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good way to guesstimate taxes in retirement
Old 07-09-2015, 01:34 PM   #1
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good way to guesstimate taxes in retirement

Hello all,
I'm not retired yet but would like to in 2016, lol October to be exact. I'm filling out one of those on line budget worksheets and I'm trying to guesstimate how much I'll owe in taxes.

How did you figure out what your tax bill would be? should I just use where I'm at now?

Thanks,
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Old 07-09-2015, 01:40 PM   #2
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Past tax years are a good guide/predictor. Also Taxcaster is a good free tool to do "what if" scenarios.
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Old 07-09-2015, 01:43 PM   #3
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+1 on Taxcaster
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Old 07-09-2015, 01:51 PM   #4
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You need to know where your taxable income is coming from. Will it be from selling part of an IRA? Or is it pension income, and how much of that will be taxable? Or will you be living off investments, a large chunk of which may be subject to capital gains tax rather than ordinary income tax like the first two.
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Old 07-09-2015, 01:53 PM   #5
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I just used a spreadsheet but since I am a tax accountant, that might be easier for me than for others :-). Your taxes will likely be much lower in retirement than they are now so you should definitely not just use your current numbers.
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Old 07-09-2015, 03:12 PM   #6
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I just plug(ged) my anticipated income and distributions into Turbo Tax.
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Old 07-09-2015, 03:28 PM   #7
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+1 to donheff's method.
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Old 07-09-2015, 03:55 PM   #8
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Should be simple. Look at last years income tax return.

Delete last years "earned income", since you are retired.

Add any "new" income, ie. IRA withdrawals, social security etc.

The "taxable Income" figure should give you good estimate, to figure out
your income taxes.
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Old 07-09-2015, 04:10 PM   #9
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Quote:
Originally Posted by bclover View Post
How did you figure out what your tax bill would be? should I just use where I'm at now?
I suspect you do not fill out your own tax return because you asked this question.

Basically, it looks like many responders just fill out a tax return in order to figure out their tax bill. I used TurboTax which also helps with routine tax planning. This year, I got $50 free to spend at Amazon from the TurboTax folks, so I made money using TurboTax.

I use TurboTax in other ways even before filing a tax return in order to reduce my taxes:
1. How much bunching of deductions to do.
2. How much conversion to Roth IRA to do.
3. How much to withdraw from 529 plan to pay for college or use tax credits instead.
4. Should I avoid getting dividends that might put me in higher tax bracket?

So I can start up TurboTax several times a year and see how I am doing on taxes well before year-end.
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Old 07-09-2015, 04:33 PM   #10
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I would suggest Taxcaster. Put in info from your 2014 return and see if you get a similar result to the tax on your 2014 return. If so, then eliminate your work income and make any other appropriate changes such as adding SS or pension income or Roth conversions or whatever and see what the resulting taxes are. Ditto for 2015 in Taxcaster, though the results should be similar to 2014.
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Old 07-09-2015, 04:34 PM   #11
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Quote:
Originally Posted by LOL! View Post
I suspect you do not fill out your own tax return because you asked this question.

Basically, it looks like many responders just fill out a tax return in order to figure out their tax bill. I used TurboTax which also helps with routine tax planning. This year, I got $50 free to spend at Amazon from the TurboTax folks, so I made money using TurboTax.

I use TurboTax in other ways even before filing a tax return in order to reduce my taxes:
1. How much bunching of deductions to do.
2. How much conversion to Roth IRA to do.
3. How much to withdraw from 529 plan to pay for college or use tax credits instead.
4. Should I avoid getting dividends that might put me in higher tax bracket?

So I can start up TurboTax several times a year and see how I am doing on taxes well before year-end.
Lol you are correct, I don't do my own taxes

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Old 07-09-2015, 04:34 PM   #12
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Thanks all.

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Old 07-09-2015, 07:27 PM   #13
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This site is helpful for federal tax estimating:
1040 Tax Calculator
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Old 07-09-2015, 07:47 PM   #14
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Taxcaster is great! Thanks for the pointer.

How do I estimate how much dividends/capital gains a given fund generates just by owning it? I can't look at last year's numbers since I had a windfall and last year almost everything was tax-free.
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Old 07-09-2015, 07:53 PM   #15
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I also use a spreadsheet to forecast my estimated taxes (federal and state) throughout retirement. I have different income streams that kick in at different ages so my taxes and tax rate will change over time. The 'SUMPRODUCT' formula in Excel makes it easy to accurately calculate your federal and state taxes for each year in retirement as long as you have a reasonable guesstimate of your taxable income to input into it. Just need to update the formula if/when the tax brackets and rates change.
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Old 07-09-2015, 11:43 PM   #16
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Quote:
Originally Posted by nuisance View Post
Taxcaster is great! Thanks for the pointer.

How do I estimate how much dividends/capital gains a given fund generates just by owning it? I can't look at last year's numbers since I had a windfall and last year almost everything was tax-free.
Look at the dividends paid for 2014 or the last 12 months under distributions on the fund's website as a guesstimate.
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Old 07-10-2015, 09:51 AM   #17
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The Federal Tax Calculator 2015/2016 | 2015 Tax Refund Calculator


I've used this.
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Old 07-10-2015, 03:56 PM   #18
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Originally Posted by pb4uski View Post
Look at the dividends paid for 2014 or the last 12 months under distributions on the fund's website as a guesstimate.
Thanks. Looks like morningstar has this data at the bottom of the quote page in a consistent (ie. the same for every fund) format. (Example link: VGTSX Vanguard Total Intl Stock Index Inv Fund VGTSX Quote Price News )
Between that data and taxcaster I've got a pretty good idea of what taxes will be, and it's lower than I expected!
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Old 07-11-2015, 03:57 PM   #19
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i have the same question re: how much tax i'll have to pay.
we will be living off of our rental property portfolio's income (85%) & a few other income streams (15%) from age 49 to 60 or so, then i can tap into my 401k & ira (approx. 1.2m value today) to supplement as needed.
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Old 07-11-2015, 10:58 PM   #20
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knucklehead, read backwards to find the answer.

P.S. I'm sorry, after seeing your screen name I just couldn't resist.
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