What about Taxes in FireCalc?

[SpreadsheetGuy]

Doesn't the FireCalc completely ignore any kind of tax liability?



Sorry if this has been asked already, but I looked through some of the recent threads and didn't see it. How are you all accounting for state/federal taxes(I get it, it's a moving target and different for everyone, but it's a expense that certainly changes the output of the calculator and % of success).

 

[braumeister]

Taxes are spending just like all other spending.

Spend a few minutes reading about FIRECalc and it will become clear.

https://firecalc.com

https://firecalc.com/intro.php

 

[Midpack]

Yes, FIRECALC ignores all taxes, you have to include any and all taxes in your spending expenses. Federal tax rates change, state income-property-sales and other taxes vary considerably and your capital gains/losses are unique, so there’s no way any free or low cost calculator could take on taxes meaningfully. You’re better off knowing what taxes are included by entering them yourself instead of relying on a ‘tax black box’ within FIRECALC that you may/not understand.

 

[pb4uski]

What I did is a pro forma tax return in retirement using the What-If worksheet in Turbo Tax. If you don't have TT you could use this link: https://www.dinkytown.net/java/1040-tax-calculator.html

I did it based on our immediate post retirement, then later adding my pension, then later adding SS, then later adding RMDs.... held my thumb up in the air and picked a number. Luckily for us, absent voluntary Roth conversions it isn't a huge number... about 10% of our total annual spending on average.... sometimes more sometimes less.

 

[SheriffRoscoePColtrane]

Try excel1040

What I did is a pro forma tax return in retirement using the What-If worksheet in Turbo Tax. If you don't have TT you could use this link: https://www.dinkytown.net/java/1040-tax-calculator.html

I'm a big fan of the Excel spreadsheets for Federal 1040 from excel1040.com. Glenn Reeves puts out an estimator version for the current year very soon after the year starts, and it does a great job. I still use TurboTax to file, but only because it's convenient (and fairly cheap).

 

[Katsmeow]

I use this link which updates each year.

https://www.mortgagecalculator.org/calcs/1040-calculator.php

 

[WestUniversity]

Also try the Intuit app called TaxCaster...

 

[VanWinkle]

I use this link which updates each year.

https://www.mortgagecalculator.org/calcs/1040-calculator.php

I am a tax preparer and like this link for estimating future taxes. It is easier
to make adjustments than tax caster from Intuit.

 

[Time2]

I use this link which updates each year.

https://www.mortgagecalculator.org/calcs/1040-calculator.php

A quick glance, this looks the same as the Dinkytown calculator.
https://www.dinkytown.net/java/1040-tax-calculator.html
I have used Dinkytown and found it easy to use and came up with the same answer as a much hard to use calculator I tried.

 

[tb001]

I use this link which updates each year.

https://www.mortgagecalculator.org/calcs/1040-calculator.php

Yes! Someone (maybe you?) posted this here and I’ve found it to be the most helpful easy way to estimate our taxes and changes with retirement. I’ve even caught errors made my our now former tax preparer.

I know this has been said before, but if you’re married, be sure to look at tax liability if either of you dies first. It can add a significant amount to your spend.

 

[Happyras]

I am a tax preparer and like this link for estimating future taxes. It is easier
to make adjustments than tax caster from Intuit.

The calculator in general will work for most, but in our case I could not avoid the NIIT tax on capital gains from sale of our business which is not due. A huge $15K in tax we will not need to pay. It is too simple for our situation, but then our accountant included a safe harbor adjustment on our estimated taxes for 2020, when we had an exception to our income in 2019 due to early payment on one note. As a result, in 3 quarters we have now overpaid our tax due for 2020 by a significant amount. This calculator would create a similar overpayment. Also, for some reason we are not alone in having the IRS waive the underpayment penalty for 2019. It just is not so simple anymore.

 

[target2019]

Doesn't the FireCalc completely ignore any kind of tax liability?

Sorry if this has been asked already, but I looked through some of the recent threads and didn't see it. How are you all accounting for state/federal taxes(I get it, it's a moving target and different for everyone, but it's a expense that certainly changes the output of the calculator and % of success).

https://firecalc.com/dev/faq.php
Answer is in the FAQ.

How to search
site:firecalc.com "tax"

Calculating future tax is one reason I use Flexible Retirement Planner. There is a spot on the intro screen to plug in your effective tax rate.

 

[BlueberryPie]

I am not retired yet and 60% of the contributions to my portfolio are tax-deferred
should I enter a larger number in the "not retired" tab so that the proper amount is credited to my portfolio?

For example, if I contribute $20K to a 401(k) and $10k to a taxable brokerage account,
do I enter 30K, or do I enter something like $35K to make it an actual $30K hitting the portfolio after taxes?

I'm also not quite sure how to calculate a "before taxes" amount from an after taxes amount easily, add another 15-20% to account for your effective tax rater (whcih will be different based on what income generates that retirement money in thefirst place)

 

[H2ODude]

I've used Firecalc and the Fidelity calculators. I've been using an accountant for many years and have sort of lost most of my tax calculation abilities for anything but gross estimations. For that reason FIDO is what I use to judge adequacy/safety (it figures the tax in, both state and fed). I use Firecalc to get a good graphic picture of the range of outcomes and their likelihoods. Between the two I get a result that lets me sleep at night.

 

[pb4uski]

I am not retired yet and 60% of the contributions to my portfolio are tax-deferred
should I enter a larger number in the "not retired" tab so that the proper amount is credited to my portfolio?

For example, if I contribute $20K to a 401(k) and $10k to a taxable brokerage account,
do I enter 30K, or do I enter something like $35K to make it an actual $30K hitting the portfolio after taxes?

I'm also not quite sure how to calculate a "before taxes" amount from an after taxes amount easily, add another 15-20% to account for your effective tax rater (whcih will be different based on what income generates that retirement money in thefirst place)

I think best practice is to use $30k for how much you add to your portfolio each year and then add taxes to your spending in retirement on the Start Here tab.

To get an idea of taxes, you can do a pro forma tax calculation as if you were retired in today's dollars using TurboTax what-If worksheet or the dinkytown tax calculator.

Most of us find that our effective tax rate in retirement is much lower that it was when we were working. Our effective tax rate is currently ~7-8% retired vs ~15-17% when I was working and even then the 7-8% is discretionary because without discretionary Roth conversions it would be 0%.

 

[SheriffRoscoePColtrane]

The calculator in general will work for most, but in our case I could not avoid the NIIT tax on capital gains from sale of our business which is not due. ... It just is not so simple anymore.

That's why I recommended the excel1040.com Excel spreadsheet. It's free (although I donate, because I use it a lot), and it covers LOTS of Federal tax oddball cases. It also generally allows you to override most of its calculations, for when you (think ) you know better than it does.