Poll: Your 2021 Taxes Federal Tax Rate

[Al in Ohio]

Quote:

Originally Posted by Surewhitey So, does the Roth conversion count negatively for ACA purposes? I think I know, just curious to confirm...

I’m doing them now so as to keep my magi low and maximize my ACA subsidies before age 65.

[Act2]

17%

[Sunset]

For the Feds, ours was 10.6%

I failed to do enough Roth Conversions, as was afraid of going over the IRMMA line.
Trying to get better handle on our yearly income amounts.

[Landolink]

3.38% effective tax rate

[srblanco7]

20.5% effective tax rate.

[Midpack]

Quote:

Originally Posted by Sunset For the Feds, ours was 10.6% I failed to do enough Roth Conversions, as was afraid of going over the IRMMA line. Trying to get better handle on our yearly income amounts.

It took me a year to dial in the IRMAA threshold, and it doesn’t help that we don’t know the limit until very late in the year. So I target just inside the prior year limit, if they ever reduce the limit, I’m hosed…

[pb4uski]

Quote:

Originally Posted by jldavid47 0%. We aren't poor. We just like to look that way to the taxing authorities. If I plan well it should be 0% again this year.

0% might not be good.

I was talking with BIL the other night. He is 0% but is worried about RMDs. It turns out that he has headroom to either withdraw or Roth convert tax-deferred money and fill up his standard deduction so pay no tax on the withdrawal/conversion but is not doing so.

That's a no brainer.

[pb4uski]

Quote:

Originally Posted by athena53 Interesting adjustment- that would raise mine from 3.96% to 7.34%. Big difference.

True, but is it really a tax or more that Medicare Part B and Part D premiums have an element of income scaling built into them.

The non-profit dental group that I used to go to scaled their rates for income. Of course, I paid the full freight but their lower income clients paid less for the same services. I never thought of that as a tax.

[pb4uski]

Quote:

Originally Posted by Midpack How does anyone have an effective tax rate of over 35%?

Looks like those effective rates are a tad high, even for a single. Using https://www.irscalculators.com/tax-calculator for 2021 for a single with $100,000 of ordinary income I get 15.01% and for $200,000 of ordinary income I get 20.04%.

[TheWizard]

My ratio of federal income tax to AGI was 18.6% for 2021, my ninth year of retirement.

I have a small spreadsheet that I've been updating annually with my income and tax numbers, going back 15 years or so.
2021 was my highest Federal tax paid year ever and I expect future years to be inching up even higher...

[USGrant1962]

Quote:

Originally Posted by pb4uski Looks like those effective rates are a tad high, even for a single. Using https://www.irscalculators.com/tax-calculator for 2021 for a single with $100,000 of ordinary income I get 15.01% and for $200,000 of ordinary income I get 20.04%.

Nice website to play with for quick and dirty estimates. To get to 35% effective a single would need approximately:

$800,000 in wages, or
$650,000 in SE income (including SE tax)
$850,000 of bond interest (including NIIT), so a ~$35M portfolio all in bonds?

Capital gains never gets close to 35% effective and of course the numbers are higher for MFJ.

$650K to $1M is not extremely rare for docs, Megacorp execs, and self-employed business owners so a few >35% responses seem right for the still-employed in this crowd. >35% would be rare for retirees living off pensions, SS and portfolios, though.

[BruinBones]

Earned Income = $153,863.
(AGI = $150,168)
(Taxable Income = $119,492).
Tax = $19,567.
Tax/Earned Income = 19567/153863 = 12.7%

[CincyDave]

I don't know how Turbo Tax calculates effective tax rate. The summary page of the turbo tax print out shows the effective tax rate as 13.9%. If I take total tax / Adjusted gross income it comes to 15.2% and if I take total tax / taxable income it comes to 16.3%. Color me confused.

[ArmchairMillionaire23]

We paid $0 in taxes in 2021 due to contributing around 50% of my salary into 401(k), maxing out two IRAs and HSAs, a carryover capitol loss, and the savings credit. Our tax bracket was 12%.

Zero divided by anything (other than zero) is still zero, right?

[GLM]

.19%. We played the game well this year... And managed income one more year for the ACA.

In 2023 I go on Medicare with DH in the rules change.

[rk911]

Quote:

Originally Posted by Landolink 3.38% effective tax rate

nicely done!

[rk911]

Quote:

Originally Posted by GLM .19%. We played the game well this year... And managed income one more year for the ACA. In 2023 I go on Medicare with DH in the rules change.

is that decimal point in the right place

[richardf]

Quote:

Originally Posted by RonBoyd Tax questions always confuse me... so I will go with this: The effective tax rate is the percentage of income paid in taxes. The effective tax rate is the overall tax rate paid on earned income. The most straightforward way to calculate effective tax rate is to divide the income tax expense by the earnings (or income earned) before taxes. We had $0 tax liability in 2021 and that is what we paid. So, I guess the answer is 0%.

Adjusted gross income divided by federal income tax paid on your 1040 is the rate %.

[richardf]

Quote:

Originally Posted by BruinBones Earned Income = $153,863. (AGI = $150,168) (Taxable Income = $119,492). Tax = $19,567. Tax/Earned Income = 19567/153863 = 12.7%

Javelin cost, $178,000.

[Ronstar]

9.08% effective tax rate