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Hi,
I want to estimate my taxes once I begin drawing income from retirement funds. Here are the particulars:
· I will be withdrawing approx. $80,000 per year for expenses
· $60,000 from tax deferred sources (IRAs and 403b accounts)
· $20,000 from non-qualified investments (4% SWR on $500,000 pool of stocks, mutual funds)
State Tax: I live in NY State. The 2006 tax rate for $80,000 income is 6.85%. I don’t know how NYS treats tax deferred income and if our State law differentiates by source of investment funds. Total: $5480
Federal: My estimate of federal tax liability is $8245 (tax deferred income) plus $3000 (15% capital gains, dividends on $20,000 non-qualified investments) for a total of $11,245.
So, my estimate of federal and state tax liability on $80,000 draw is about $16,725, or about 21% of the $80,000.
No social security for another 10 years. Small pension of $6000 not factored into above.
That seems like a huge amount of federal and state taxes. Is my methodology flawed?
Thanks,
Piano
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