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Old 11-06-2011, 07:05 AM   #21
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Originally Posted by donheff
If so, where do you get the small form Youbet mentions?
Last pages of:
http://www.irs.gov/pub/irs-pdf/f1040es.pdf

You may need a state 1040 es form also if you make a qtrly payment to your state
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Old 11-06-2011, 08:00 AM   #22
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Quote:
Originally Posted by Ronstar View Post
Last pages of:
http://www.irs.gov/pub/irs-pdf/f1040es.pdf

You may need a state 1040 es form also if you make a qtrly payment to your state
If you use TurboTax it will prepare the forms for you as well. Once you send the first one in the IRS will send you forms for the rest of the year and the next year (and beyond if you keep paying quarterly).
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Old 11-06-2011, 09:28 AM   #23
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If you use TurboTax it will prepare the forms for you as well. Once you send the first one in the IRS will send you forms for the rest of the year and the next year (and beyond if you keep paying quarterly).
I used Turbo Tax for the first time last year. It told me my qtrly payments, but didnt print the fed vouchers. It did print the state vouchers. I must have screwed something up.
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Old 11-06-2011, 10:35 AM   #24
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Originally Posted by Ronstar View Post
Last pages of:
http://www.irs.gov/pub/irs-pdf/f1040es.pdf

You may need a state 1040 es form also if you make a qtrly payment to your state
One thing I am always sure to do (after not doing this the first time back in the 1990s) is to make my 4th quarter estimated tax payment of state taxes before 12/31 (instead of in early January) so I can deduct them on when I file my federal tax return the following April instead of waiting another year. Then, in early January, I make my 4th quarter estimated tax payment of federal taxes. This spreads out the two checks, as I usually receive a large, monthly dividend payment in the first few days of January which is used to cover the later estimated taxes.
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Old 11-06-2011, 11:10 AM   #25
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I still have significant pension income, but the elimination of payroll taxes means the % of gross income to taxes went from 28.6% to 23.3%.

While working we maxed out both our 401k's including after 50 catch-up allowances, and I had pre-tax FSA contributions plus HI payments that all reduced taxes somewhat, and we don't have those options in retirement. (not eligible for an HSA)
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Old 11-06-2011, 11:35 AM   #26
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Hello W2R - I am planning on 28% average tax rate. Can I ask you how have you been able to reduce it to 14% ? Please feel free to email me if you do not wish to share details on this board. Thank you.
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Now that I'm retired, I'm happy to say that for me, state and federal taxes together total only 14% of my income.
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Old 11-06-2011, 12:13 PM   #27
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Once my wife stops working our FIT rate should go from 20+% to about 3% according to Taxcaster. And no more payroll tax. No SS, no pension, no taxable IRA distribution, mostly qualified dividends, some munis, some return of capital and a small amount of taxable interests.
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Old 11-06-2011, 12:14 PM   #28
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Hello W2R - I am planning on 28% average tax rate. Can I ask you how have you been able to reduce it to 14% ? Please feel free to email me if you do not wish to share details on this board. Thank you.
I didn't do anything. My income consists of my tiny federal pension, my monthly withdrawal from the TSP, and dividends from my taxable accounts. Actually my taxes would be less than they are right now, if I withdrew less from the TSP than I am at present. I am purposely trying to take this taxable income now before I start Social Security, for tax reasons. My house is paid off so I don't need more income to pay a mortgage or rent, and that may help.

It sounds likely that my total income is less than what you are planning on for retirement.
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Old 11-06-2011, 02:02 PM   #29
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As others have mentioned, ER gives you some opportunities to manage your tax rate. This year will be my first "low" year with a rate somewhere around 4-5% before ROTH conversions. Like many, I will probably convert up through the 15% bracket.

The other thing I did was front end load my charitable deductions during my last high rate year to maximize the deduction value. I am expecting my pre-Roth conversion rate to be in low single digits for 7 more years, then my pension starts and the rate will rise. When RMDs start, game over. During my last couple of high-rate years I pre-funded our charitable deductions through age 69.
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Old 11-06-2011, 02:38 PM   #30
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I used Turbo Tax for the first time last year. It told me my qtrly payments, but didnt print the fed vouchers. It did print the state vouchers. I must have screwed something up.
Back when I was paying estimated taxes turbo tax printed the vouchers out as part of the print return for filing entry.

Their help confirms this:
Why Does TurboTax Print Estimated Tax Payment Vouchers? - TurboTax® Software Support
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Old 11-06-2011, 03:04 PM   #31
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My effective tax rate (sez TurboTax) for federal return was 10.55% for 2010. I am still able to itemize, due to school/property taxes plus some other miscellaneous minor deductions. I am filing Single, retirement status FIREd and not drawing SS (age 53).

Both of my current income streams, CSRS federal survivor pension and federal TSP 401(k) converted to fixed annuity, are not taxable by NYS.
I pay fed tax on both, of course.
The NY state income tax burden disappearing is where I saw the biggest advantage for no longer w*rking.
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Old 11-06-2011, 03:06 PM   #32
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I've been moving big chunks of money from deferred accounts to roth accounts for several years up to 15% max tax rate. This will be the last year I'll move so much since company pension started in October (although I haven't filed for it yet, timing first three checks for January.) Then in October next year I planned to start SS. But...maybe I should delay that until January 2013 to move more to roth. When I look back to the early years that I contributed to my 401K, you always heard that you would have lower taxes when you retired which would save you a bundle. No one thought to mention that this all changed at 70 1/2. It will be a killer.
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Old 11-06-2011, 05:28 PM   #33
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I'm also doing Roth conversions to the top of the 15% bracket. I turned 62 last April and will also take SS in January of 2013 as DW turns 62 in Dec of 2012. I want to move as much as possible till that date.
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Old 11-06-2011, 07:25 PM   #34
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My DW is still w*rking so our income is still relatively high plus I live in CA so my pension is taxed. This is my first year in ER, starting March 1st, so I still haven't seen what my taxes will be. This is the only big item on my budget planning worksheet that I don't have a good handle on. I extrapolated from last years taxes using Turbo Tax. I'll have to see how that works out.
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Old 11-06-2011, 11:03 PM   #35
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This year she could get a bonus for some extra work she did. If so, could she just file one "quarterly" to make up the difference? If so, where do you get the small form Youbet mentions?
https://www.eftps.gov/eftps/

All online, payments scheduled in advance for when you want them deducted, no small forms required...
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Old 11-07-2011, 01:29 PM   #36
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https://www.eftps.gov/eftps/

All online, payments scheduled in advance for when you want them deducted, no small forms required...
Yep, I've used that for a few years.

The problem with paying estimated tax for a bonus in the 4th (or any) quarter is that you will have to figure your taxes for each of the four quarters and make sure that you paid enough tax in each to satisfy the IRS. That was a real PITA when I had lots of investment transactions and oddball income to account for.

Withheld taxes (and equal quarterly estimated tax payments) are assumed to have been paid throughout the year, so that if the final total is correct you won't have to worry about the timing. I was able to have most of DW's paycheck withheld for the month of December the second time I ran into a bonus problem. That was much easier.
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Old 11-07-2011, 01:39 PM   #37
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I was able to have most of DW's paycheck withheld for the month of December the second time I ran into a bonus problem. That was much easier.
If we find out in time I would do that but we would probably hear about it after my final pension check is issued. I'm not going to worry about it, the amount probably wouldn't throw us off enough to incur a penalty.
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Old 11-07-2011, 05:03 PM   #38
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We're self-employed and pay estimated taxes. We obviously have fairly erratic income. There are ways to address this. The easiest one is to pay 100% of the tax you paid for the previous tax year, in four equal installments, as your "estimated taxes". Even if you made more money this year, you just pay the extra tax in april and you won't get a penalty.

The other way is to pay 90% of the actual tax you owe, in four equal installments. Useful if you expect much lower tax bill this year compared to last.

The other way is to pay on a quarterly basis roughly what you think you really owe (ie., a good estimate) and not do equal installments at all. This is useful if you expect low income in the first half of the year, and high income in the second half or the last quarter. But in April you have to fill out another form and show each quarter's income. (We did it once in 2008 when we moved state in the 2nd quarter, and didn't do much work in the 1st quarter as the house was busy being decorated and we were busy packing. Normally we pay based on the last year's taxes, but that killed our cash flow in the first half of the year when we needed the money for repairs and moving expenses etc.)
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Old 11-07-2011, 05:29 PM   #39
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Depends on the skills you developed when you were employed and how successfully you can utilize these skills after retirement.
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Old 11-07-2011, 05:42 PM   #40
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Every GOP candidate has a new tax plan, and while I know the chances are slim any of these will make it to law - what if one did? What if we move to more of a consumption tax with much lower income taxes (like the 9-9-9 plan)? How would that work with all of the people with Roth IRA's, Roth 401k's and those converting to Roth's - that may have already paid taxes at a 30%+ rate?

I also have a taxable portfolio with well over six figures of unrealized capital gains. Since most of these new tax plans say they will exempt L/T cap gains and dividends, should I sit tight on these gains for a while to see how it turns out?

Just one more reason these major tax change plans will never work, but it's something to think about.
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