Retirement Tax Haven?

[pfpelican]

http://finance.yahoo.com/retirement/article/103293/Tax-Free-in-the-Rust-Belt?mod=oneclick

 

[W2R]

Thanks! Very interesting, for those of us who are planning to relocate for retirement.

 

[Orchidflower]

Good article and one I have missed. Thanks, pfpelican.

 

[cj]

I saw that article, too. We have been thinking about relocating to a lower cost area at some point, but I get confused every time I start to look at tax issues. For instance, Pennsylvania does not tax pensions and at least some retirement accounts (as I understand) but the property taxes seem to be much higher than where I live (Maryland). Virginia's property taxex (for your home) seem to be lower, but they have the personal property tax on your cars. So it seems like if you get a break in one area, they get you somewhere else. Plus, you really have to look at whether you will live within city or town limits, as the local municipalities can also take a share, particularly with property taxes.

I would be interested in anyone's experiences with taxes, especially in the mid-Atlantic region (PA, VA, NC, WV).

CJ

 

[teejayevans]

I would be interested in anyone's experiences with taxes, especially in the mid-Atlantic region (PA, VA, NC, WV).
CJ

Great article and very timely, Thx

NC is one of the worst states in the union:
~8% income tax
~6% sales tax
~1.5% personal property tax
~1.5% property tax
few exemptions...
a new home sales tax...

Taxes in every county are different, so there are less expensive
counties. Any big city will have big taxes...

I'm so outta here...

TJ

 

[roadtoharvard]

Don't feel too bad. Here is the combined provincial and federal (Canada) taxes where i live:

based on a $40,000 salary

Tax Payable: $9,113
After Tax Income: $30,887
Average Tax Rate: 22.78%
Marginal Tax Rate: 38.37%
Marginal Rate on Capital Gains: 19.19%
Marginal Rate on Dividends: 15.42%

How about $100,000 salary


Tax Payable: $34,747
After Tax Income: $65,253
Average Tax Rate: 34.75%
Marginal Tax Rate: 45.71%
Marginal Rate on Capital Gains: 22.86%
Marginal Rate on Dividends: 26.06%


Oh did i mention we have a federal sales tax of 6%?
As well an additional provincial sales tax (this various according to province) of 7.5% based on original purchase price + federal sales tax.

Comrade I think the vodka is getting warm!


Try the bloating calculator yourself!

All seriousness aside i complain but you get used to it.

 

[Mach]

Don't feel too bad. Here is the combined provincial and federal (Canada) taxes where i live:

I don't know, but whatever you're doing over there I thank you. My Canadian mutual fund is the best in my portfolio and was in the 30% range for a while...even with the correction going on it's still double-digits.

oh Canada!

-Mach

 

[roadtoharvard]

The lands she give us wealth comrade! It is the golden days that surely cannot end..and if you say they will then a trip to gulag you will see. More vodka!

 

[roadkill]

For instance, Pennsylvania does not tax pensions and at least some retirement accounts (as I understand) but the property taxes seem to be much higher than where I live (Maryland)....... I would be interested in anyone's experiences with taxes, especially in the mid-Atlantic region (PA, VA, NC, WV).

CJ

Pennsylvania does not tax any form pension payments to include IRA's, 401(k)'s, social security, defined benefit plans, etc. Of course, those of us who live in PA do not get an upfront tax deduction for contributions to 401(k)'s or IRA's. The state tax rate is a flat 3.07% on non pension income such as interest and dividends received outside a pension plan. Property taxes, as you would expect, depends on where you live. The urban areas tend to have a higher property tax than in rural areas. The state sales tax is 6% and excludes a number of items, such as food purchased in a grocery store. The latest money making plan of the govenor is to put toll booths on Interstate 80.....or lease the PA turnpike to a private company. So it appears that we will all pay one way or another.

 

[kcowan]

More vodka!

Cost for 1.75 litres C$48x.94=$45.12 in Canada

Cost of 1.75 litres of Popov in San Diego Vons $10.50 (Club Price)

Don't drink too much of that vodka or your sin tax contributions will skyrocket!

Oh and don't drive too far either $1.50/gal sin tax.

 

[FinanceGeek]

For this reason I have always questioned the wisdom of investing in Roth IRAs, annuities paid on an after tax basis, etc. where the tax is paid now with the promise of "tax free" withdrawals in retirement.

I figure that when I'm retired I'll have FAR more control over my tax bill than I do today. In retirement I will have far better control of where I want to live, and how much income I decide to "earn" in any given year, and a primary consideration of my life in retirement will be minimizing taxation on so-called "unearned" income.

Hence I'd rather have my tax deduction now thank you.

Not to mention that the government can easily change their minds on the taxability of Roth withdrawals. Need I remind anyone that budget deficits aren't getting any smaller? They made social security benefit taxable...I find it hard to believe that Roth withdrawals will never be taxable...

 

[teejayevans]

For this reason I have always questioned the wisdom of investing in Roth IRAs, annuities paid on an after tax basis, etc. where the tax is paid now with the promise of "tax free" withdrawals in retirement.

I figure that when I'm retired I'll have FAR more control over my tax bill than I do today. In retirement I will have far better control of where I want to live, and how much income I decide to "earn" in any given year, and a primary consideration of my life in retirement will be minimizing taxation on so-called "unearned" income.

Hence I'd rather have my tax deduction now thank you.

Not to mention that the government can easily change their minds on the taxability of Roth withdrawals. Need I remind anyone that budget deficits aren't getting any smaller? They made social security benefit taxable...I find it hard to believe that Roth withdrawals will never be taxable...

1. Roths also don't have RMDs at 70.5, so also helps minimize tax bites,
especially from your SS check.
2. For most people in 25% Fed + X% state, its silly, but once you RE, if you
have room in the 15% bracket, it would be smart to do some conversions.
3. Washington is not going to yank the roth rug out from under the
40-80 age brackets, because they VOTE. They may apply limits or sneak
it into the AMT, but they can't just say: All roths are retroactively taxable.
Remember, your principle has already been taxed, its just the income that
is tax free.
4. If Washington needs money, they'll just lower the brackets, catch
everybody instead of the few with roths.
TJ