Z3Dreamer
Thinks s/he gets paid by the post
Used my 2016 TurboTax to look at 2017 taxes. That's right, 2017. I am retired, looking to Roth convert AND qualify for ACA subsidies. One more thing - will draw some SS. Yes, we are drawing at 62.
Anyhow, I put in some IRA distribution so as to Roth convert in my 15% Federal bracket. This was fine. Still qualified for ACA. Then I bumped the IRA distribution up by $5,000. Still qualified for ACA.
Here is the rant part: Federal and state taxes increased by $1,346. Subsidy decreased by $746. So, that is an effective tax rate of 27% combined Fed and state and a 15% "tax" in the form of decreased ACA subsidies. 42% combined even though my top tax bracket is 15%.
In case you did not know this, increased income causes more SS to be taxed creating a super-marginal tax rate. Will have to find that sweet spot - draw SS later, convert less, find more above the line deductions. But 42%!!!
Anyhow, I put in some IRA distribution so as to Roth convert in my 15% Federal bracket. This was fine. Still qualified for ACA. Then I bumped the IRA distribution up by $5,000. Still qualified for ACA.
Here is the rant part: Federal and state taxes increased by $1,346. Subsidy decreased by $746. So, that is an effective tax rate of 27% combined Fed and state and a 15% "tax" in the form of decreased ACA subsidies. 42% combined even though my top tax bracket is 15%.
In case you did not know this, increased income causes more SS to be taxed creating a super-marginal tax rate. Will have to find that sweet spot - draw SS later, convert less, find more above the line deductions. But 42%!!!