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Old 02-13-2020, 06:48 AM   #61
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Looking at a couple of links for 2020, it appears the Lifetime Learning Credit phaseout has increased to $118,001 - $138,000. Thanks!
Fixed. Thanks for catching that.
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Old 02-13-2020, 10:58 AM   #62
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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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Old 02-16-2020, 06:39 PM   #63
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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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Old 03-27-2020, 02:28 PM   #64
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May want to update this thread with the stimulus payment income levels ($75K AGI, $112.5K AGI, and $150K AGI).
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Old 04-14-2020, 07:24 AM   #65
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May want to update this thread with the stimulus payment income levels ($75K AGI, $112.5K AGI, and $150K AGI).
Thanks. I have added the Single and MFJ levels.
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Old 04-19-2020, 11:30 PM   #66
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This thread is a tremendous public service. Thank you all so very much.
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Old 04-27-2020, 04:38 PM   #67
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This thread is a tremendous public service. Thank you all so very much.
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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Old 05-20-2020, 03:37 PM   #68
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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.
I just stumbled on this and wanted to echo my thanks!
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Old 09-07-2020, 09:36 AM   #69
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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
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Old 09-07-2020, 10:32 AM   #70
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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
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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Old 09-07-2020, 12:34 PM   #71
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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.

Great. Thanks for explaining.
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Old 09-07-2020, 02:26 PM   #72
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Originally Posted by cyber888 View Post
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
For clarity, edited your post.
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Old 09-07-2020, 03:33 PM   #73
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Good edit. Yes, the actual tax is at your marginal rate for your income (12%, 22%, etc).
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Old 09-07-2020, 03:53 PM   #74
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...

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.
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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Old 09-07-2020, 04:09 PM   #75
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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.
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.
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Old 09-07-2020, 04:18 PM   #76
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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)
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Old 09-07-2020, 04:37 PM   #77
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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)
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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Old 09-07-2020, 04:41 PM   #78
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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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Old 09-07-2020, 05:31 PM   #79
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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)
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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Old 09-07-2020, 05:35 PM   #80
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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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