Join Early Retirement Today
View Poll Results: Poll: Your eff. tax rate (see original post to calculate!)
0% or less 6 4.96%
0% < my eff rate <= 5% 12 9.92%
5% < my eff rate <= 10% 21 17.36%
10% < my eff rate <= 15% 36 29.75%
15% < my eff rate <= 20% 22 18.18%
20% < my eff rate <= 25% 11 9.09%
more than 25% 13 10.74%
Voters: 121. You may not vote on this poll

Reply
 
Thread Tools Display Modes
Poll: What is your effective Federal income taxes paid / AGI rate?
Old 08-18-2012, 10:33 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
Poll: What is your effective Federal income taxes paid / AGI rate?

I think some folks still do not realize how low an effective income tax rate that folks really are able to pay if they practice tax-efficient investing even in retirement. So to make people more aware, how about a poll?

Here are the rules: From your Federal return (Form 1040 and siblings), please take your "total tax" and divide by "adjusted gross income" and express as a percentage. This will not take into account non-taxable income such as tax-exempt dividends, foreign exclusion, 401(k)/403(b)/FSA/HSA exclusions, pre-tax health insurance premiums, and so on. But you can comment on those non-taxable income if you like.

This is about Federal income tax and not state tax nor sales tax nor property tax. FICA/medicare is a blurry area because some folks pay that with Form 1040 and some don't.

Do early retirees really enjoy low effective tax rates?
LOL! 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 08-18-2012, 10:37 AM   #2
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Let's just say that I/DW pay much less (%) than any of the folks running for president (either party) does ...

And as far as state/local tax? We pay nothing (those taxing agencies do not tax retiree's income - not even SS) even though that was not part of the question...
rescueme is offline   Reply With Quote
Old 08-18-2012, 10:44 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Jun 2006
Posts: 2,068
Quote:
Originally Posted by rescueme View Post
Let's just say that I/DW pay much less than any of the folks running for president (either party) does ...
.
I pay a larger percentage than either as I recall, did you mean less as in dollar amount, or in percentage?
__________________
"We do not inherit the earth from our ancestors, we borrow it from our children.
(Ancient Indian Proverb)"
Zathras is offline   Reply With Quote
Old 08-18-2012, 12:11 PM   #4
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,583
I hear the sound of sizzling bacon
MichaelB is offline   Reply With Quote
Old 08-18-2012, 12:18 PM   #5
Administrator
Alan's Avatar
 
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,053
I'm retired and my effective tax rate last year was 14.5%
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
Alan is offline   Reply With Quote
Old 08-18-2012, 12:41 PM   #6
Full time employment: Posting here.
arebelspy's Avatar
 
Join Date: Apr 2011
Posts: 625
I'm not retired, so I didn't vote, but my effective rate was 9.86% (using the calculation provided in the OP.). My marginal rate is 25%.
arebelspy is offline   Reply With Quote
Old 08-18-2012, 12:49 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,681
I am retired and mine is a hair under 5% (federal only). State income tax and local property tax are each between 4.5% and 5% of AGI.
__________________
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 online now   Reply With Quote
Old 08-18-2012, 01:09 PM   #8
Recycles dryer sheets
 
Join Date: Aug 2012
Location: Murfreesboro
Posts: 57
>25%

At least we don't have state income tax
5971 is offline   Reply With Quote
Old 08-18-2012, 01:16 PM   #9
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,583
Quote:
Originally Posted by LOL! View Post
I think some folks still do not realize how low an effective income tax rate that folks really are able to pay if they practice tax-efficient investing even in retirement. So to make people more aware, how about a poll?
Two income streams subject to different tax rates can result in the same after tax income for someone. An example would be tax exempt munis vs taxable interest income. The rates are different but the new after tax is the same. What conclusion can you draw from just looking at the numbers?
MichaelB is offline   Reply With Quote
Old 08-18-2012, 01:23 PM   #10
Moderator Emeritus
M Paquette's Avatar
 
Join Date: Oct 2007
Location: Portland
Posts: 4,946
Since I am gainfully unemployed, with no pension, Social Security, or such, the ordinary income part of the 1040 is pretty darn low. Combined with tax loss harvesting from early 2009, and having dependents, well...

My biggest tax bill is property taxes. Federal? The silly thing goes negative after the education credits for DD go in.
M Paquette is offline   Reply With Quote
Old 08-18-2012, 01:24 PM   #11
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 17,773
I would have answered I don't know (what, you want me to look at old returns AND do math??). But I don't know what meaning it would have, either.
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 08-18-2012, 01:26 PM   #12
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
Quote:
Originally Posted by Bestwifeever View Post
I would have answered I don't know (what, you want me to look at old returns AND do math??). But I don't know what meaning it would have, either.
What happened to the spirit of adventure you had as a child. Don't you remember playing "I'll show you mine if you show me yours"?
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Old 08-18-2012, 01:37 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
Total combined tax rate for me was 16%. This is combined provincial and federal. Most of my income were dividends and capital gains. Last year I had an unusually high income that will not be repeated.
Danmar is offline   Reply With Quote
Old 08-18-2012, 01:59 PM   #14
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 17,773
Quote:
Originally Posted by REWahoo View Post
What happened to the spirit of adventure you had as a child. Don't you remember playing "I'll show you mine if you show me yours"?
Yeah, but then I found out the only ones who want to show me theirs didn't have enough of it . Wait, you are talking about money, right?
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 08-18-2012, 02:12 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
Quote:
Originally Posted by MichaelB View Post
Two income streams subject to different tax rates can result in the same after tax income for someone. An example would be tax exempt munis vs taxable interest income. The rates are different but the new after tax is the same. What conclusion can you draw from just looking at the numbers?
My purpose is to prompt people who are paying at a high effective rate to look for ways to lower their taxes while keeping the same total income.

For example, most people know that CD interest & bond dividends are taxed at a higher rate than stock dividends, right? That knowledge might cause one to place bonds and equities in different kinds of accounts.
LOL! is offline   Reply With Quote
Old 08-18-2012, 02:18 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 13,202
I voted 15/20 and started to think about why it was above 15 since my plan is to go only to the end of the 15% bracket if I can (which should put me well under 15% effective rate), then I remembered that I worked part of last year and got a severance package. I also did a Roth conversion up to the top of the 25% bracket. So if you're keeping it to retirees, I butted in when I shouldn't have.
RunningBum is offline   Reply With Quote
Old 08-18-2012, 02:32 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
Everybody is welcome to respond to the poll, whether they are working or retired or something else.
LOL! is offline   Reply With Quote
Old 08-18-2012, 02:38 PM   #18
Recycles dryer sheets
 
Join Date: May 2011
Posts: 145
This has lead me to do something I've not done before, compare EU and US rates on my retirement income (excluding the fact the tax year is different).
US is 13.7% (AGI + treaty positions [gross income]. No foreign tax credits. US taxes adjusted accordingly and AGI calculated as if I were US resident and all income was US source.)
EU is 24.4% (gross income worldwide pre-treaty positions, and pre-tax free allowances. Taxes adjusted accordingly.)

It's the only way I can make it apples for apples with US (basically the same AGI income minus EU personal allowance/US std. deduction and exemption). Without apples to apples with the US, it's 13.7% (US) and 16.8% (EU).
theOAP is offline   Reply With Quote
Old 08-18-2012, 02:39 PM   #19
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,583
Here's a link to a similar poll from 2010. http://www.early-retirement.org/foru...pay-49621.html
MichaelB is offline   Reply With Quote
Old 08-18-2012, 02:41 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 12,597
Are we the only ones who get stuck paying AMT? Effective rate, 21% whether we deserve it or not. No offshore investments here...

Amethyst
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
Amethyst is offline   Reply With Quote
Reply


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


» Quick Links

 
All times are GMT -6. The time now is 09:20 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.