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Old 04-16-2010, 06:00 AM   #41
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I have a very simple retirement income situation. Currently, my income comes from only tax-deferred vehicles (TIRA, Rollover IRA, and SPIA).

I simply have FIDO take out 15% FIT of my monthly withdrawal from my cash bucket and send it in. 15% is a bit high, but that's due to not having taxes taken out of my monthly SPIA income. I could have them also take out state income tax, but luckly I live in a state where retirement income is not taxed on a state or local level.

In early December (when I get the early version of TT) I simply plug in my YTD income, December's forecast withdrawal, and YTD FIT already paid.

Depending on the result, I adjust my December FIT tax payment to target my annual taxes within a $50+/- variance.

Nothing fancy at all, and it eliminates quarterly tax submissions....

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Old 04-16-2010, 11:34 AM   #42
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Rescueme - that's a pretty novel approach from what I have seen and very clever! Congrats!

You came up with the 15% number based on prior year tax patterns I assume?

(wouldn't work for me as 95% of my investments are non-taxed deferred and we are not drawing from IRAs at present and have no annuities (SPIA))


Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
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Old 04-16-2010, 02:44 PM   #43
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Originally Posted by audreyh1 View Post
Yep - it's pretty easy when all your annual income is from a pension. That means it is a known quantity, and it can be treated just like it was at work with tax withholding.

It's when you have other sources of income (IRA withdrawals, investment income, realized capital gains, etc.) that it becomes tricky as these often aren't predictable.


Only one third of my income is from my Pension . The rest is made up of SS Survivor Benefit & withdrawals from my taxable accounts . Since my SS is very close to my pension amount I just doubled my withholding from my pension and so far so good ! I like the fact that I 'm not writing a big check four times a year and if I end up owing anything it is minimal.
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Old 04-17-2010, 02:20 PM   #44
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I was in a similar situation to Audrey - I have self-employed income and it varies according to my business schedule. In 2008, all of my income was employee income and a *lot* more than what I made self-employed. I ended up paying taxes to the IRA, but the overall tax burden was less than half that of the previous year, so based on my reading of the rules, I'm OK.

I use the AI method for my tax calculations - mine is a bit easier as I have Foregin earned income, so only worry about the SSN and Medicare until a certain threshold of earning is reach and to be honest, I'm endeavoring to stay under that.

The only other variable is the increase in investment income needing to be accounted for in the estimated taxes - as that grows, then I will need a better estimating method .....

Deserat aka Bridget
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estimated tax, taxes

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