How Retirees Pay Zero Taxes

[Beryl]

Of course I have heard of tithing.

My bad. I must have misunderstood when you stated this.

10% is very unusual in my experience - in fact, virtually unheard of.

Too bad I rubbed you the wrong way but like I previously stated, I never attacked anyone PERSONALLY.

At the risk of Porky coming out, I appreciated that both of our POTUS candidates donated well above 10% of their earnings to charity. I also think it set a good example that they both also donated their time to help others. IMO, that is what real Americans are about.

 

[tulak]

My bad. I must have misunderstood when you stated this.

Too bad I rubbed you the wrong way but like I previously stated, I never attacked anyone PERSONALLY.

At the risk of Porky coming out, I appreciated that both of our POTUS candidates donated well above 10% of their earnings to charity. I also think it set a good example that they both also donated their time to help others. IMO, that is what real Americans are about.

Darn. I didn't know I was a fake American...

However, it would make an interesting poll, assuming that it's anonymous.

 

[urn2bfree]

As a soon to be retired person who expects to pay MUCH lower taxes I will share the following point about my anticipation of lower taxes. Because I ALREADY will have paid them when I was working. PLENTY OF TAXES. I have about 2/3 of my money in after tax investments. If I structure things properly I should be able to pay myself out of these investments a nice income and pay single digit (or lower) Federal taxes. I have substantial carryover Capital losses from the various stupid investments I have made. I also will simply be taking the return of my principle which is not taxable.

I would also like to weigh in on the "head shaking" and general discussion on charitable giving. I am not comfortable telling others how they SHOULD be spending their money. I can make suggestions of ways that might be better to achieve a particular goal, but that requires evidence. Head shaking implies knowing what "should be done.". If you donate 0% or 50%, whatever it is, the other percent is saved or spent on other things. You might like a new car every three years. Another might prefer saving on car expenses and splurging on vacations or grandchildren or charity, or any number of other expenditures. I don't tell others how they should divide their spending and do not want someone telling me how I should be dividing up my spending -no matter what "tradition" they claim supports a certain practice. If that tradition works for you, great, traditions are nothing more than another personal choice each individual makes as well. Seems so much of what goes wrong starts with some people assuming they know best how other people should be living their lives.
Here's an idea about money: You spend yours as you see fit, I will spend mine as I see fit. If that is not a "tradition," maybe it SHOULD be.

 

[kaneohe]

Assuming filing single (widow case):

In this case, taxes will be paid on part of the capital gains since the threshold is $36.25K for cap gains plus taxable income. So whatever combined after deductions exceeds that.

This is not high enough SS to push into AMT - as long as the muni bonds owned aren't subject to AMT, and some are.

Note that muni income does count against your taxable threshold for social security income, but as long as the SS income is below ~17K, 50% of it taxable should have you in the 0% tax bracket as far as I can determine. Something like that anyway.

Once LTCG/QDIV income crosses $51.9K, you'll probably start paying AMT rates on part of the ordinary income (half the SS in this case). And by then any cap gains income above $36.25K less ordinary taxable income is already subject to 15% cap gains tax.

audrey.......I have no intuitive feel about how AMT works esp. if conditions are different from my normal conditions. However, assuming that this calculator does, Tax Calculator - Federal Income Tax Calculator & Free Tax Tips from H&R Block - H&R Block®
it is interesting to do what ifs........Unfortunately, there is no input for muni interest so instead of inputting 10K as SS, I input 8.5K as interest (taxation of SS saturates at 85% when the income, including muni interest is high). I then input varying amounts of LTCG.....40K, 140K, 240K. I saw no sign of AMT.......you can get details of the tax by clicking on the "+" sign on the left side of the "tax" line to expand the display to show the amount of AMT as well as the regular tax.

I did confirm that the AMT part works by putting in a ridiculously high state tax deduction.

 

[target2019]

Here is a better online tax calculator. Seems to produce reasonable output.

 

[obgyn65]

I agree donations should be what one feels comfortable with. My income is much less than yours but my donations are higher. I am not feeling better or worse than anyone else. Just pleased with the way I use my money.

Once retired, I plan to use a CPA firm.


.

Well donations should be what one feels conformtable with and not some mandated amount or else what is the difference between that and a tax. Our income is around $1 million and our donations is around $9K so I guess we are far worse than this person using your standards.

 

[audreyh1]

audrey.......I have no intuitive feel about how AMT works esp. if conditions are different from my normal conditions. However, assuming that this calculator does, Tax Calculator - Federal Income Tax Calculator & Free Tax Tips from H&R Block - H&R Block®
it is interesting to do what ifs........Unfortunately, there is no input for muni interest so instead of inputting 10K as SS, I input 8.5K as interest (taxation of SS saturates at 85% when the income, including muni interest is high). I then input varying amounts of LTCG.....40K, 140K, 240K. I saw no sign of AMT.......you can get details of the tax by clicking on the "+" sign on the left side of the "tax" line to expand the display to show the amount of AMT as well as the regular tax.

I did confirm that the AMT part works by putting in a ridiculously high state tax deduction.

Not sure why not, but as one who has paid AMT some years because my cap gain income was much higher than my ordinary income, I know that you can start paying it when cap gains/qual divs crosses that $80.8K threshold. It doesn't actually "show up" until it exceeds the ordinary income tax. So unless your ordinary income tax is super low, you might not see it. It really depends on your income mix.

 

[scrabbler1]

I went back to my 2008 income tax spreadsheet and played with the LTCG from the huge sale of my company stock leading to my ER. I had a LTCG (from NUA) of about $286k and that triggered the AMT on the rest of my rather small income. I lowered the LTCG on the company stock sale to see when the AMT got triggered. The AMT got triggered at about $115k. The rest of my (ordinary) income was about $45k.

 

[pb4uski]

.... IMO, that is what real Americans are about.

You just can't help yourself from being judgmental, can you? But one thing I think we might agree on is that, as a society, Americans are very generous compared to the rest of the world.

 

[kaneohe]

Here is a better online tax calculator. Seems to produce reasonable output.

Thanks.......had not seen that one. Why do you think it is better?
I didn't see an input for muni interest on this one either and I didn't see a way to break out the AMT to see if it was zero or non.

 

[kaneohe]

Not sure why not, but as one who has paid AMT some years because my cap gain income was much higher than my ordinary income, I know that you can start paying it when cap gains/qual divs crosses that $80.8K threshold. It doesn't actually "show up" until it exceeds the ordinary income tax. So unless your ordinary income tax is super low, you might not see it. It really depends on your income mix.

looks like I didn't go far enough.........with 8.5K in ordinary income and 240K in
LTCG, no AMT. At 270K LTCG, AMT just starting to appear. Using single, over 65.

 

[target2019]

Thanks.......had not seen that one. Why do you think it is better?
I didn't see an input for muni interest on this one either and I didn't see a way to break out the AMT to see if it was zero or non.

Has less lime green and I like playing with the sliders on screen #2.
Seriously, though, can't you open last years turbotax or whatever and create a new filing for taxpayerX Will that break out AMT for you?

 

[Beryl]

You just can't help yourself from being judgmental, can you? But one thing I think we might agree on is that, as a society, Americans are very generous compared to the rest of the world.

And you can't help making personal attacks, can you?

At least we agree on something. Peace out!

 

[ERD50]

And you can't help making personal attacks, can you?

At least we agree on something. Peace out!

If you don't want judgmental responses, then it might help to leave out the judgmental comments, like what 'real Americans' should do, etc.

There are many ways that people can contribute to society. They can donate their time, their dollars, their skills. Some might create a business that employs thousands and makes useful products that enhance people's lives. In some cases, that business person might do more measurable good for society with no 'donations' of time/money in the usual sense, than others. Why judge them on a single metric? Why judge at all?

-ERD50

 

[pb4uski]

Is 3,850 posts before one uses the "Ignore List" feature good, bad or indifferent?

 

[jebmke]

If you don't want judgmental responses, then it might help to leave out the judgmental comments, like what 'real Americans' should do, etc.

There are many ways that people can contribute to society. They can donate their time, their dollars, their skills. Some might create a business that employs thousands and makes useful products that enhance people's lives. In some cases, that business person might do more measurable good for society with no 'donations' of time/money in the usual sense, than others. Why judge them on a single metric? Why judge at all?

-ERD50

Exactly, in some countries, they vote to have high taxes so that many of the services provided here through charities are provided through their governments. Their choices.

 

[haha]

Exactly, in some countries, they vote to have high taxes so that many of the services provided here through charities are provided through their governments. Their choices.

Actually, in most high tax societies, these services mainly have been sent back to the same social groups that are paying them. This is changing with mass immigration of different groups who usually are very slow to adopt the social ethos of these formerly very homogeneously middle class societies, so welfare increasingly takes on the role it has historically held in America- mostly a transfer from some groups to others.

This is why there is so much struggle in Europe today that has largely been quiescent since the labor movements of 1st half of the 20th century. Das Kapital was written about the struggle between labor, and owners of capital. This seems quaint today. Today's labor movement is mostly elite worker government employee unions against the taxpayer; while the struggle over transfer payments, to the extent that there is a struggle, has little to do with labor, as most of the regular recipients are hardly interested in doing any labor.

Ha

 

[RunningBum]

Is 3,850 posts before one uses the "Ignore List" feature good, bad or indifferent?

Don't worry, you'll get better at it!

btw, you can still choose to view an individual post of a person you've ignored if you can't help it. I find that the effort reminds me that I've ignored the person and not to respond even if it does still push my buttons.

 

[nun]

But one thing I think we might agree on is that, as a society, Americans are very generous compared to the rest of the world.

Sorry I don't agree. America and Americans certainly give to charity and the US aid budget is biggest. But should we look at total amount of charity, the amount given per citizen or just the percentage of citizens that give. I don't see Americans as inherently more charitable than any other country. Even the tendency to express exceptionalism isn't uniquely American.

 

[Beryl]

Exactly, in some countries, they vote to have high taxes so that many of the services provided here through charities are provided through their governments. Their choices.

True.

 

[audreyh1]

looks like I didn't go far enough.........with 8.5K in ordinary income and 240K in
LTCG, no AMT. At 270K LTCG, AMT just starting to appear. Using single, over 65.

Interesting - and surprising!

 

[Beryl]

Is 3,850 posts before one uses the "Ignore List" feature good, bad or indifferent?

You attacked me personally -- twice (calling me "holier-than-thou” and judgmental). That, IMO is very different from expressing an opinion or judgment about an issue or a fictitious individual as I did.

I could have "ignored" you for doing that but I hoped you'd get the message when I called it out the first time. Maybe moderators can do a better job at it. I rarely "ignore" members here.

Be well.

 

[travelover]

......... I rarely "ignore" members here............

Try it, you will like it.

 

[HawkeyeNFO]

Is 3,850 posts before one uses the "Ignore List" feature good, bad or indifferent?

Well, that's a judgement call.

 

[MichaelB]

Maybe moderators can do a better job at it. I rarely "ignore" members here.

Learning to ignore what some people say is a skill I acquired at work and often apply at family get-togethers.

Come on, folks. Lets take a step back, a deep breath, and remember we're friends who can disagree but stay friends.