I just make up a number. I don't use numbers from tax forms because I set my income there to whatever amount I think will work out for me in the line run. Using dividends and interest also doesn't make sense to me because if I'm a growth investor, I have no dividends, but at least as good prospects for portfolio growth. Take 3 or 4 percent of your portfolio as a starting point and alter as needed.
Sorry, this a bit off topic, but can you tell me how much of a rebate you received for taking the financing and did you need to keep the finiancing for a period of time (like 3 months) before paying it off. We are about to start the car buying experience and I'm trying to get my plan in place.
An idle question on a foggy Saturday morning:
Not counting SS, rental income or anything other than your portfolio, how do you count your income?
Example: If your portfolio made $400K and your SWR is $120K but you only paid taxes on $30K what would you consider your income?
I think it might depend on who's asking; that is, when it's time to do a new car lease, I'd use the total portfolio number (if larger that year) but on a practical day-to-day level I consider my income to be my SWR, then there are instances where I might answer on what I paid taxes on.
Again, limiting it to portfolio only. Just curious.
Wow. Thanks for responding. Do you mean you could have gotten more than $1,500, or if you'd kept it for 4 months you would have gotten the full $1,500?We got $1,500 for taking the financing. Word of caution. The dealer told me I had to keep the financing for four months. That was BS but I didn’t find that out until it was too late. The four months is how long you have to keep it for the dealer to get their cut. As far as the financing company is concerned, you could pay it off the next day. That issue cost me about half the rebate. Still worth it, but could have got more. Had I known, I probably would have paid it off by the end of the first month.
I think this answer is simpler and closer to what I was thinking.
Every three years I'm asked about my income on a car lease application and I'm always thinking twice about what to put down (not that anyone seems to check).
OP here.
My original question was more about how you mentally tally your portfolio income and growth more than a practical use or definition.
What I was getting at was, if your portfolio gained $X do you consider that 'income' or just growth, regardless of how the IRS views it.
True, at lease-car time (the only time I'm asked) I fudge in some number but quietly wonder if I'm over or understating--again, not that anyone seems to check. For my usual calculations and day-to-day, I use my withdrawals + SS + other incomes but the question was really about how other view their portfolio growth.
I believe "Jerry1" best answered the envelope of the question in post #2.
Wow. Thanks for responding. Do you mean you could have gotten more than $1,500, or if you'd kept it for 4 months you would have gotten the full $1,500?
What I was getting at was, if your portfolio gained $X do you consider that 'income' or just growth, regardless of how the IRS views it.
... whenver I am asked for income on an application of some sort I use what is shown as total income on our tax return... so in our case it includes interest, dividends, my pension, realized gains/(losses) and IRA withdrawals. And it will include 85% of SS once SS starts.
I got lost on this one...
Our income more than balances our outgo. No taxes since 1998.
.... One could envision a situation where one could be taking SS while withdrawing $100K in after-tax cash each year, yet filing a $15K SS 'income' to the IRS. In this case, I'd say my income was $115K.
Well, I'd hate to try and lease a new Mercedes with a $15k annual income!No! If you take $20 out of your wallet and spend it is that income? I presume that you would say no.
So if you take $100k out of your after-tax savings account and spend it is that income? No! For the same reason.
So if you take $100k out of your brokerage account and spend it is that income? No! For the same reason.
What you are advocating doesn't make sense.
Well, I'd hate to try and lease a new Mercedes with a $15k annual income!
But what your saying is that if I take $100k out of my after tax account it is not income, but if I take it out of my pre tax account it is? To me we're getting into semantics, no?
Having said that, "not making sense" is about the 19th time I've been accused of such just today, so, all good.
You won't get that chance to explain if you write down $15K. I'd rather be conditionally accepted and then justify my ability to pay based on $15K income and $100K withdrawal than be outright rejected for putting down $15K. My $115K is as good as $115K salary income--better, really, since I'm not paying tax on that return of capital. If you think my credibility would be shot after that explanation, do you really believe they would spend a second more after seeing $15K income?You guys seem to be confusing spending with income.
I think we would agree that one possible definition of (net) income is change in net worth... in marko's example his net worth decreases by $100k... $x beginning net worth + $15k SS - $115k spending = $x - $100k ending net worth.... proving that $115k of "income" makes no sense at all.
If they ask for income and he puts down $115k then he has falsified his application... if they ask him for details on his $115k of income his credibility will crater. He should put down the $15k and explain that he is also living off of savings.