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Old 04-14-2015, 07:51 AM   #21
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Surprise? For many and varied reasons, we have not paid income taxes for the past 24 years, and the simplicity of our financial status has kept us below the taxing level since the day we retired. Goverment bonds, IRA's and deferred annuity tax advantages greatly simplify our lives. Tax preparation takes about 1/2 hour for state and federal taxes, and the historical info fromTaxAct makes filing a non event.

We did make an early-on mistake for 2 years, when we turned 65, by not taking out some smaller investments, up to the exempt limit. With Social Security as a base and IRA withdrawals, the actual cash flow keeps us under the taxable limits.

We never planned it this way, it just happened. As we go forward, there will be some taxes, but this hapens at the same time our spending has gone down and spending needs decreased. Looking ahead to soon becoming a nonagenarian, we'll eventually pay some taxes, but overall, we are very grateful for the current US tax structure as it is designed to treat those with middling incomes.
............................
Adding a thought for those who could have parents who are in a similar "no tax" situation. Theoretically, not owing taxes, per se, would not require a person to file taxes....
EXCEPT... that not filing, implicitly allows the government to file for you. When the government does that, it assumes ONLY the standard deduction, and no other deductions. ie. single return, not joint, and no other exemptions suchas over 65, blind, etc.

You may want to read this article on the legal points involved.
https://www.legalzoom.com/articles/w...t-filing-taxes
Quote:
What if you fail to file?

The IRS may file what is known as a substitute return for you. However, as you well know, the IRS will not be looking to save you any money. In fact, a substitute return will not include any of the standard deductions your accountant would typically include in your return. Case in point, a substitute return only allows one exemption: single or married filing separate, so you end up with higher tax liability than if you would have just filed.
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Old 04-14-2015, 07:56 AM   #22
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Still working so Pleasant and Tax does not go in the same sentence for me.

Had to take some money out of the business this year and hit the new Affordable Health care tax. That was a very unpleasant surprise.
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Old 04-14-2015, 08:14 AM   #23
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We too got the savers tax credit and got direct deposit of our "managed return" in one week...
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Old 04-14-2015, 09:08 AM   #24
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My nice surprise is that my planning was about right! Went back to work in June last year. Found a website with spreadsheets for income tax planning. Knew I'd have to pay back my subsidies for Obamacare insurance and knew I wouldn't contribute to a 401K again until 2015 as I was getting the emergency fund replenished after 10 months off work. So, knowing my income, deductions and previous years' cap gains and interest/dividends, I was able to adjust my W-4 with-holdings accordingly and am getting back a small refund. I consider +/- $4K return/owe in any given year a success and this was well under that. Plus I refuse to file quarterly, choosing instead to adjust with-holdings at work. When I finally do ER, though, will have to reconsider that!
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Old 04-14-2015, 09:21 AM   #25
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No surprise here, although we paid almost 3x in federal tax this year what our total gross income will be next year.

Next year Uncle Sam gets a surprise when I take some of it back out of his pocket! muah hah hah
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Old 04-14-2015, 09:21 AM   #26
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During the year I monitored our dividend and CG income, and near the end of the year I figured we had enough leeway to make a fairly substantial Roth conversion without affecting our ACA subsidy. We paid no estimated taxes during the year.

Well, turns out I miscalculated a bit and we needed to pony up the excess ACA subsidy to the IRS.

Our tax bill amounted to $3.00, total.
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Old 04-14-2015, 10:14 AM   #27
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The only pleasant surprise was that no one hijacked our tax return and filing went through fine.
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Old 04-14-2015, 10:58 AM   #28
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The only pleasant surprise was that no one hijacked our tax return and filing went through fine.
+1! I filed on Sunday using Turbotax and kept my fingers crossed until I received the acceptance emails!
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Old 04-14-2015, 11:16 AM   #29
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During the year I monitored our dividend and CG income, and near the end of the year I figured we had enough leeway to make a fairly substantial Roth conversion without affecting our ACA subsidy. We paid no estimated taxes during the year.

Well, turns out I miscalculated a bit and we needed to pony up the excess ACA subsidy to the IRS.

Our tax bill amounted to $3.00, total.
Please remit $0.75 every quarter.

DH has a little art and graphic design side income of >$10k this year. I increase the withholdings on Vanguard distributions to accommodate for taxes on it. Overaccommodation this year--$3k refund. Woohoo!
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Old 04-14-2015, 12:38 PM   #30
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Just finished my taxes this past weekend and caught an unexpected and pleasant surprise - the Retirement Saver Credit -- as I was working through the Turbotax categories. Before I ERd in 2013, I had for years been in the top tax bracket, so most of my tax surprises were of the unpleasant variety. Now, with annual total income of about $40k, lovely tax credits have come into view - the ACA credit, Tuition tax credit (my spouse has gone back to school), and the Retirement Saver Credit (up to $2000 credit on IRA contributions, which I had not even known about). How advantageous to have a middle class income again. (Full disclosure: I itemized my deductions in 2014, probably for the last time, because I still had a mortgage interest deduction and some carryover charitable contributions. These helped reduce my income tax bill to 0.)

Anyone else experience a 'nice' surprise this tax season?
Is one still required to have a j*b in order to contribute to an IRA?
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Old 04-14-2015, 12:55 PM   #31
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Like others here no good news. Paid as expected on taxable brokerage acct profits. We have usually paid $$ on this and even occasionally paid a small penalty as DW and I figured we earned more on the cash than we would pay at the end -- that and our profits moved around quarter to quarter so we avoided paying estimates (though we likely should have done so).

For '15 it's a very different story as we had a significant windfall this year from sale of my corp employer and a concomitant $$ payout. Net of all of that if we are paying big $ estimates for this year with the plan/hope to owe nearly $0 in April of 16.

With the goal of RE at end of '15 or early '16 we hope to be back to more orderly estimates after one bad year


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Old 04-14-2015, 05:22 PM   #32
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Yes, The AMT in the amount of about $6,500.00. What a kick in the pants. I have worked hard saved all my life, and now having put as much as I could afford into a DB plan, it now has to all come out as earned income.
And welfare people complain about the middle class not paying their fair share of taxes. I pay plenty!
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Old 04-14-2015, 05:46 PM   #33
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My pleasant surprise this season is that the TurboTax shenanigans pushed me into investigating other tax software and I discovered that TaxAct works just fine at a fraction of TT cost.
I love TaxAct and have used it since it came on the market 16 years ago. They are the same folks who made Parson's Tax Edge which I also loved because it ran on my old computer long after TT was too big to be loaded.
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Old 04-14-2015, 06:56 PM   #34
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No surprises for me - I meet with the CPA in October to figure out what tweaks we can do to optimize everything.

BUT, I'm now doing both my parents taxes with them using TurboTax. I've been having DD harvest capital gains and stay at zero taxes due (no state tax in FL). So for 2014 DD made a little income (working for the county board of elections) and so the exact same CG harvesting as in 2013 pushed him into owing $400 for 2014.

He spent last weekend poring over his records and scared up enough medical expenses (sadly from heart surgery) and charitable giving to make switching to itemized deductions worthwhile. And we got his tax back down to $0.

Phew!
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Old 04-14-2015, 07:04 PM   #35
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I ER'd halfway thru the year so there was no income (and no withholding) for the second half of the year.

The surprise for me was that after year-end Vanguard CG and Dividend distributions, I ended up owing an additional $13K in taxes.
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Old 04-14-2015, 07:12 PM   #36
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My nice surprise is that my planning was about right!
+1 I retired mid-year and, despite the drastic change in income, our withholding worked out so that we ended up writing checks for ~$120 to the Feds and ~$220 to the state. This is a bulls-eye compared to the last several (tens of?) years.

We'll see how it works out during this first full year with the start of my small pension.
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Old 04-14-2015, 08:04 PM   #37
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During the year I monitored our dividend and CG income, and near the end of the year I figured we had enough leeway to make a fairly substantial Roth conversion without affecting our ACA subsidy. We paid no estimated taxes during the year.

Well, turns out I miscalculated a bit and we needed to pony up the excess ACA subsidy to the IRS.

Our tax bill amounted to $3.00, total.
Good job!
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Old 04-14-2015, 10:10 PM   #38
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How about an unpleasant surprise, more Turbo Tax than just tax.

I bought TT Home and Business because I have a business, as well as a couple of rentals. Did my taxes, then did my Mom's taxes (no tax due, no refund). She passed away last year, leaving a relatively small estate, waaaay below the estate tax limit. So when I started the estate filing, I discovered I needed Form 1041. And in order to do Form 1041 in TT you need TT Business. Not Home and Business, but Business. Never even heard of it. I ended up filing an extension for the estate, and can probably figure out the form directly without TT, but what a rip off! I bought basically the most expensive version they have, and still couldn't do something pretty basic.
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Old 04-14-2015, 11:08 PM   #39
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How about an unpleasant surprise, more Turbo Tax than just tax.

I bought TT Home and Business because I have a business, as well as a couple of rentals. Did my taxes, then did my Mom's taxes (no tax due, no refund). She passed away last year, leaving a relatively small estate, waaaay below the estate tax limit. So when I started the estate filing, I discovered I needed Form 1041. And in order to do Form 1041 in TT you need TT Business. Not Home and Business, but Business. Never even heard of it. I ended up filing an extension for the estate, and can probably figure out the form directly without TT, but what a rip off! I bought basically the most expensive version they have, and still couldn't do something pretty basic.
I just checked and TaxAct supports form 1041 Form 1041 and Form 706 - Estates - Trusts - Generation-Skipping Transfer | Help Topics | TaxACT
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Old 04-15-2015, 07:35 AM   #40
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2nd full of ER and again no Federal Tax Liability due to managing LT/ST gains and Qual Dividends.
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