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Old 09-12-2020, 11:51 AM   #81
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Hi Gumby .. or anyone good at taxes ..

If you have the time, can you check if this tax calculator is correct. It calculates retirement income from Social Security + from retirement savings withdraws + wages .. and spews out what your Federal taxes and local taxes are .. What do you think I'm in NC, so it's set at NC .. all other states are available. It definitely shows taxes to be much lower if your social security income is higher than your 401k withdrawals

https://smartasset.com/retirement/no...xes#kUolN2fjcy
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Old 09-13-2020, 02:18 PM   #82
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Originally Posted by cyber888 View Post
Hi Gumby .. or anyone good at taxes ..

If you have the time, can you check if this tax calculator is correct. It calculates retirement income from Social Security + from retirement savings withdraws + wages .. and spews out what your Federal taxes and local taxes are .. What do you think I'm in NC, so it's set at NC .. all other states are available. It definitely shows taxes to be much lower if your social security income is higher than your 401k withdrawals

https://smartasset.com/retirement/no...xes#kUolN2fjcy


By my calculation (using the Publication 915 Worksheet 1 and IRS 2019 tax table in the Form 1040 instructions), if you filed MFJ, had a combined $28,000 in social security and $25,000 in tIRA withdrawals and you used the standard deduction of $24,400, then $3500 of your SS would be taxable and your taxable income would be $3500 + $25,000 - $24,400 = $4100. The tax rate is 10%, but the IRS tax tables say $413 in tax (for a range of $4100 to $4150 tax on half the increment is $2.50 rounded to $3).

However, the calculator you linked shows the federal tax for that scenario as $361, which is too low by 12.6% So there is something wrong with that calculator, but I can't tell what, because they don't show their work. I can't tell you if the state taxes are correct, but the error in the federal tax makes me suspicious.

As a general rule, however, you are correct - the greater the percentage of your total income that comes from social security, the lower your taxes will be for the same total income. If for no other reason than the fact that under federal tax law, 15% of your social security income is never subject to tax. Many states also privilege social security, some completely.
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Old 09-13-2020, 02:33 PM   #83
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Thanks Gumby.

But is it possible that they are using the 2020 standard deduction of $24,800, and not the 24,400 deduction for 2019.

So, 3,500 + 25000 - 24,800 = $3,700 .. that would be $370 at 10%. That would be closer to the $361.
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