SecondCor521
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Hi all,
This is sort of a continuation to the following thread of mine from September:
http://www.early-retirement.org/for...-decide-how-much-income-to-realize-93589.html
I'd appreciate people checking my tax situation and making sure I'm thinking about this correctly.
I have entered all of my existing YTD tax related items into TaxAct that have happened already. To this I have added an additional chunk of Roth conversions and 0% LTCG that I tentatively plan to do before 12/31.
If I go with this plan, it appears that my marginal rate will be:
10% federal tax on ordinary income
0% federal tax on LTCG
6.55% ACA on AGI
6.925% state tax on AGI
5% FAFSA EFC on AGI
For a total of 28.475% marginal rate.
In 2040 when I must start RMD's, it appears that I will be in the middle of the 24% federal bracket. Adding Idaho's top marginal bracket of 6.925% means I'll be in a 30.925% bracket then. It is possible I will receive an inheritance between now and 2040 that will make my income even higher.
I know things can change, but it seems like I should be willing to execute this plan since my marginal rate on this income this year is below what I'll ultimately pay on my income when I start RMDs.
Questions:
1. Seem reasonable?
2. Fill up more of the 10% bracket with more Roth conversions? This seems logical if I believe in the marginal rate story above.
3. Fill up more of the 0% LTCG bracket with more LTCG? Again, same marginal rate story, but it's even better because the marginal rate on my LTCG would just be 18.475%.
4. I should be looking at marginal rates when deciding how much to convert or realize, correct? As it turns out my effective rate with this plan is less than 2%, but I think that really shouldn't matter, right?
Thanks!!
This is sort of a continuation to the following thread of mine from September:
http://www.early-retirement.org/for...-decide-how-much-income-to-realize-93589.html
I'd appreciate people checking my tax situation and making sure I'm thinking about this correctly.
I have entered all of my existing YTD tax related items into TaxAct that have happened already. To this I have added an additional chunk of Roth conversions and 0% LTCG that I tentatively plan to do before 12/31.
If I go with this plan, it appears that my marginal rate will be:
10% federal tax on ordinary income
0% federal tax on LTCG
6.55% ACA on AGI
6.925% state tax on AGI
5% FAFSA EFC on AGI
For a total of 28.475% marginal rate.
In 2040 when I must start RMD's, it appears that I will be in the middle of the 24% federal bracket. Adding Idaho's top marginal bracket of 6.925% means I'll be in a 30.925% bracket then. It is possible I will receive an inheritance between now and 2040 that will make my income even higher.
I know things can change, but it seems like I should be willing to execute this plan since my marginal rate on this income this year is below what I'll ultimately pay on my income when I start RMDs.
Questions:
1. Seem reasonable?
2. Fill up more of the 10% bracket with more Roth conversions? This seems logical if I believe in the marginal rate story above.
3. Fill up more of the 0% LTCG bracket with more LTCG? Again, same marginal rate story, but it's even better because the marginal rate on my LTCG would just be 18.475%.
4. I should be looking at marginal rates when deciding how much to convert or realize, correct? As it turns out my effective rate with this plan is less than 2%, but I think that really shouldn't matter, right?
Thanks!!
Last edited: