Poll: What is your effective Federal income taxes paid / AGI rate?
- Thread starter LOL!
- Start date
kumquat
Thinks s/he gets paid by the post
Assuming this was for USA only (I'm Canadian) I didn't answer. I did the [-]math[/-] arithmetic for the last two tax years. Due to great tax planning, 2010 income was high 6 figures, 2011 was ~= $55K.
2010:
- Federal 14.2 (bulk of income was capital gains, 50% taxed as income)
- Provincial 7.1
2011:
- Federal 16.6 (no CG, no surprise)
- Provincial 9.2
Edit to add:
I got "free" health care
2010:
- Federal 14.2 (bulk of income was capital gains, 50% taxed as income)
- Provincial 7.1
2011:
- Federal 16.6 (no CG, no surprise)
- Provincial 9.2
Edit to add:
I got "free" health care
Last edited:
FUEGO
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Nov 13, 2007
- Messages
- 7,746
Federal is around 3%. State is a little higher (no generous kid standard deductions and a smaller personal exemption).
My true income is much higher than my AGI though, since we defer around $75,000 in income at a minimum, sometimes over $80,000 tax deferred savings, plus other untaxed monies we funnel through the child care and medical care FSAs. As a result of smart tax planning, we pay under 2% of our gross income in federal tax.
And this year we have another deduction (yay babies!) that will push our total federal income taxes to right around zero (probably a couple hundred dollars in the positive).
My true income is much higher than my AGI though, since we defer around $75,000 in income at a minimum, sometimes over $80,000 tax deferred savings, plus other untaxed monies we funnel through the child care and medical care FSAs. As a result of smart tax planning, we pay under 2% of our gross income in federal tax.
And this year we have another deduction (yay babies!) that will push our total federal income taxes to right around zero (probably a couple hundred dollars in the positive).
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
My actual 2011 (last full year of work) was 18.50% effective rate calculating as you described and 28% marginal rate.
However, interestingly, my TurboTax 2011 Tax Summary form indicates that my effective rate is 17.38%. It seems that TurboTax excludes AMT in calculating the effective rate on that page. Since the AMT is real and was painful, I think your calculation is a more realistic effective tax rate.
For 2012, my first year of RE, I expect my effective federal tax rate to be 0%. Since the OP was focused on retiree tax rates, that is how I recorded my vote. While I will do some Roth conversion in 2012, I am taking a lower Roth conversion to optimize the property tax relief credit in my state. This will put us at ~310% of poverty level and will hopefully also optimize our ObamaCare medical insurance subsidy in 2014.
The way the federal income tax, state income tax and property tax relief interact if I convert another 100 of IRA to a Roth, it would cost me 1,688 in tax/loss of property tax relief (a whopping 1688% marginal rate) or if I convert an additional 10,000 it would cost me 2,353 in tax/loss of property tax relief (23.5% marginal rate). Too much.
However, interestingly, my TurboTax 2011 Tax Summary form indicates that my effective rate is 17.38%. It seems that TurboTax excludes AMT in calculating the effective rate on that page. Since the AMT is real and was painful, I think your calculation is a more realistic effective tax rate.
For 2012, my first year of RE, I expect my effective federal tax rate to be 0%. Since the OP was focused on retiree tax rates, that is how I recorded my vote. While I will do some Roth conversion in 2012, I am taking a lower Roth conversion to optimize the property tax relief credit in my state. This will put us at ~310% of poverty level and will hopefully also optimize our ObamaCare medical insurance subsidy in 2014.
The way the federal income tax, state income tax and property tax relief interact if I convert another 100 of IRA to a Roth, it would cost me 1,688 in tax/loss of property tax relief (a whopping 1688% marginal rate) or if I convert an additional 10,000 it would cost me 2,353 in tax/loss of property tax relief (23.5% marginal rate). Too much.
Last edited:
Nope, we are in that boat too.
While the majority of our income is dividends so that is unaffected.
Danmar
Thinks s/he gets paid by the post
So any general conclusions? Maybe Canadians pay less than expected despite the health care advantage? Or the middle class (as represented here) pays quite a lot? Or difficult to draw any conclusions given the diverse circumstances evident here? i personally feel my taxes are quite reasonable given the services we enjoy.
Danmar
Thinks s/he gets paid by the post
Actually I thought more about this. My max marg rate for my pension is 39% while it is 19% for dividends. I get a large deduction for alimony which I should ignore. So since will only receive dividends and pension this year my average rate in 2012 should be about 27% if I ignore the alimony deduction. This is total combined fed and provincial. Still think this is a good deal.
Andre1969
Thinks s/he gets paid by the post
Mine came out to 11.6% for 2011. It was 10% in 2010. I got hit extra hard in 2011 because when the market started peaking earlier in the year, I cashed in some stocks and mutual funds to lock in some long-term gains. When the market started tanking, I bought some back.
For us the effective rate was 4.6% and we're in the 10% tax bracket for Federal. DH has a pension, I have a 10 hr/week part time job and we have some interest income.
For the state income taxes here in Ohio it was 1.4% effective rate in the 3.521% bracket. There is a nice retiree credit and joint filing credit after the tax calculation so that's why the effective rate is so low.
We pay local income taxes, too. It's 2% on earnings, so the pension payment and interest income are not taxed locally, just my part-time income.
For the state income taxes here in Ohio it was 1.4% effective rate in the 3.521% bracket. There is a nice retiree credit and joint filing credit after the tax calculation so that's why the effective rate is so low.
We pay local income taxes, too. It's 2% on earnings, so the pension payment and interest income are not taxed locally, just my part-time income.
I didn't vote, because DW won't officially retire until next year, but I actually have a spreadsheet with this information.
Over my w*rking life, the rate has been somewhere between a low of 9.8% and a high of 25.5%.
Over my w*rking life, the rate has been somewhere between a low of 9.8% and a high of 25.5%.
Ours was around 22% (federal vs AGI). Both w*rking; multiple incomes (W2, LLC-1099, rentals). Marginal 33%. Hoping to push both lower with individual 401(k) profit sharing this year, but our desire to RE means we gotta pour a large chunk into taxable accounts.
Ret'd 22 yrs. 0% until last year, when we had to go into non deferred accounts.
Wasn't planned that way., Just worked out. Tax free gain on house sale helped .
Some day will look to see if we would have been ahead of the game by investing.
Until recently, there were many available benefits (mostly state) for low income... not subject to net assets test. The door has closed on most of these, within the past year. (health, pharma, house taxes, tax freeze, free transportation, driver license reductions, phone subsidies etc. Some Pharma companies offer free or low cost drugs where income, not assets is the criterion. At a time when many pharmaceutical regimens run into the thousands, this can be a huge savings for pre Plan D people. Check out Prolia costs...
This year, at age 76, we'll start paying taxes again with more deferred withdrawals.
Wasn't planned that way., Just worked out. Tax free gain on house sale helped .
Some day will look to see if we would have been ahead of the game by investing.
Until recently, there were many available benefits (mostly state) for low income... not subject to net assets test. The door has closed on most of these, within the past year. (health, pharma, house taxes, tax freeze, free transportation, driver license reductions, phone subsidies etc. Some Pharma companies offer free or low cost drugs where income, not assets is the criterion. At a time when many pharmaceutical regimens run into the thousands, this can be a huge savings for pre Plan D people. Check out Prolia costs...
This year, at age 76, we'll start paying taxes again with more deferred withdrawals.
We paid 15% last year.
I forgot about paying less for dividrnds vs. CD's and savings. If the same rules apply next year, we'll have to xfer some money to funds or stocks.
I just began collecting SS this year and hubby will start next yr. Since SS is unearned, we don't have to pay taxes at the end of the yr.....right??
I early retired in 2007 and I have been paying 0% taxes since 2008. All of my income is interest, dividends, and capital gains. I do not draw any money out of my tax deferred accounts (I am still in my mid-40s). As long as my interest and unqualified dividends are under about $10,000, then the capital gains and qualified dividends are taxed at a 0% rate and so I owe nothing. This 0% tax rate on qualified dividends and capital gains expires this year.
Each year I sell some index funds and ETFs (and later rebuy them or buy a similar fund) in my taxable account so that I have gains up to the top of the 15% bracket, even though I don't need the money. So I am raising my tax basis for the future (so that my future capital gains will be smaller), effectively lowering my future income taxes.
As a single filer with an HSA contribution (which gives me a $3000 deduction), I create capital gains so that I make in total around $45000 per year on my 1040 form without paying income taxes. One does not hit the AMT doing this.
I live abroad and changed my residence to a 0% income tax state before making the move, just to make sure California would not get any ideas about taxing me. So I also pay no state income taxes.
Each year I sell some index funds and ETFs (and later rebuy them or buy a similar fund) in my taxable account so that I have gains up to the top of the 15% bracket, even though I don't need the money. So I am raising my tax basis for the future (so that my future capital gains will be smaller), effectively lowering my future income taxes.
As a single filer with an HSA contribution (which gives me a $3000 deduction), I create capital gains so that I make in total around $45000 per year on my 1040 form without paying income taxes. One does not hit the AMT doing this.
I live abroad and changed my residence to a 0% income tax state before making the move, just to make sure California would not get any ideas about taxing me. So I also pay no state income taxes.
foxfirev5
Thinks s/he gets paid by the post
- Joined
- Mar 22, 2009
- Messages
- 2,987
I've been in the 10-15% range for quite a few years. Add in property and state income taxes and I'm close to 30%.
ChiliPepr
Full time employment: Posting here.
Nope, I am not retired. I got hit with the AMT and ended up just over 21% (have not finished my 2011 taxes yet, but the number is pretty solid. 2010 was just over 21% also.)
I am in Mass so you can add another 5% to that...
Similar threads
