Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Taxes in retirement.
Old 02-23-2011, 01:37 PM   #1
Recycles dryer sheets
 
Join Date: Apr 2010
Posts: 412
Taxes in retirement.

So, I was busy working on my taxes last weekend. And then played an experiment - deleted all W-2s and try to see how much taxes would I have to pay on only Interest + Dividends + Cap gains totaling around $50-65K.

And... I was surprised to see that Fed portion was 0 and $2-3K for the state (CA).

Can somebody who actually has a similar situation in retirement share experiences on this subject?
__________________

__________________
“The problem with the world is that the intelligent people are full of doubt, while the stupid people are full of confidence.”

(—Charles Bukowski)
wanaberetiree is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-23-2011, 02:46 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by wanaberetiree View Post
So, I was busy working on my taxes last weekend. And then played an experiment - deleted all W-2s and try to see how much taxes would I have to pay on only Interest + Dividends + Cap gains totaling around $50-65K.

And... I was surprised to see that Fed portion was 0 and $2-3K for the state (CA).

Can somebody who actually has a similar situation in retirement share experiences on this subject?
Your information is insufficient. 2010,2011, and 2012 have 0% tax for qualified dividends and ltcg. This is very unlikely to continue beyond 2012. So, it sounds as if you are married, and you do not have much interest, so your ltcg and qualified divs are being taxed at 0%.

http://thefinancebuff.com/0-capital-...-and-2012.html

Enjoy it while you can!

Ha
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 02-23-2011, 03:35 PM   #3
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Quote:
Originally Posted by wanaberetiree View Post
So, I was busy working on my taxes last weekend. And then played an experiment - deleted all W-2s and try to see how much taxes would I have to pay on only Interest + Dividends + Cap gains totaling around $50-65K.

And... I was surprised to see that Fed portion was 0 and $2-3K for the state (CA).

Can somebody who actually has a similar situation in retirement share experiences on this subject?
This shouldn't be a big surprise.

Interest, dividends , cap gains get favorable tax treatment from the feds.

California, on the other hand, taxes all income regardless of source at the ordinary income tax rate(s).
__________________
MasterBlaster is offline   Reply With Quote
Old 02-23-2011, 03:40 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by MasterBlaster View Post
This shouldn't be a big surprise.

Interest, dividends , cap gains get favorable tax treatment from the feds.

California, on the other hand, taxes all income regardless of source at the ordinary income tax rate(s).
Interest doesn't, and rarely has. Dividends do now, but over most of my tax paying life they have not.

Capital gains usually do. In some countries they are untaxed. Since much of the gain in a long term holding is in fact an illusory, purely inflationary "gain", it has usually been favorably taxed most places, most times.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 02-24-2011, 12:22 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,869
Unless I have a spike in my taxable dividend income like I did in 2010, unlike in 2009, my fed taxes due on my income (no wages because I am ER) is only slightly higher than my state (New York) taxes because NY taxes all of it the same as wage income, hwile the fed gives preferential treatment to some of that investment income.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 02-24-2011, 07:20 AM   #6
Full time employment: Posting here.
 
Join Date: Mar 2008
Posts: 637
If you have to sell any stock, or make IRA withdrawls, you may have a liability there also.
__________________

__________________
bizlady is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
retirement and taxes afntrn56 FIRE and Money 17 02-28-2012 08:21 AM
Possible to estimate taxes in retirement? utrecht FIRE and Money 10 05-31-2008 07:10 PM
Taxes in retirement modhatter FIRE and Money 9 06-10-2007 07:30 AM
Taxes during retirement (+ or -) smileydog FIRE and Money 3 06-06-2007 12:52 AM
Taxes in Retirement HockeyMike35 FIRE and Money 26 06-22-2005 06:08 PM

 

 
All times are GMT -6. The time now is 07:44 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.