning and the discipline to follow a plan for success. Life changes in many ways when you retire. So it should come as no surprise that taxes during retirement change as well. The key; however, is planning. A little tax planning can often go a long way towards keeping your payments to Uncle Sam at a minimum throughout your golden years.

The first thing you need to know is your potential tax liability for this year and possibly the next 2 to 3 years. This begins with how different types of income are taxed. Below are various types of retirement income. These do not include any royalties or other investment or working income that may apply to your situation during retirement.

Social Security benefits, for example, are tax-free or partially taxed depending on your overall income. However, your overall income is not as simple as it was before retirement to calculate. The calculation is the sum of your adjusted gross income (AGI), tax-free interest, and ½ of your Social Security Benefits.

Pension distributions, qualified retirement plan distributions and IRA distributions are all fully taxable unless a portion of the contributions made to these plans are after-tax or non-deductible. Roth IRA distributions and Roth 401(k) distributions, on the other hand, are tax-free.

Distributions taken from an annuity are partially taxed. This calculation is made with consideration of the amount you contributed to the annuity (cost basis) and any growth in the annuity (gain).

And last, but definitely not least, required minimum distributions (RMDs) that begin at age 70 ½ are fully taxable.

Once you have an idea of where your tax liability will be, then you can begin the planning process. Here are just a few ideas and tax tidbits to get you started:

Don’t forget to take your personal exemption amounts and standard or itemized deductions. Your primary residence mortgage interest payments, real estate taxes, medical expenses and charitable inclinations, etc. all count if you are itemizing your deductions.

During 2010 there are still many tax credits you can take advantage of that will perhaps coincide with some of your retirement goals. The homebuyer’s tax credit is available to anyone who has lived in their home 5 of the last 8 years and can be as high as $6,500. Additionally, you can exclude up to $500,000 in capital gains from selling your primary residence if you are married ($250,000 if you are single).

Energy tax credits are available in 2010 to update your home to a more energy efficient living space. These credits can be applied for installing everything from new windows and doors to metal roofs to insulation, air conditioners and water heaters.

Don’t overlook tax-free income strategies, such as income from municipal bonds, and tax-advantaged investments, such as natural gas and oil investment programs. Section 263 of the tax code allows investors to deduct 100 percent of the intangible expenditures of drilling, which is usually 65 to 80 percent of the well, during the year the investment was made. Additionally, tangible drilling costs are 100 percent tax deductible and may be deducted as depreciation over a seven-year period.

Last, the time to start is now and get help! Tax planning is not as cut and dry as you might imagine, and if you wait it might be too late to do anything. Every year your situation could change, Uncle Sam changes his mind, and the same strategies that worked the year before might not work again. 35+ years of working in various fields of Life Planning has shown me that most people don’t plan to fail -they just fail to plan. And remember-once paid, Uncle Sam really doesn’t like to give your money back.

VSR does not provide tax or legal advice.