Originally Posted by Coach
You are correct, you need to include your taxes in your estimate of annual expenditures.
Quite a few folks work up a fake return in TurboTax/TaxCut/TaxAct to try to estimate taxes. Personally I just figure on 20% -- that's probably way high for single with annual expenses of $50K, but it gives me a little margin of error.
You might be better off estimating your taxes in terms of anticipated income rather than expenses. For example, if your expenses are $50K as you hypothesized, and you acquire those funds through earned income, you are in the 15% fed tax bracket. If my expenses are $50K and I acquire the money by digging it up from the back yard where I have it buried, I have no income and no fed taxes, despite our expenses being exactly the same.
An extreme example, but just to make the point.