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Taxes after FIREd
Old 05-17-2014, 09:15 AM   #1
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Taxes after FIREd

I'm trying to get a handle on tax liability after retirement. Using both the Intuit and H&R Block tax estimators I come up with what looks like ridiculously low looking taxes. How accurate are they? Approximately 79k income of which 43,250 is SS produces a total Fed and State tax of around 5400 to 6000 (of course after deductions, mort., prop. tax, etc).

Also the DW has the State pension where I can get my health ins.(497 @mo.), will they take that out of her check before taxes? If so, that reduces the tax burden even lower (about 1700). Am I missing something?

I'm still trying to find the flaws in our plan to retire 7/15. Given the above, after taxes, covers our existing budget nearly 100% including the additional HI expense, it looks like we are currently just working to provide tax revenue.
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Old 05-17-2014, 09:22 AM   #2
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Lower taxes in ER is common. You got the right approach - do a pro forma tax return based on your future circumstances. Magnitude sounds about right.
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Old 05-17-2014, 09:33 AM   #3
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I do taxes for HR Block. It is probably correct.

The way I run this is by using the same tax program I filed my taxes with and adjust the numbers to match what your income will be in retirement.

Your numbers are perfectly reasonable for 79k of income. When I put your numbers in Block's software, I am up with a federal tax bill of around 4000. Obviously, I do not have enough information to make an accurate estimate.
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Old 05-17-2014, 09:36 AM   #4
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Also, it appears that your social security income will only be about 50% taxable. ( that helps a lot)
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Old 05-17-2014, 09:38 AM   #5
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Normally health insurance premiums are no longer pre tax in retirement.
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Old 05-17-2014, 10:00 AM   #6
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Quote:
Originally Posted by rothlev View Post
Normally health insurance premiums are no longer pre tax in retirement.
That is the case with my fed govt. retirement, starting in July this year.
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Old 05-17-2014, 11:03 AM   #7
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Thanks for all the responses, this is fortifying my resolve to stay on this course. I've initiated a process at work that will allow me to bow out gracefully and leave everyone in a good situation, but it most likely will become an irreversible process in the next couple of months. So, I've got to get this right the first time.
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