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The original retirement section of this website has been updated
and moved to its own website:
As in its previous revision, nothing is being sold or marketed on
the new website. It merely represents my personal research into
how we are being taxed during retirement and most of it revolves
around line number 5 on your 1040 tax return:
This is the line where 50% then 85% of your Social Benefit slowly
becomes taxable income as your other taxable income increases.
| Marginal Tax Brackets |
Federal
Bracket |
Taxable
at 50¢ |
Taxable
at 85¢ |
+LTCGs
at 15% |
As each additional dollar of income causes
50 cents or 85 cents of your Social Security Benefits to also become taxable
income, your taxable income increases by $1.50 or $1.85, not just one dollar,
which creates the following marginal tax brackets. |
10% |
15% |
18.5% |
|
| 12% |
18% |
22.2% |
49.95% |
| 22% |
N/A |
40.7% |
|
| Federal | 22% |
22.2% | 40.7% |
49.95% |
|---|
| $1,282 | $1,285 |
$1,686 | $1,998 |
|---|
| More $ | $3 | $404 |
$716 |
|---|
Plus 8%
State | 30% |
30.2% | 48.7% |
57.95% |
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| $1,429 | $1,433 | $1,949 | $2,378 |
|---|
| More $ | $4 | $521 |
$950 |
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Let’s put this information into perspective by asking a relatively simple question:
how much do you have to withdraw from your taxable IRA to end up with $1,000 after
tax? The first example says $1,282 because 22% of $1,282 is $282! You end up with
$1,000 after you pay the extra tax that was created by the extra $1,282 of taxable
income.
- At what income levels do these rediculous tax rates exist?
- Can they be avoided?
- Are married couples taxed higher than single individuals?
- Are there penalties for surviving spouses?
- How can I pre-plan for all of this?
Get the answers to these and many othe questions at our new website:
www.yourssss.com
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