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02-13-2020, 05:48 AM
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#61
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Administrator
Join Date: Apr 2006
Posts: 22,923
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Quote:
Originally Posted by PatrickA5
Looking at a couple of links for 2020, it appears the Lifetime Learning Credit phaseout has increased to $118,001 - $138,000. Thanks!
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Fixed. Thanks for catching that.
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Living an analog life in the Digital Age.
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02-13-2020, 09:58 AM
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#62
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,863
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^ Many of these levels (but not all) are tied to inflation, so it's a good idea to check the limits each year for any for which you might qualify and are close to the limits. AOTC, LLC, tax brackets, IRMAA levels, IRMAA premiums, and ACA income levels are all affected by inflation; there are likely others.
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"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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02-16-2020, 05:39 PM
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#63
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Recycles dryer sheets
Join Date: Sep 2007
Posts: 153
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Schedule E losses
How about the limitations on deducting rental real estate losses from income starting at MAGI of $100,000 and eliminated at $150,000. Below MAGI of $100,000, losses up to $25,000 can be deducted.
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03-27-2020, 02:28 PM
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#64
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,863
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May want to update this thread with the stimulus payment income levels ($75K AGI, $112.5K AGI, and $150K AGI).
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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04-14-2020, 07:24 AM
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#65
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Administrator
Join Date: Apr 2006
Posts: 22,923
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Quote:
Originally Posted by SecondCor521
May want to update this thread with the stimulus payment income levels ($75K AGI, $112.5K AGI, and $150K AGI).
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Thanks. I have added the Single and MFJ levels.
__________________
Living an analog life in the Digital Age.
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04-19-2020, 11:30 PM
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#66
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Recycles dryer sheets
Join Date: Sep 2018
Location: High Plains Non-Drifter
Posts: 314
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This thread is a tremendous public service. Thank you all so very much.
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04-27-2020, 04:38 PM
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#67
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Dryer sheet aficionado
Join Date: Mar 2018
Location: CLT
Posts: 30
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Quote:
Originally Posted by WyomingLife
This thread is a tremendous public service. Thank you all so very much.
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I agree 100%. Thanks to Gumby and all those who have contributed to this thread. I will be making conversions this year from 401k to Roth for the first time and having this is so handy for seeing the tax rate levels that I will want to stay under.
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05-20-2020, 03:37 PM
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#68
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Recycles dryer sheets
Join Date: Feb 2019
Posts: 135
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Quote:
Originally Posted by MandM
I agree 100%. Thanks to Gumby and all those who have contributed to this thread. I will be making conversions this year from 401k to Roth for the first time and having this is so handy for seeing the tax rate levels that I will want to stay under.
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I just stumbled on this and wanted to echo my thanks!
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09-07-2020, 09:36 AM
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#69
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,962
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I'm not yet retired, so I have a question. Read an Article that says if your income is $32,000 - $44,000 as a couple, your SS income will be taxed 50%.
Is the $44,000 income after the IRS standard deductions ?
In 2019, the standard deduction is $24,800 for a couple. So, if your gross income is say $65,000 - $24,800 = $40,200 (income after standard deductions). So, in this case, do you still fall under the 50% SS taxation ? Because above $44,000 income, you will need to pay 85% on your SS income.
https://smartasset.com/retirement/is...income-taxable
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
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09-07-2020, 10:32 AM
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#70
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Administrator
Join Date: Apr 2006
Posts: 22,923
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Quote:
Originally Posted by cyber888
I'm not yet retired, so I have a question. Read an Article that says if your income is $32,000 - $44,000 as a couple, your SS income will be taxed 50%.
Is the $44,000 income after the IRS standard deductions ?
In 2019, the standard deduction is $24,800 for a couple. So, if your gross income is say $65,000 - $24,800 = $40,200 (income after standard deductions). So, in this case, do you still fall under the 50% SS taxation ? Because above $44,000 income, you will need to pay 85% on your SS income.
https://smartasset.com/retirement/is...income-taxable
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Social security taxation is based on your "provisional income", which is 1/2 of your social security plus your other AGI. AGI is the income before any standard deduction. Note that the social security taxation thresholds are not "cliffs". That is why the article you link uses the words "up to" 50% and "up to" 85%
Your social security starts getting taxed when your provisional income passes $32k. The percentage of your benefit subject to tax increases for each additional dollar in AGI until it reaches 50% of SS being taxable at $44k provisional income. Thus, for example, if you and you spouse together had $28k per year in social security and $25k per year in other AGI (tIRA withdrawals, sales of appreciated stock, pension, etc), your provisional income would be $39k per year and $3500 (12.5%) of your social security benefit would be taxable.
Once provisional income hits $44k, progressively more gets taxed, up until 85% of it is taxable. The point at which you reach 85% of SS being subject to taxation differs for everyone, depending on their social security amount. Post #51 in this thread ( https://www.early-retirement.org/for...ml#post2350324) explains how to find the point at which 85% of your social security will be taxable. It is a surprisingly large number.
My recommendation is to go through the IRS worksheet here https://www.irs.gov/pub/irs-pdf/p915.pdf#page=16 and plug in your anticipated numbers. Here is a link to the Form 1040 to help. https://www.irs.gov/pub/irs-pdf/f1040.pdf
At the end of the day, your taxable income will be the taxable portion of your social security plus your other AGI minus any deductions.
__________________
Living an analog life in the Digital Age.
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09-07-2020, 12:34 PM
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#71
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,962
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Quote:
Originally Posted by Gumby
Social security taxation is based on your "provisional income", which is 1/2 of your social security plus your other AGI. AGI is the income before any standard deduction. Note that the social security taxation thresholds are not "cliffs". That is why the article you link uses the words "up to" 50% and "up to" 85%
Your social security starts getting taxed when your provisional income passes $32k. The percentage of your benefit subject to tax increases for each additional dollar in AGI until it reaches 50% of SS being taxable at $44k provisional income. Thus, for example, if you and you spouse together had $28k per year in social security and $25k per year in other AGI (tIRA withdrawals, sales of appreciated stock, pension, etc), your provisional income would be $39k per year and $3500 (12.5%) of your social security benefit would be taxable.
Once provisional income hits $44k, progressively more gets taxed, up until 85% of it is taxable. The point at which you reach 85% of SS being subject to taxation differs for everyone, depending on their social security amount. Post #51 in this thread ( https://www.early-retirement.org/for...ml#post2350324) explains how to find the point at which 85% of your social security will be taxable. It is a surprisingly large number.
My recommendation is to go through the IRS worksheet here https://www.irs.gov/pub/irs-pdf/p915.pdf#page=16 and plug in your anticipated numbers. Here is a link to the Form 1040 to help. https://www.irs.gov/pub/irs-pdf/f1040.pdf
At the end of the day, your taxable income will be the taxable portion of your social security plus your other AGI minus any deductions.
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Great. Thanks for explaining.
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
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09-07-2020, 02:26 PM
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#72
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Thinks s/he gets paid by the post
Join Date: Dec 2016
Location: DC area
Posts: 2,464
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Quote:
Originally Posted by cyber888
I'm not yet retired, so I have a question. Read an Article that says if your income is $32,000 - $44,000 as a couple, 50% of your SS income will be taxed 50%.
Is the $44,000 income after the IRS standard deductions ?
In 2019, the standard deduction is $24,800 for a couple. So, if your gross income is say $65,000 - $24,800 = $40,200 (income after standard deductions). So, in this case, do you still fall under the 50% SS taxation ? Because above $44,000 income, you will need to pay 85%tax on 85% of your SS income.
https://smartasset.com/retirement/is...income-taxable
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For clarity, edited your post.
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FI and Semi-ER March 24, 2017
Consulting to stay engaged
"All models are wrong, some are useful." - George Box
“There is always a well-known solution to every human problem: neat, plausible, and wrong.” - H.L. Mencken
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09-07-2020, 03:33 PM
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#73
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Administrator
Join Date: Apr 2006
Posts: 22,923
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Good edit. Yes, the actual tax is at your marginal rate for your income (12%, 22%, etc).
__________________
Living an analog life in the Digital Age.
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09-07-2020, 03:53 PM
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#74
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,184
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Quote:
Originally Posted by Gumby
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I just went through this exercise with my parents' tax planning. The best way by far was to just do a tax run for them with TurboTax (or whatever one might use). Then I could just look at line 5 to see what was taxable, and look at the SS Benefits Worksheet if I wanted to see the detailed calcs. It's also easy to tweak the numbers and see what changes as you add or subtract IRA withdrawals or other income. I just get a headache if I try to do it any other way.
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09-07-2020, 04:09 PM
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#75
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,197
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Quote:
Originally Posted by RunningBum
I just went through this exercise with my parents' tax planning. The best way by far was to just do a tax run for them with TurboTax (or whatever one might use). Then I could just look at line 5 to see what was taxable, and look at the SS Benefits Worksheet if I wanted to see the detailed calcs. It's also easy to tweak the numbers and see what changes as you add or subtract IRA withdrawals or other income. I just get a headache if I try to do it any other way.
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Yeah, just converted the SS worksheet to a simple excel formulaic worksheet and use it frequently enough to play around with the potential Roth conversions.
__________________
TGIM
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09-07-2020, 04:18 PM
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#76
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Administrator
Join Date: Apr 2006
Posts: 22,923
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I always do my taxes with software. But if you really want to understand how something actually works, pencil and paper is the way to go (or building your own spreadsheet). I'm one of those guys who has called H&R Block to tell them that there is an error in their software. (they fixed it)
__________________
Living an analog life in the Digital Age.
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09-07-2020, 04:37 PM
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#77
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,184
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Quote:
Originally Posted by Gumby
I always do my taxes with software. But if you really want to understand how something actually works, pencil and paper is the way to go (or building your own spreadsheet). I'm one of those guys who has called H&R Block to tell them that there is an error in their software. (they fixed it)
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You're right about that. I did a few exercises on regular income and cap gains/divs by hand (pencil and paper) with the "Qualified Dividends and Capital Gains worksheet" to make sure I understood it. That's what Turbo Tax calls it anyway. I had to dig to find it buried elsewhere in H&R B a few years back when I gave that a try.
Maybe someday I'll do the same with social security but at 58 I'm not quite motivated yet to do that. I know enough to try to get my IRA fully converted before taking SS, or at least to a level where I'd use the rest for QCDs.
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09-07-2020, 04:41 PM
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#78
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,184
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That's also why I don't want to pay to have my taxes done. I've learned a lot by doing them myself. If I pay someone else they may or may not tell me how to reduce taxes over my lifetime, and if they don't know all of my finances they may not even know how to do it. And unless I pay them more for that planning, why would they bother, since it's no skin off their noses.
It's like mowing the grass. I liked to see for myself the condition of the lawn, where I needed to do more weed control, and where to put down some Amdro for fire ants (when I lived in Texas).
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09-07-2020, 05:31 PM
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#79
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,679
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Quote:
Originally Posted by Gumby
I always do my taxes with software. But if you really want to understand how something actually works, pencil and paper is the way to go (or building your own spreadsheet). I'm one of those guys who has called H&R Block to tell them that there is an error in their software. (they fixed it)
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Building my own spreadsheet has shown me how different parts of the tax forms interact with each other, too. I can think of 2 times in the last 10 years or so when I thought small changes to items I entered had an effect on the bottom line even when I thought they wouldn't. It made me more mindful for when I made similar changes in subsequent years.
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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!"
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09-07-2020, 05:35 PM
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#80
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 3,678
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I use this calculator. Very handy.
https://www.calcxml.com/calculators/...-taxed?lang=en
The range between 50% of your benefits being taxable and 85% being taxable is very small.
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Married, both 69. DH retired June, 2010. I have a pleasant little part time job.
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