Taxes in retirement.

[wanaberetiree]

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?

 

[haha]

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-gains-tax-rate-for-2011-and-2012.html

Enjoy it while you can!

Ha

 

[MasterBlaster]

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).

 

[haha]

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

 

[scrabbler1]

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.

 

[bizlady]

If you have to sell any stock, or make IRA withdrawls, you may have a liability there also.