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View Poll Results: Poll: Your eff. tax rate (see original post to calculate!)
0% or less 6 5.00%
0% < my eff rate <= 5% 12 10.00%
5% < my eff rate <= 10% 20 16.67%
10% < my eff rate <= 15% 36 30.00%
15% < my eff rate <= 20% 22 18.33%
20% < my eff rate <= 25% 11 9.17%
more than 25% 13 10.83%
Voters: 120. You may not vote on this poll

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Poll: What is your effective Federal income taxes paid / AGI rate?
Old 08-18-2012, 11:33 AM   #1
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Poll: What is your effective Federal income taxes paid / AGI rate?

I think some folks still do not realize how low an effective income tax rate that folks really are able to pay if they practice tax-efficient investing even in retirement. So to make people more aware, how about a poll?

Here are the rules: From your Federal return (Form 1040 and siblings), please take your "total tax" and divide by "adjusted gross income" and express as a percentage. This will not take into account non-taxable income such as tax-exempt dividends, foreign exclusion, 401(k)/403(b)/FSA/HSA exclusions, pre-tax health insurance premiums, and so on. But you can comment on those non-taxable income if you like.

This is about Federal income tax and not state tax nor sales tax nor property tax. FICA/medicare is a blurry area because some folks pay that with Form 1040 and some don't.

Do early retirees really enjoy low effective tax rates?
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Old 08-18-2012, 11:37 AM   #2
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Let's just say that I/DW pay much less (%) than any of the folks running for president (either party) does ...

And as far as state/local tax? We pay nothing (those taxing agencies do not tax retiree's income - not even SS) even though that was not part of the question...
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Old 08-18-2012, 11:44 AM   #3
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Originally Posted by rescueme View Post
Let's just say that I/DW pay much less than any of the folks running for president (either party) does ...
.
I pay a larger percentage than either as I recall, did you mean less as in dollar amount, or in percentage?
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Old 08-18-2012, 01:11 PM   #4
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Old 08-18-2012, 01:18 PM   #5
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I'm retired and my effective tax rate last year was 14.5%
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Old 08-18-2012, 01:41 PM   #6
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I'm not retired, so I didn't vote, but my effective rate was 9.86% (using the calculation provided in the OP.). My marginal rate is 25%.
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Old 08-18-2012, 01:49 PM   #7
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I am retired and mine is a hair under 5% (federal only). State income tax and local property tax are each between 4.5% and 5% of AGI.
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Old 08-18-2012, 02:09 PM   #8
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>25%

At least we don't have state income tax
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Old 08-18-2012, 02:16 PM   #9
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Quote:
Originally Posted by LOL! View Post
I think some folks still do not realize how low an effective income tax rate that folks really are able to pay if they practice tax-efficient investing even in retirement. So to make people more aware, how about a poll?
Two income streams subject to different tax rates can result in the same after tax income for someone. An example would be tax exempt munis vs taxable interest income. The rates are different but the new after tax is the same. What conclusion can you draw from just looking at the numbers?
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Old 08-18-2012, 02:23 PM   #10
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Since I am gainfully unemployed, with no pension, Social Security, or such, the ordinary income part of the 1040 is pretty darn low. Combined with tax loss harvesting from early 2009, and having dependents, well...

My biggest tax bill is property taxes. Federal? The silly thing goes negative after the education credits for DD go in.
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Old 08-18-2012, 02:24 PM   #11
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I would have answered I don't know (what, you want me to look at old returns AND do math??). But I don't know what meaning it would have, either.
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Old 08-18-2012, 02:26 PM   #12
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I would have answered I don't know (what, you want me to look at old returns AND do math??). But I don't know what meaning it would have, either.
What happened to the spirit of adventure you had as a child. Don't you remember playing "I'll show you mine if you show me yours"?
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Old 08-18-2012, 02:37 PM   #13
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Total combined tax rate for me was 16%. This is combined provincial and federal. Most of my income were dividends and capital gains. Last year I had an unusually high income that will not be repeated.
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Old 08-18-2012, 02:59 PM   #14
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What happened to the spirit of adventure you had as a child. Don't you remember playing "I'll show you mine if you show me yours"?
Yeah, but then I found out the only ones who want to show me theirs didn't have enough of it . Wait, you are talking about money, right?
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Old 08-18-2012, 03:12 PM   #15
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Originally Posted by MichaelB View Post
Two income streams subject to different tax rates can result in the same after tax income for someone. An example would be tax exempt munis vs taxable interest income. The rates are different but the new after tax is the same. What conclusion can you draw from just looking at the numbers?
My purpose is to prompt people who are paying at a high effective rate to look for ways to lower their taxes while keeping the same total income.

For example, most people know that CD interest & bond dividends are taxed at a higher rate than stock dividends, right? That knowledge might cause one to place bonds and equities in different kinds of accounts.
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Old 08-18-2012, 03:18 PM   #16
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I voted 15/20 and started to think about why it was above 15 since my plan is to go only to the end of the 15% bracket if I can (which should put me well under 15% effective rate), then I remembered that I worked part of last year and got a severance package. I also did a Roth conversion up to the top of the 25% bracket. So if you're keeping it to retirees, I butted in when I shouldn't have.
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Old 08-18-2012, 03:32 PM   #17
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Everybody is welcome to respond to the poll, whether they are working or retired or something else.
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Old 08-18-2012, 03:38 PM   #18
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This has lead me to do something I've not done before, compare EU and US rates on my retirement income (excluding the fact the tax year is different).
US is 13.7% (AGI + treaty positions [gross income]. No foreign tax credits. US taxes adjusted accordingly and AGI calculated as if I were US resident and all income was US source.)
EU is 24.4% (gross income worldwide pre-treaty positions, and pre-tax free allowances. Taxes adjusted accordingly.)

It's the only way I can make it apples for apples with US (basically the same AGI income minus EU personal allowance/US std. deduction and exemption). Without apples to apples with the US, it's 13.7% (US) and 16.8% (EU).
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Old 08-18-2012, 03:39 PM   #19
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Here's a link to a similar poll from 2010. Poll: What percentage tax did you pay?
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Old 08-18-2012, 03:41 PM   #20
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Are we the only ones who get stuck paying AMT? Effective rate, 21% whether we deserve it or not. No offshore investments here...

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