The Money Mustache Community
General Discussion => Forum Information & FAQs => Topic started by: MDM on March 16, 2016, 08:23:57 PM
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The Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing) (CSS) contains various calculations applicable to personal finance, including
- Tax planning, including many common credits and extra taxes, for both federal and state taxes.
- Traditional vs. Roth vs. non-deductible IRA vs. taxable investment choice
- Social Security benefit estimates
- "HDHP plus HSA" vs. "non-HDHP and no HSA" comparison
- Lump sum vs. pension
and others.
This thread is intended for updates, questions, comments, suggestions, etc. about the spreadsheet tool itself.
Questions about one's own finances should go in a thread dedicated to that topic, and follow the outline in the "How to Write a Case Study (http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/)" sticky.
See this post (http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/msg274228/#msg274228) and the 'Instructions' tab in the spreadsheet itself for - you guessed it - instructions.
For more instructions with accompanying screen shots, the "Using a spreadsheet" section of the Roth IRA conversion - Bogleheads (https://www.bogleheads.org/wiki/Roth_IRA_conversion) wiki discusses that topic, and perhaps best of all Harry Sit at The Finance Buff (https://thefinancebuff.com/) has two great step-by-step articles: Roth Conversion and Capital Gains On ACA Health Insurance (https://thefinancebuff.com/tax-calculator-aca-obamacare-subsidy.html) and Roth Conversion with Social Security and Medicare IRMAA (https://thefinancebuff.com/roth-conversion-social-security-medicare-irmaa.html). All the above show how to provide common inputs such as filing status, age, income types, etc.
2022/2023/2024 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- Click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately and later save from Excel to your computer, or save immediately to your computer and later open that file with Excel.
- See https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496 regarding warnings one might see, and why those are spurious warnings for these files.
In early 2023, Microsoft added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the "Details can be found at..." link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
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Version 8.01
- Improved Social Security calculations (SocialSecurity tab). Within $1 vs. anypia and https://www.ssa.gov/oact/cola/examplemax.html results for spot checks. Doesn't do "born on the first of the month" adjustments.
- Changed comment on federal tax result to confirm it is a 2016 value.
- Added a "pension income" line to the Calculations tab
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Version 8.02
- Minor clean-up/reformatting on several tabs
- Minor graph improvements
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Version 8.03
Changed input to saver's credit calculation to use "AGI + Foreign Income exclusion"
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Version 8.04
Added an adult earner's age test to the Earned Income Credit.
Added a "fixed vs. variable rate" calculation to the 'Misc. calcs' tab
Added 'Basic Terms' tab: Chart of some basic investing terms. Target audience: someone who asks "is that a Roth or a Vanguard?". Don't laugh, we (at least, most of us) were all there once….
Other miscellaneous edits.
Any thoughts on the 'Basic Terms' chart?
Not interested in replicating Investopedia, but:
- Would also be happy to defer to an existing web page, etc., if there is one that strikes a good balance between simplicity and helpfulness.
- Said balance, however, is likely in the eye of the beholder.
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Version 8.05
Minor edits and formatting - no functionality change.
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Thank you, MDM! It is so awesome that you have created this spreadsheet and are keeping it updated for our community to use! :D
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I've been playing around with the "401k or Taxable" sheet in the CSS to try to figure out whether to fill my 401k (and Roth) with Bonds or Stocks or both.
My question is whether I'm using the spreadsheet correctly.
Since my AA is 50%TSM/50%TBM, I simply ran it once with stocks, and once with bonds, and then added up the various totals in all the permutations to see which mix of taxable and iras was optimal.
My questions:
1) For TSM held long term, is "current marginal tax rate" calculated before or after all the deductions for using any 401ks?
2) Is the "investment taxable yield (if in taxable account)" for TSM 2% or 0% (since it gives off mostly qualified dividends)?
3) If TBM yields 2%, would the "total pretax return" be 2% and would the "investment taxable yield" be 2% (since it distributes mostly non-qualified interest)? Can this spreadsheet be used for bond funds at all?
4) Since my ultimate concern is to compare Stocks in Taxable/Bonds 401k, versus Bonds in taxable/Stocks in 401k, I ran figures for Stocks and then ran figures for Bonds.
Since my allocation is 50/50 I simply added the final total $ from $10,000 for each permutation to figure what my final total would be. To calculate using a mix of stocks/bonds in both taxable and 401k I simply averaged the totals for both in taxable and both in 401ks. Is this methodology correct?
Thank you.
ps. I hope this is the correct forum; if not I can move it to either investment or taxation.
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I've been playing around with the "401k or Taxable" sheet in the CSS to try to figure out whether to fill my 401k (and Roth) with Bonds or Stocks or both.
My question is whether I'm using the spreadsheet correctly. ps. I hope this is the correct forum; if not I can move it to either investment or taxation.
jmk, welcome to the forum. Yes, you picked a good place to ask.
It wasn't originally designed for stocks vs. bonds, but let's see....
My questions:
1) For TSM held long term, is "current marginal tax rate" calculated before or after all the deductions for using any 401ks?
It is the tax rate you save by using a traditional account. See https://www.bogleheads.org/wiki/Marginal_tax_rate#Traditional_vs._Roth for more.
2) Is the "investment taxable yield (if in taxable account)" for TSM 2% or 0% (since it gives off mostly qualified dividends)?
2%. You distinguish between qualified vs. non-qualified by the "Tax rate on annual investment returns while contributing" entry.
3) If TBM yields 2%, would the "total pretax return" be 2% and would the "investment taxable yield" be 2% (since it distributes mostly non-qualified interest)? Can this spreadsheet be used for bond funds at all?
If you are assuming no capital gains at all, then yes.
4) Since my ultimate concern is to compare Stocks in Taxable/Bonds 401k, versus Bonds in taxable/Stocks in 401k, I ran figures for Stocks and then ran figures for Bonds.
Since my allocation is 50/50 I simply added the final total $ from $10,000 for each permutation to figure what my final total would be. To calculate using a mix of stocks/bonds in both taxable and 401k I simply averaged the totals for both in taxable and both in 401ks. Is this methodology correct?
Hmmm.
My knee-jerk reaction was "no, it wasn't designed for that!" The designed use for that tab is to see if a 401k (or 403b, etc.) plan with egregious fees is still worth using.
But maybe...? Sometimes things can work quite well, even for situations not originally envisioned. Given the answers to questions 1-3, I'll toss number 4 back to you for now - what do you think?
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2) Is the "investment taxable yield (if in taxable account)" for TSM 2% or 0% (since it gives off mostly qualified dividends)?
2%. You distinguish between qualified vs. non-qualified by the "Tax rate on annual investment returns while contributing" entry.
But that line is a calculation, not an entry. It doesn't adjust for qualified v non-qualified--assumes all is ltcg/qualified. No?
4) Since my ultimate concern is to compare Stocks in Taxable/Bonds 401k, versus Bonds in taxable/Stocks in 401k, I ran figures for Stocks and then ran figures for Bonds.
Since my allocation is 50/50 I simply added the final total $ from $10,000 for each permutation to figure what my final total would be. To calculate using a mix of stocks/bonds in both taxable and 401k I simply averaged the totals for both in taxable and both in 401ks. Is this methodology correct?
Hmmm.
My knee-jerk reaction was "no, it wasn't designed for that!" The designed use for that tab is to see if a 401k (or 403b, etc.) plan with egregious fees is still worth using. But maybe...? Sometimes things can work quite well, even for situations not originally envisioned. Given the answers to questions 1-3, I'll toss number 4 back to you for now - what do you think?
It works, I think, with a minor adjustment to one formula. You need to change the calculation for how bond final returns are calculated, to reflect that TSM in taxable has all its dividends qualified (and is taxed at your marginal rate if in an tIRA), but TBM in taxable has none of its interest qualified (and is taxed at your marginal tax rate if in an IRA). So we need a "flag" to distinguish the two cases. As you noted, we'd have to assume none of the TBM return is capital gain (you'd still list the total return though, since it gets subtracted out in the calculations.)
If I appropriate the flag in H3 to be a "TBM flag" (0=TSM, 1=TBM), then you'd need to modify the formulas:
"Tax rate on LTCG at taxable withdrawal" to "=IF(H3=1,e+sw,IF('Bond v Stock IRA'!a<=15%,0+sc,15%+sc))"
"Tax rate on annual investment returns while contributing" to "=IF(H3=1,a+sc,IF('Bond v Stock IRA'!a<=15%,0+sc,15%+sc))"
"Tax rate on annual investment returns after contributing" to "=IF(H3=1,e+sw,IF('Bond v Stock IRA'!e<=15%,0+sw,15%+sw))"
Not at all sure these fomulas are correct. What do you think?
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But that line is a calculation, not an entry. It doesn't adjust for qualified v non-qualified--assumes all is ltcg/qualified. No?
Yes, it is a calculation, intended to reduce the number of entries needed for a first-time user by using a heuristic based on the ordinary tax rate. The heuristic assumes all is ltcg/qualified and any state tax also applies. You may simply override the calculation if needed.
It works, I think, with a minor adjustment to one formula. You need to change the calculation for how bond final returns are calculated, to reflect that TSM in taxable has all its dividends qualified (and is taxed at your marginal rate if in an tIRA), but TBM in taxable has none of its interest qualified (and is taxed at your marginal tax rate if in an IRA). So we need a "flag" to distinguish the two cases. As you noted, we'd have to assume none of the TBM return is capital gain (you'd still list the total return though, since it gets subtracted out in the calculations.)
If I appropriate the flag in H3 to be a "TBM flag" (0=TSM, 1=TBM), then you'd need to modify the formulas:
"Tax rate on LTCG at taxable withdrawal" to "=IF(H3=1,e+sw,IF('Bond v Stock IRA'!a<=15%,0+sc,15%+sc))"
"Tax rate on annual investment returns while contributing" to "=IF(H3=1,a+sc,IF('Bond v Stock IRA'!a<=15%,0+sc,15%+sc))"
"Tax rate on annual investment returns after contributing" to "=IF(H3=1,e+sw,IF('Bond v Stock IRA'!e<=15%,0+sw,15%+sw))"
Not at all sure these fomulas are correct. What do you think?
That may work, thanks!
Haven't looked in full detail yet, but at first glance it seems doable. One quick question: would 'sw' be better to use than 'sc' in the first line of code?
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"Tax rate on LTCG at taxable withdrawal" to "=IF(H3=1,e+sw,IF('Bond v Stock IRA'!a<=15%,0+sc,15%+sc))"
"Tax rate on annual investment returns while contributing" to "=IF(H3=1,a+sc,IF('Bond v Stock IRA'!a<=15%,0+sc,15%+sc))"
"Tax rate on annual investment returns after contributing" to "=IF(H3=1,e+sw,IF('Bond v Stock IRA'!e<=15%,0+sw,15%+sw))"
Haven't looked in full detail yet, but at first glance it seems doable. One quick question: would 'sw' be better to use than 'sc' in the first line of code?
I think you're right. But then you're gonna need to change your equation, cause that part I left from you. :) You actually set sc equal to sw (probably as a short cut) in your spreadsheet, and I just left it that way for simplicity. To be frank, I'm confused about the difference between "tax rate on ltcg at withdrawal" and "tax rate on annual investment returns after contribution" as the two always seem the same in your original spreadsheet (and mine too).
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I think you're right. But then you're gonna need to change your equation, cause that part I left from you. :)
Guess I fixed it already, as my local version has "0+sw" etc. in the first and third line, with "0+sc" etc. in the second. :)
You actually set sc equal to sw (probably as a short cut)...
Actually sw equal to sc, but yes it's another heuristic.
...in your spreadsheet, and I just left it that way for simplicity. To be frank, I'm confused about the difference between "tax rate on ltcg at withdrawal" and "tax rate on annual investment returns after contribution" as the two always seem the same in your original spreadsheet (and mine too).
Under current federal tax law those are the same. I don't even pretend to know whether that is true for all state income taxes, and the federal law could change....
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And assuming my modifications are correct, here is an odd finding. At 15% tax rate (which I get down to with a 401k) and 15% in retirement, it doesn't matter much what I do:
At stocks=6% for 20 years, Trad=$26619, Roth=$26619, Taxable $26176. The power of compounding doesn't seem to amount to much.
And, frankly, it doesn't matter much where I put my bonds or my stocks:
$28132 stocks tax bonds ira
$27807 stocks roth bonds tax
$28132 stocks tax bonds roth
$27807 stocks ira bonds t
$28357 stocks r bonds ira
So I might as well, just keep all my buckets with the 50/50 asset allocation rather than try to get fancy with optimal asset location:
simply keeping everything at 50/50 is a nice tax-diversified $27,969.
Things change rapidly if my current tax goes up or my after-retirement tax goes up to 25%. The latter is the most probably, as I have a small $13000 pension that will kick in at age 62, and my wife and I each will get $15-23k of SS. So Roth is probably the safest.
j
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Version 8.06
- Added cells for "full-time student" status and tied those into the saver's credit calculation.
- Added more cells that can be used for the marginal tax rate calculations. Any cell can - this merely documents some of the more common.
- Added bond calculations to the '401k vs Taxable' tab as suggested by jmk.
- Added tab 'HDHP Analysis' for comparing an HDHP plan with "normal" medical insurance to see which might work better for specific conditions.
- Misc. edits and format changes.
Case Study Spreadsheet (https://drive.google.com/file/d/0Bxe0EgraZFRBT2pGYjBEbG1qYlk/edit?usp=sharing)
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Version 8.07
- Updated Social Security calculations to use the new Average Wage Index numbers from the 2016 Trustees' report. Due to lower inflation projections, monthly SS income projections have decreased.
Also added some input test data from the ssa.gov website. - Added some pre-tax vs. after-tax differentiation to the HDHP analysis.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 8.08
- Allowed a choice between "no increase" and "Alternative II" for future average wage increases in Social Security calculations.
- Wordcrafting in a couple of the tabs.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Thank you so much for this. I am figuring out how to use it now.
Something seems to be off with Box B7 (dependent FSA) as I can't put an equation into it. (Just a simple equation because I get paid 2x/mo so I want to put =$$*2) It keeps responding with 1901/7...
Thanks for the hard work on this. I don't pretend to understand it all, but at least it is a start.
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Something seems to be off with Box B7 (dependent FSA) as I can't put an equation into it. (Just a simple equation because I get paid 2x/mo so I want to put =$$*2) It keeps responding with 1901/7...
Do you get the correct value in D7 (the annual amount)?
It appears B7 may have received a "date" format in your copy. Can you change the cell format back to "currency"?
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Perfect! That worked beautifully!
Now only if I could understand my spending as easily... sigh...
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Version 8.09
- Added SandP500_5-Year_Rolling_Returns_with-CPI_calendar_year.pdf (http://allfinancialmatters.com/wp-content/uploads/2013/08/SandP500_5-Year_Rolling_Returns_with-CPI_calendar_year.pdf) to the Investment Order tab.
- Added note that using cell B26 as the "table column input cell" provides marginal rates vs. Long-Term Capital Gains & Qualified Dividends
- Modified the 'Misc. calcs' Investing vs. mortgage payoff calculation to allow mortgage comparisons. See 20 year or 30 year mortgage? (http://forum.mrmoneymustache.com/real-estate-and-landlording/20-year-or-30-year-mortgage/msg1257091/#msg1257091)
- Miscellaneous clean-up
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 8.10
- Added the "two break point" Social Security benefit graph on the 'SocialSecurity' tab for visualization. Calculation methodology remains the same.
- Updated the 2017 maximum wage base and 2015 wage index on the 'SocialSecurity' tab.
- Added "tIRA contribution" and "SE income" as options for automatic title generation in the marginal rates chart on the 'Calculations' tab.
- Revised the 'HDHP Analysis' tab to handle several more tax-related considerations.
- Miscellaneous clean-up
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 8.11
- Added a table ('Calculations'!T1:U19) showing the tIRA balance needed, assuming a 4% WR and that the withdrawals are the only income, to reach various tax brackets.
- Major revision of the 'HDHP Analysis' tab. There may be too many different insurance terms to have a one-size-fits all analysis tool, but the present version isn't bad. As always, caveat user.
- Minor reformatting of the Basic Terms tab
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 8.12
- Changed the tIRA MAGI calculation to match the IRS, not Intuit, description
- Provided additional "Table column input cell" choices for the automatic chart title
- Minor fixes
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 8.13
- Changed to use 2017 tax calculations. By this time, folks ought to be using real tax calculations for their 2016 returns. The tax calculation portion of the CSS can be useful for planning ahead, but should not be mistaken for commercial tax software.
- Provided additional "Table column input cell" choices for the automatic chart title on the 'Calculations' tab, and switched to VLOOKUP instead of nested-IFs for this purpose.
- Added sheet 'Tax Code' (hidden by default) as a step in the direction of automating the yearly tax update. Not there yet.
- Minor formatting changes
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
ETA: Attached version 8.12 in case a 2016 retrospective is useful.
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Version 8.14
- Added some calculations for the Child and Dependent Care credit, and Education credits. Seems to work OK but if anyone has an actual situation to test....
- Minor formatting changes
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 8.15
- Added curve fitting for starting annual SS benefits as a function of age. This is a step toward
- optimum withdrawal strategy for traditional accounts, Roth accounts, and taxable accounts with significant unrealized capital gains,
- including when to start SS and/or pensions,
- with "reasonably rigorous" tax effects considered.
No idea when (or if) a working version will be done. - Minor formatting changes
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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MDM, thank you for your contributions to these forums. They are appreciated!
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Version 8.16
- Added a screen shot to the instructions for the marginal rate chart, with supporting text.
- Corrected an error in the COLA modification needed for some situations on the SocialSecurity tab.
- Fixed the incorrect equation in the previous point so the root cause (adding some documentation thus changing the offset needed in the INDIRECT function) won't recur.
- Updated the examples used on the ssa.gov site and confirmed the spreadsheet matches those results.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Hi MDM!
Thank you so much for the amazing case study spreadsheet!! My husband and I have used an older version of the spreadsheet for awhile and I just stumbled across the "updates" thread and downloaded the latest version. It's so great!! I had an old spreadsheet I'd used to compare HDHP options at my employer to the others, but yours takes into account more tax savings than I'd been able to calculate and the graph is SO helpful!
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Hi MDM!
Thank you so much for the amazing case study spreadsheet!! My husband and I have used an older version of the spreadsheet for awhile and I just stumbled across the "updates" thread and downloaded the latest version. It's so great!! I had an old spreadsheet I'd used to compare HDHP options at my employer to the others, but yours takes into account more tax savings than I'd been able to calculate and the graph is SO helpful!
You're very welcome.
If there are any other features that would be useful, let me know. No guarantees - e.g., I'm not likely to code every state tax algorithm ; - but if it would be broadly useful.... :)
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Version 9.0
- Added income options for interest and tax-exempt interest.
- Added calculations for Medicare insurance premiums if one is age 63 or older. In reality, current MAGI affects premiums
two years later, not the current year, but this could help one avoid an inadvertent move to a higher premium.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.01
- Added table (Calculations!T22:U28) for Head of Household tIRA assets needed to reach various tax brackets, assuming no other income and 4% withdrawal rate.
- Corrected cell reference in AMT calculations for itemized deduction limitation.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.02
- Added state tax brackets. See State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/new/#new) for more on this change.
- Added some accounting for paying rental mortgage principal.
- Minor fixes and formatting changes.
- Check both wages and SE income for 401k contribution limit.
- Added "state" tax rate to the automated display options for the marginal rate chart Y-axis.
- Added "457" and "employer-sponsored HSA" to the automated display options for the marginal rate chart X-axis.
- Added an annuity option to the "Growth in a taxable account" section of the 'Misc. calcs' tab.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.03
- Updated state tax calculations to
- Allow for earned income and child tax credits as a percent of federal
- Handle various approaches to social security benefits
- Include comments made in State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/new/#new)
- Fix calculations for some EIC and taxable SS situations.
- Minor fixes and formatting changes.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.04
- Minor updates to some state tax calculations
- Eliminate option for user input of a flat state tax rate
- Allow education credits for more than one person
- Updated Soc. Sec. Average Wage Index, COLA, and maximum taxed earnings per yesterday's government announcement.
- Use current effective state tax rate to estimate state tax rate in retirement (in the "Time to FI" section)
- Minor fixes and formatting changes.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.05
- Significant revision to 'Calculations' sheet input
- Separate earning and contribution amounts for MFJ filers
- Choose among monthly, annual, bi-weekly, etc. for many inputs
- Probably others not listed
- Corresponding changes to 'Instructions' and 'Posting' tabs
- Minor fixes and formatting changes.
The beta testing group thinks it's good to go, but there were many changes. Thus a reminder, caveat user, seems appropriate. ;)
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.06
- Formatting and minor fixes to 'Calculations' sheet input
- Corresponding changes to 'Posting' tabs
- Added options for annuity vs. annuity due for growth of a taxable investment on the 'Misc. calcs' tab
Federal tax calculations should remain good for a wide (but not all-inclusive) variety of cases.
State calculations should be good for "simple" cases. State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/new/#new) remains available for suggestions.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.07
- More complete treatment of capital gains: allowing entries for short and long term, separate from qualified dividends.
- Added option for local (e.g., city) income tax as a percentage of federal AGI.
- Various clean-ups from the income frequency changes
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.08
- Added cells showing phase-out marginal rates for EITC.
- Improved formatting for various lines in the Posting tab.
- Show Medicare premiums separately if applicable.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.09
- Include employer match in pre-tax amount for FI calc'n.
- Improve formatting for various lines in the Posting tab.
- Add another automatic title option to marginal rate chart.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.10
- Allow forced use of itemized deductions (can be useful to avoid AMT when charitable contributions are significant).
- Include local tax in AMT calculations.
- Reformat "pension vs. annuity" section in 'Misc. calcs'.
- Add "Estimating withdrawal tax rates" section in 'Misc. calcs'.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Version 9.11
- Allow more automated x-axis variables for the marginal rate chart.
Intent is for this to be the last version for 2017 tax law.
Federal 2018 changes will be released "soon."
State 2018 updates will come when the 2018 version of https://taxfoundation.org/state-individual-income-tax-rates-brackets-2017/ (or similar reference) is published.
Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
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Ver 9.11 works great :O
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Version 10.00
AFAIK this incorporates all the 2018 tax law changes that affect items already handled in previous versions, plus a few new items.
These items include
- brackets, rates, and standard deductions
- dependent care, education, saver's, earned income, and child tax credits
- Alternative Minimum, Net Investment Income, Social Security, and Medicare taxes
- Medicare Part B premiums based on IRMAA
- SALT $10K limit for itemized deductions; no miscellaneous itemized deductions
As with any major software update, caveat user. Reports of errors, omissions, etc. appreciated.
Most recent (2018 or later) version: Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
The final 2017 version (9.11) is here: https://drive.google.com/file/d/1Kxk0_A1gEzg9BB8OFUZeXl_DqitYQIa2/view?usp=sharing
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How do you specific a state in the excel doc?
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How do you specific a state in the excel doc?
Enter state postal abbreviation in cell H32 (on the 'Calculations' tab).
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There is a bug in the Itemized Deduction calculation. Cell G38 should contain the formula "=SUM(G31,MIN(10000,SUM(G32:G34)),G35:G37)".
Right now "G35:G37" is inside the MIN() function, which is not correct. So effectively the current calculation takes the minimum of $10k, SALT or Charity+Medical and adds it to Mortgage Interest.
Also, I would like to request the addition of a tax line for calculating Additional Medicare Tax due with the 1040 return based on Form 8959.
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Version 10.01
- Fixed SALT limit (thanks nolesrule!)
- Added a 60% of AGI limit on charitable contributions.
Note that more restrictive limits on charitable contributions, such as the 30% of AGI on appreciated stock, are not included.
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This is one of the best spreadsheets I've seen!
Does the HSA employer match go in B19 "employer match" along with the 401k employer match, or do you just put the total (contributions + employer match) in "employer-sponsored HSA"?
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This is one of the best spreadsheets I've seen!
Does the HSA employer match go in B19 "employer match" along with the 401k employer match, or do you just put the total (contributions + employer match) in "employer-sponsored HSA"?
Either can work. I think "employer match" is more straightforward, as one would have to add the HSA match to "gross salary/wages" if that amount goes into "employer-sponsored HSA".
Doing it the latter way might be slightly more accurate in terms of "time to FI" calculations, but the uncertainty in those is so large anyway that I'd stick with the simpler approach.
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Is there a place that makes sense to input an estimated annual bonus, or is it best to just amortize that into gross wages if you want to include it in calculations?
We're not counting on it for making our budget work, but would like to put an estimate (of a minimum amount typically expected) in since it's a large part of one of our compensations.
Thanks for such a great spreadsheet - I hadn't updated in awhile since a lot of the changes were small enough it wasn't worth re-entering everything for us, but I'm now loving the separated earners and ability to do different paycheck frequencies.
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Is there a place that makes sense to input an estimated annual bonus, or is it best to just amortize that into gross wages if you want to include it in calculations?
We're not counting on it for making our budget work, but would like to put an estimate (of a minimum amount typically expected) in since it's a large part of one of our compensations.
Thanks for such a great spreadsheet - I hadn't updated in awhile since a lot of the changes were small enough it wasn't worth re-entering everything for us, but I'm now loving the separated earners and ability to do different paycheck frequencies.
Assuming the bonus is subject to FICA, adding it into gross wages is best.
Yes, allowing different income frequencies is one of those "why didn't I do this a long time ago?" things. Haven't decided whether to do the same for expenses....
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In the summary section on the calculations sheet, it looks like cells B150-152 are leaving out the 2nd earner's information. Am I reading that correctly or am I misunderstanding how the sheet should be working?
ETA: Of course - they're right in the next column - exactly where I'd look for them if I weren't an idiot.
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MDM, thanks for all your work on this great spreadsheet!
I have an S-corp and I enter the w-2 information into the appropriate boxes. For the the "distribution" income, would "schedule c net profit" be the best place to input that? And for my pre-tax business deductions, would "rental real expenses" make sense as a place to input?
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I have an S-corp and I enter the w-2 information into the appropriate boxes. For the the "distribution" income, would "schedule c net profit" be the best place to input that? And for my pre-tax business deductions, would "rental real expenses" make sense as a place to input?
I'm not familiar with S-corp taxes.
If someone is, and can provide either (or both) of
- a succint description of how to use the existing format, and/or
- a few minor tweaks to the existing format in order to accommodate S-corp filing,
there is a reasonable chance those will be included.
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S-corp income is just taxable ordinary income. However it's not clear what calculations may change things with the pass-through adjustments in the new tax law. For now either include it in D40 or add another line for it.
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thanks guys. the only relevant distinctions for s-corps and the spreadsheet are
1) income gets split between w2 salary and distributions. you pay both sides (employer/employee) of FICA tax on the w2 part (except for the .9% surtax on the employer part), and no FICA taxes on the distributions. I was handling this by entering the w2 info into the appropriate boxes, the distributions into "sched c net profit", and then calculating my employer share of FICA on the w2 and overriding that number into the self employment tax box. i think that works?
2) business deductions are also taken out before any tax implications are considered -- it seemed like entering those into "rental real expenses" would do the trick?
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thanks guys. the only relevant distinctions for s-corps and the spreadsheet are
1) income gets split between w2 salary and distributions. you pay both sides (employer/employee) of FICA tax on the w2 part (except for the .9% surtax on the employer part)
Seems putting this into the "sched c net profit" would work.
and no FICA taxes on the distributions.
As nolesrule noted, D40 should work for this.
I was handling this by entering the w2 info into the appropriate boxes, the distributions into "sched c net profit", and then calculating my employer share of FICA on the w2 and overriding that number into the self employment tax box. i think that works?
Probably will. Best way is in the eye of the beholder.
2) business deductions are also taken out before any tax implications are considered -- it seemed like entering those into "rental real expenses" would do the trick?
Not sure what "taken out" means here. If the W-2 salary and distributions come after business deductions are subtracted, then entering them isn't needed at all, etc.
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Version 10.02
- Removed Pease limitation on itemized deductions
- Modified Child Tax Credit calculations. Still not 100% sure how the IRS will implement the new law to cover all situations.
- Edited Instructions to reflect new tax law
- Calculate number of exemptions for state tax purposes
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I am trying my 5 digit zip code in H32 and it says N/A. Do I need my 9 digit zip code instead? I can't get my state income tax calculated without this part.
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I am trying my 5 digit zip code in H32 and it says N/A. Do I need my 9 digit zip code instead? I can't get my state income tax calculated without this part.
Try the two character state postal abbreviation.
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I am trying my 5 digit zip code in H32 and it says N/A. Do I need my 9 digit zip code instead? I can't get my state income tax calculated without this part.
Try the two character state postal abbreviation.
It worked, thanks!
Question about the 401k & 457 amounts: are eligible employees still able to contribute $18,500 to both a 401k and a 457? I thought so, but the spreadsheet indicates that I may be exceeding allowable maximums in both.
Thanks for the clarification.
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Question about the 401k & 457 amounts: are eligible employees still able to contribute $18,500 to both a 401k and a 457? I thought so, but the spreadsheet indicates that I may be exceeding allowable maximums in both.
(https://s13.postimg.cc/9gu46c3yv/screenshot_259.png)
leads to
(https://s13.postimg.cc/lipi0ifs7/screenshot_260.png)
in the latest version I have.
Does the same input give you different results?
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Ah, just checked & I am using the version just prior to the latest version. So, I'll need to use the latest version. Thanks for clarifying!
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thanks guys. the only relevant distinctions for s-corps and the spreadsheet are
1) income gets split between w2 salary and distributions. you pay both sides (employer/employee) of FICA tax on the w2 part (except for the .9% surtax on the employer part), and no FICA taxes on the distributions. I was handling this by entering the w2 info into the appropriate boxes, the distributions into "sched c net profit", and then calculating my employer share of FICA on the w2 and overriding that number into the self employment tax box. i think that works?
2) business deductions are also taken out before any tax implications are considered -- it seemed like entering those into "rental real expenses" would do the trick?
For an S-Corp, FICA taxes employer-side taxes are a straight-up business expense. So you should just use the Paycheck section for your W-2 wages and D40 for the net business income from the 1120S / K-1.
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Just a heads up, the 529 deduction is not coming off my state part, so you may have to do that math or override that part.
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Just a heads up, the 529 deduction is not coming off my state part, so you may have to do that math or override that part.
Good point. With the variety in State Tax Deductions for 529 Contributions (http://www.finaid.org/savings/state529deductions.phtml), that probably won't be a programmed addition any time soon. Unless someone has an Excel version...?
See also State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/).
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We need to work on the Medicare calculations. Your calculations only work correctly for a single earner with a single W-2 income source. MFJ calculation is incorrect, and I don't see any accounting for SE income and the Additional Medicare Tax
It would be simplest to assume only one W-2 in the case of an earner over $200k, but that may not always be true, and I'm not sure how to handle that scenario in the spreadsheet.
Medicare taxes withheld per employer W-2 are calculated at 1.45% of FICA wages and an additional 0.9%on FICA wages above $200k.
The Additional Medicare Tax itself is on total FICA Wages + Self-employment Taxable Income^ over $200k for Single or $250k MFJ.
The Additional Medicare Tax form is designed to calculate the correct Additional Medicare Tax liability (since it can differ from what is withheld) and reconcile with medicare taxes withheld, properly adjusting the tax liability up or down.
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The Additional Medicare Tax form is designed to calculate the correct Additional Medicare Tax liability....
Excellent point! And it happens to coincide with the version under development - see the attachment to https://forum.mrmoneymustache.com/taxes/child-care-credit-vs-dependent-care-fsa/msg1842186/#msg1842186, which (I think) addresses both this issue and those raised by FIRE_Wannabe and Gin1984.
As with "normal" tax calculations, this spreadsheet ignores withholding. Or, perhaps better stated, assumes withholding is correct. Thus it doesn't attempt to cover penalties for under-withholding, nor attempt to reconcile SS and Medicare withholding. It's more a cash flow planner that happens to be (with crowd-sourced help from all noted here and others!) a pretty good tax calculator.
If no errors in the medicare and child care calculations are noted, after a while (days? hours?) I'll take the development copy and upgrade that to a released version.
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The Additional Medicare Tax form is designed to calculate the correct Additional Medicare Tax liability....
Excellent point! And it happens to coincide with the version under development - see the attachment to https://forum.mrmoneymustache.com/taxes/child-care-credit-vs-dependent-care-fsa/msg1842186/#msg1842186, which (I think) addresses both this issue and those raised by FIRE_Wannabe and Gin1984.
As with "normal" tax calculations, this spreadsheet ignores withholding. Or, perhaps better stated, assumes withholding is correct. Thus it doesn't attempt to cover penalties for under-withholding, nor attempt to reconcile SS and Medicare withholding. It's more a cash flow planner that happens to be (with crowd-sourced help from all noted here and others!) a pretty good tax calculator.
If no errors in the medicare and child care calculations are noted, after a while (days? hours?) I'll take the development copy and upgrade that to a released version.
That sheet looks ok to me. I think if you sum up the Medicare plus the calculation you have for Additional Medicare Tax, you do get the correct Medicare tax total in aggregate. So for yearly cash flow purposes in aggregate, it's probably accurate.
I've thought about helping out with your crowdsourcing for NJ taxes, but it treats so many different items differently from the way Federal and/orother states handle them that I'm not sure you really want to tackle it.
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That sheet looks ok to me. I think if you sum up the Medicare plus the calculation you have for Additional Medicare Tax, you do get the correct Medicare tax total in aggregate. So for yearly cash flow purposes in aggregate, it's probably accurate.
Great - thanks!
I've thought about helping out with your crowdsourcing for NJ taxes, but it treats so many different items differently from the way Federal and/orother states handle them that I'm not sure you really want to tackle it.
That is probably correct. For similar reasons, I avoided any state tax calculations (beyond a flat percentage estimate) until finding https://taxfoundation.org/state-individual-income-tax-rates-brackets-2017/ with it's state-by-state brackets. Likelihood of implementation for any specific issue is proportional to how easy the calculation, how likely it will be a common situation, and inversely proportional to how nice the weather is outside.
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Version 10.03
- Modified Child and Dependent Care Tax Credit calculations.
- Added Form 8959, Additional Medicare Tax. The result appears in cell G25. The standard 1.45% tax continues to appear in the "payroll tax" section.
- Minor formatting changes.
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The SS Wage Base for 2018 was revised at the end of November. The correct cap number is $128,400. G53 needs to be updated.
See https://www.ssa.gov/news/press/releases/2017/#11-2017-1
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The SS Wage Base for 2018 was revised at the end of November. The correct cap number is $128,400. G53 needs to be updated.
See https://www.ssa.gov/news/press/releases/2017/#11-2017-1
Thanks! Sneaky of them to change what they announced in October and the IRS codified earlier in November. ;)
Also affects SocialSecurity!C74.
Small enough effect on either current year SS withholding or future SS benefit projections that I'll wait and include these in the next official release. One can always make the changes in a downloaded copy.
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Why are the fields for Roth401k/403b, ESPP/After-tax 401k, and After-tax pension contributions subtracted from the value for W-2 Box 1 to get Net paycheck before tax? Aren't these values all taken from your paycheck after all taxes have been calculated?
(https://imgur.com/nhYMzt2)
Is there a way to estimate what my paycheck will be each pay period? I'm not seeing it but then I could just be missing something.
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Why are the fields for Roth401k/403b, ESPP/After-tax 401k, and After-tax pension contributions subtracted from the value for W-2 Box 1 to get Net paycheck before tax? Aren't these values all taken from your paycheck after all taxes have been calculated?
Good question!
That may vary from employer to employer. Megacorp would list a separate line item with the amount shown in the spreadsheet, and this is just a holdover from that. Tax withholding would still be based on the "FICA base" for SS and medicare, and the "W-2 Box 1" amount for federal and state taxes (this may differ for those in states that do not follow federal guidelines for HSA, etc., deductions).
Is there a way to estimate what my paycheck will be each pay period? I'm not seeing it but then I could just be missing something.
The spreadsheet calculates the tax amount per paycheck that should be withheld, assuming one wants neither to pay nor to owe when filing taxes. How one chooses to arrange actual withholding amounts is an individual decision.
One could look at the "Net paycheck before tax" amount, then subtract Social Security, Medicare, Federal tax, and State+local tax to approximate what the "net paycheck amount deposited to checking" might be. Does that come close in your situation?
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MDM, thank you for all your work on this and for answering my questions. I think the answers fit my situation, at least it fits my current understanding of the situation and gives me enough to continue playing with the numbers and see how things play out.
One other thing I'm not seeing is a field for employer contributions to an HSA. My understanding is that their contribution does not affect my taxes now or in the future, but it should affect total net worth and time to FI.
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MDM, thank you for all your work on this and for answering my questions. I think the answers fit my situation, at least it fits my current understanding of the situation and gives me enough to continue playing with the numbers and see how things play out.
Great! See also some of the discussion with nolesrule a couple of days ago regarding withholding.
Might not be too complicated to include a withholding estimator, depending on how the IRS reconfigures the W-4. Let's see how that looks when they release it.
One other thing I'm not seeing is a field for employer contributions to an HSA. My understanding is that their contribution does not affect my taxes now or in the future, but it should affect total net worth and time to FI.
Adding it to row 19, "Employer Match", may be the easiest and likely accurate enough way. One could also add the amount both to Gross Salary and Employer-sponsored HSA.
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Version 10.04
- Modified Child Tax Credit calculations. I think this now covers all possibilities for 2018, but will review the IRS instructions when they appear.
- Made the $128,400 change to the SS wage index discussed previously.
- Minor formatting and documentation changes.
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Version 10.05
- Added a W-4 allowance estimator.
From the Instructions tab:
W-4 allowances, based on one's overall tax situation, may be tested in cells Calculations!F56:I64.
Enter "S" or "M" (for Single or Married) in row 59.
Enter the number of allowances in row 60.
See the expected refund due at filing in cell I64. An amount due at filing will show as a negative number.
Adjust the entries in cells Calculations!G59:H60 to achieve your desired result.
Note that there are various "safe harbors" to avoid penalties due to under-withholding. Caveat filer.
Always check the results of this or any other W-4 estimator against the actual withholding and expected tax due.
It shows (other than at very low incomes when the Earned Income Credit is active) that for filers with no dependents, only one wage income, standard deduction, and no other income, credits, etc., filing "Single with 2 Allowances" or "Married with 3 Allowances" (as applicable) will withhold exactly the amount of federal tax due. For other situations, see the short set of instructions above.
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The Earner #2 withholding (H62) is calculating based off the filing status rather than off the M or S (H59) in the calculator.
I'm trying to roughly estimate switching between M or S on either/or/both of our W-4s and right now that's not possible.
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As a quick fix, just copy cell G62 to H62. That's what I did at some point, but apparently did not save the file after doing so. :(
New version coming....
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Version 10.06
- Changed standard deduction adder for age 65+. 2018 IRS numbers not yet available at Standard Deduction? | IRS (https://www.irs.gov/help/ita/how-much-is-my-standard-deduction), and there is some discrepancy among non-IRS sites, but 1600 for single and 1300 for MFJ seem the consensus numbers.
- Added some ad hoc calculation cells on the 'Misc. calcs' tab. Reduces the need to unprotect that sheet.
- Fixed earner #2 withholding calculation.
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(http://goo.gl/gqqjFD) Nice :)
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Awesome spreadsheet!
I'm not too tax savvy so I have a few questions. If I'm self employed where would I put my income? Under Schedule C net profit?
I did it that way and it calculated a number for "self employment tax". Does this include the medicare/ss that I will have to pay or do I need to calculate those on my own and put them in to the SS/Medicare boxes? Thanks.
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Awesome spreadsheet!
I'm not too tax savvy so I have a few questions. If I'm self employed where would I put my income? Under Schedule C net profit?
I did it that way and it calculated a number for "self employment tax". Does this include the medicare/ss that I will have to pay or do I need to calculate those on my own and put them in to the SS/Medicare boxes? Thanks.
Yes, Schedule C net profit.
The self employment tax is indeed the medicare/ss you pay: both the employee and employer portion. You should not need to enter those on your own.
When you do your real 2017 return, you could compare those numbers to the final 2017 version, attached in this post (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1825323/#msg1825323). How closely the results match might indicate how well the 2018 version will predict for you.
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Thanks MDM!
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Version 11.00
- Adjusted heuristics in the '401k vs Taxable' tab regarding QD/LTCG rates based on ordinary tax bracket.
- Minor clarifications in the 'Instructions' tab.
- Significant change to the marginal rate chart infrastructure. See below.
One particularly useful feature of this spreadsheet is the ability to generate marginal tax rate charts for any income, expense, contribution, etc., line item. The recent update (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1745720/#msg1745720) allowing different frequencies (bi-weekly, 2X/month, etc.) for paychecks and other items, apparently causes problems for this chart in older Excel versions (based on conversation in Social Security “Hump” and the new tax rates??? - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=237823)). The Data>What-If Analysis>Data Table method that generates the chart also requires somewhat advanced Excel knowledge.
Based on the above, a button has been added that one may click to update the chart. Rather than going through Data>What-If Analysis>Data Table, one types the desired X-axis and Y-axis cells in the respective green boxes, then clicks the "Update chart" button. The normal Excel chart tool will rescale the Y-axis if desired. Cells P82 and P83 are used to adjust the X-axis.
(https://s13.postimg.cc/47is4k3x3/screenshot_290.png)
One issue is that this approach introduces a macro (the thing that makes the button click work). Consequently, Excel's security setting may create a warning. I hope this will not dissuade anyone from using the tool - it really is just an automated way to update the What-If Data Table - but one needs to decide that for oneself. Other fine spreadsheets (e.g., Retiree Portfolio Model - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?t=97352)) are chock full of buttons and macros for just this purpose: speed and ease of use.
As always, suggestions for fixes/improvements/etc. are welcome. It's a small beta test group here, so crowd-sourcing is good.
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Found an issue with the self employment tax.
The original
=IF(B30*B162*0.9235<400,0,MIN(B30*B162*0.9235,MAX(0,$G$53-B9))*0.124+MAX(0,B30*B162*0.9235)*0.029)/B161The fix
=IF(B30*B162*0.9235<400,0,MIN(B30*B162*0.9235,MAX(0,$G$53-B9*B161))*0.124+MAX(0,B30*B162*0.9235)*0.029)/B161
B9 was not being adjusted for pay periods, which means it was not capping my self employment tax if I met my SS max on my W-2.
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Version 11.01
- Fixed SE tax for earner #1 and #2 as noted by hamiltop - thanks!
As always, suggestions for fixes/improvements/etc. are welcome. It's a small beta test group here, so crowd-sourcing is good.
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I noticed in the most recent versions of the spreadsheet that the Additional Medicare tax isn't being added in to the total tax, so it's not actually included anywhere in the tax summary box since it was removed from the Medicare tax calculation.
G30 should be changed from:
=G24+G26-G27-G28-G29 to =G24+G25+G26-G27-G28-G29
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Version 11.02
- Changed default y-axis to "total tax" for the marginal rate chart
- Changed Child Tax Credit calculation to use a more favorable interpretation of the new law. Still not sure about this....
- Added some calculations for high marginal rates related to SS benefits
- Fixed inclusion of add'l medicare tax as noted by nolesrules - thanks!
As always, suggestions for fixes/improvements/etc. are welcome. It's a small beta test group here, so crowd-sourcing is good.
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Version 11.03
- Assume age is between 25 and 50 if not entered
- Adjusted some tax items (HSA, EITC, AMT) due to IRB 2018-10 (Rev. March 5, 2018) (https://www.irs.gov/pub/irs-irbs/irb18-10.pdf)
As always, suggestions for fixes/improvements/etc. are welcome. It's a small beta test group here, so crowd-sourcing is good.
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Version 11.02
- Changed default y-axis to "total tax" for the marginal rate chart
- Changed Child Tax Credit calculation to use a more favorable interpretation of the new law. Still not sure about this....
- Added some calculations for high marginal rates related to SS benefits
- Fixed inclusion of add'l medicare tax as noted by nolesrules - thanks!
As always, suggestions for fixes/improvements/etc. are welcome. It's a small beta test group here, so crowd-sourcing is good.
Most recent version: Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
The last 2017 version (9.11) is attached to post https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1825323/#msg1825323.
What is the "more favorable interpretation of the new law"?
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What is the "more favorable interpretation of the new law"?
In short, the question is does the tax consume the refundable part first or the non-refundable part? (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=240176)
The example scenario is "...one has two children and $3000 in tax before the child tax credit. The CTC of $4000, with $2800 refundable, would reduce the tax to zero, with $1000 left over. How much would the additional tax credit be, assuming the ($3K + 15%) amount is greater than $5K? Would it be $0 because $3000>$2800 or would it be $1000 because $1000<$2800?"
See that Bogleheads thread for more details.
I had originally coded things along the lines of the "pessimistic" view in that thread. Reading a few other places (don't remember exactly where) led to the speculation that the law either is, or would be interpreted as, more favorable to the taxpayer/voter. But I've yet to see a definitive ruling, so if anyone knows of one...?
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Version 11.04
- Fixed max tIRA deduction amount when in the MAGI phaseout zone.
- Updated state taxes based on https://taxfoundation.org/state-individual-income-tax-rates-brackets-2018/
Note that many state tax laws are still in flux due to the federal tax law changes to standard deduction and personal exemption amounts. Anyone interested in more accurate state calculations (either now or as state legislatures do their thing) is invited to post in State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/).
Most recent version: Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
The last 2017 version (9.11) is attached to post https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1825323/#msg1825323.
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Version 11.05
- Added an option to take the "optimistic" or "pessimistic" view of the Child Tax Credit implementation.
- Modified the IRA withdrawal taxation for a couple of states.
- Added a sheet for Form 8606, an important component of a Backdoor Roth IRA (https://www.bogleheads.org/wiki/Backdoor_Roth_IRA).
The Form 8606 (and Publication 590-B worksheet 1-1) calculations have been tested on a few situations, including the examples in 2017 Publication 590-B (https://www.irs.gov/pub/irs-pdf/p590b.pdf). But the beta test group is small, so any testing by those with known correct Forms 8606 is welcome.
Most recent version: Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
The last 2017 version (9.11) is attached to post https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1825323/#msg1825323.
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Version 11.06
- Mostly word crafting various documentation, particularly on the Instructions tab.
- Added an option for part-year withholding calculations.
Most recent version: Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
The last 2017 version (9.11) is attached to post https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1825323/#msg1825323.
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Version 11.07
- Added a tab that evaluates a non-deductible IRA vs. taxable (and, while it's at it, Roth and deductible)
- Tweaks to the Form 8606 tab
Most recent version: Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
The last 2017 version (9.11) is attached to post https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1825323/#msg1825323.
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Version 11.08
- Updated the 2016 Average Wage Index for Social Security benefit estimates.
- Minor formatting
The estimates on the 'SocialSecurity' tab match the version 2018.1 anypia.exe numbers within $1/mo for all examples tested, e.g., https://www.ssa.gov/oact/ProgData/retirebenefit1.html.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 11.09
- Added Form 8962, Premium Tax Credit.
This allows one to see the impact of various Affordable Care Act phaseouts and cliffs on overall marginal rates.
The Premium Tax Credit (PTC) for those with "simple" ACA insurance will be calculated if one enters the
- Enrollment Premium (aka the cost if one would receive no Premium tax credit) in cell B113.
- Advance Premium Tax Credit in cell B114. Enter this as a negative number.
- Second Lowest Cost Silver Plan (SLCSP) cost for the year in cell AE99.
At this time, the calculation does not explicitly consider
- situations not the same for all 12 months (taking monthly averages might or might not be accurate)
- self-employment health insurance requiring iterative calculations to determine PTC and Form 1040 line 29 amounts.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 11.10
- Put the HSA family limit back to $6900. Thanks, IRS....
- Added columns and fixed typos in the Form8606 tab.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 11.11
- Added $25K rental loss limitation.
- Correct cell reference in state tax estimate for time to FI.
- Add local income tax to NIIT deductions.
- Minor formatting changes.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 11.12
- Added the new Section 199A deduction for qualified pass-through business income.
- Minor formatting changes.
Please use QBI Pass-through deduction in the case study spreadsheet (https://forum.mrmoneymustache.com/taxes/qbi-pass-through-deduction-in-the-case-study-spreadsheet/) for suggestions, corrections, and comments on the Section 199A calculations. Although, any such replies made here won't be ignored. ;)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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I searched a bit in the forums and on the spreadsheet but could not find it myself. Where does one just put their existing savings on the spreadsheet? I expected to see it near A172, but the accompanying cell has no calculation included. I am using a google sheets version of the spreadsheet, so I thought i'd double check if this was correct or not. Edit: Oh, I see the calculations tab is primarily for tax calculations with some convenient calculations. I misunderstood that when I first asked this question, but I'll leave this post up in hopes someone can point me to other portions of the spreadsheet properly. Thank-you!
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Where does one just put their existing savings on the spreadsheet? I expected to see it near A172....
Correct!
Specifically, in B173:B176, depending on what type of accounts one has.
It's probably best to ignore emergency funds held in savings accounts, as those pretty much just sit there and (at best) keep up with inflation.
Using Excel definitely works best. Based on the lack of responses to https://forum.mrmoneymustache.com/ask-a-mustachian/any-google-sheets-knowledge/ and https://forum.mrmoneymustache.com/ask-a-mustachian/any-libreoffice-calc-knowledge-86335/, it seems Excel is just better.
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Version 11.13
- Added a "how much can one spend per year using a pension with no COLA?" calculation to the 'Misc. calcs' tab.
- Fixed formulas for some brackets in the HI and KS state tax calculations.
The non-COLA pension calculation uses input values for nominal return, inflation, and life expectancy to determine the first year's spending that, increased each year by inflation, will exactly deplete at the end of life a fixed annual pension invested at the given nominal return.
See this post in Pension with no COLA. How much to spend? (https://forum.mrmoneymustache.com/welcome-to-the-forum/pension-with-no-cola-how-much-to-spend/msg2071538/#msg2071538) for some math background.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Is there a way to migrate entries from an older version to the latest version?
Where should we enter partnership income?
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Is there a way to migrate entries from an older version to the latest version?
Copy & Paste? In many (but not all) cases, input cells remain the same from one version to the next.
Where should we enter partnership income?
Don't know offhand. Where does it go on Form 1040?
ETA: Perhaps row 33 ("Rental income") or row 40 ("Other taxable income")? Would either of those work in your situation?
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Version 11.14
- Modified the SocialSecurity tab so it will automatically select the top 35 years of indexed earnings - filtering no longer necessary.
- Fixed the AMT breakpoints for capital gains on the Form6251 tab (thanks to Boglehead Electron).
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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I'm trying to model various scenarios where Earner 1 is self-employed and Earner 2 has a W-2.
I'm unsure whether the self-employment 401(k) deduction for Earner 1 should go in box B11, because I'm using the box B30 to show self-employment income (and get the calculation for deductible SE tax).
Am I doing this right? For simplicity, let's ignore that employer SE 401(k) contributions are a thing and assume everything comes out of the employee side of things.
(https://i.imgur.com/DZq7E33.png)
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I'm trying to model various scenarios where Earner 1 is self-employed and Earner 2 has a W-2.
I'm unsure whether the self-employment 401(k) deduction for Earner 1 should go in box B11, because I'm using the box B30 to show self-employment income (and get the calculation for deductible SE tax).
Am I doing this right? For simplicity, let's ignore that employer SE 401(k) contributions are a thing and assume everything comes out of the employee side of things.
Ideally it would go on a currently-not-present line in the "Subtractions for AGI" section, similar to line 28 of Form 1040 (https://www.irs.gov/pub/irs-pdf/f1040.pdf).
Absent that, it seems where you have it is fine. Putting it there would not be fine if the Earned Income Credit (EIC) is a factor, but at $51K AGI the EIC is $0.
You could also add it to the tIRA box if you want it in the same general area it would appear on the 1040 form. That would interact correctly with EIC calculations if needed, at the cost of "looking strange" for a tIRA number. ;)
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@MDM, partnership income is reported on Schedule E and goes on 1040 line 17 (2017 version). Unlike rental income, it's non-passive income so it is subject to SE tax. So...put it with "Other taxable income"?
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@MDM, partnership income is reported on Schedule E and goes on 1040 line 17 (2017 version). Unlike rental income, it's non-passive income so it is subject to SE tax. So...put it with "Other taxable income"?
Ok, if it is subject to SE tax then it would have to go in row 30, Schedule C net profit. This would be similar to what happens in line 2 of Schedule SE (https://www.irs.gov/pub/irs-pdf/f1040sse.pdf).
Does that work for you?
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Version 11.15
- Added some constraints to the 20% pass-thru business deduction calculation. Calculations match all the in-scope examples in the recent IRS proposed regulations on this (https://www.irs.gov/pub/irs-drop/reg-107892-18.pdf).
- Added a link to a nice screen-shotted "how to" on the ACA premium tax credits (thanks to TheFinanaceBuff). See the Instructions tab.
- Added some brief documentation to the lines in the Qualified Dividends and Capital Gain Tax Worksheet.
- Added a worksheet tab, 0% LTCG or t->R, to evaluate the choice between Tax Gain Harvesting (TGH) vs traditional to Roth conversions when one is in the 12% (or lower) federal bracket.
More on the new tab
This addresses the situation of being in a low bracket (12% or less) this year and having two possibilities:
1) Tax Gain Harvest: incur Long Term Capital gains but pay $0 federal tax
2) Convert traditional to Roth at 12% federal, with the expectation of being in a higher tax bracket after retirement
It generates a table listing, by years from the current year, whether TGH or t->R conversion is favored.
In general, the longer one can wait, the more the t->R conversion is favored over TGH - and in many cases it doesn't take many years at all.
Of course, this is based on the assumptions in the model, and that the model is coded correctly - always a consideration in a new release. ;)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 11.16
- Added a cell, Calculations!V4, for "unavoidable" (e.g., pension, interest, dividends) income when determining how large a traditional balance is needed for a 4% withdrawal rate to reach various tax brackets.
- Included ACA premium tax credit in the Alternative Minimum Tax calculation.
- Adjusted "taxable income" calculation for the 20% pass-thru business deduction calculation. Calculations continue to match all the in-scope examples in the recent IRS proposed regulations on this (https://www.irs.gov/pub/irs-drop/reg-107892-18.pdf).
- Minor formatting and documentation changes.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 11.17
- Updated Idaho state tax calculations, per this post (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/msg2138606/#msg2138606).
- Updated Arkansas state tax calculations, per this post (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/msg2138640/#msg2138640).
Note that when saving the CSS, if one is not on the 'Calculations' tab, the following scary-looking message may appear:
(https://i.postimg.cc/Y0h80wch/screenshot_411.png)
For versions 20.09 and later, there are 7 instead of 6 instances.
It comes from the use of drop-down lists to enter paycheck frequency, etc., and is actually not a problem at all. Microsoft has confirmed that the warning is incorrect, there is no loss of functionality. (https://support.microsoft.com/en-us/help/2757267/compatibility-checker-warning-for-data-validation)
Thanks to the Bogleheads forum finding the error in my federal tax return - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?f=11&t=257517&p=4111949#p4111558) for bringing this up.
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On your next update, can you add a Cells for Earner # 1 and Earner #2 for SEPs under 'Subtractions for AGI'?
I'm assuming that's the right place.
Also, a place for healthcare insurance premium for those that are self employed? Again, I'm assuming under
'Subtractions for AGI'
Thanks
What does the abbreviation in Cell A49, SL int (Approx) stand for?
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What does the abbreviation in Cell A49, SL int (Approx) stand for?
Student Loan interest (Approximate calculation). It is calculated based on student loan balance and interest amounts given in rows 132-136.
On your next update, can you add a Cells for Earner # 1 and Earner #2 for SEPs under 'Subtractions for AGI'?
I'm assuming that's the right place.
That seems doable. Similar to 401k and IRA contributions, the program would not enforce contribution limits because there are too many possible scenarios. That look OK to you?
Also, a place for healthcare insurance premium for those that are self employed? Again, I'm assuming under
'Subtractions for AGI'
I suppose the same caveat user philosophy could be used here, but I've been reluctant to include this due to the difficulty some could have determining the actual limits. See brief comments in these posts: What comes after the ACA? (https://forum.mrmoneymustache.com/welcome-to-the-forum/what-comes-after-the-aca/msg2018185/#msg2018185) and Case Study Spreadsheet updates (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1983651/#msg1983651).
If you (or anyone) has a spreadsheet version of any method for Self-Employed Health Insurance Deduction and PTC (https://taxmap.irs.gov/taxmap/pubs/p974-010.htm)...?
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What does the abbreviation in Cell A49, SL int (Approx) stand for?
Student Loan interest (Approximate calculation). It is calculated based on student loan balance and interest amounts given in rows 132-136.
On your next update, can you add a Cells for Earner # 1 and Earner #2 for SEPs under 'Subtractions for AGI'?
I'm assuming that's the right place.
That seems doable. Similar to 401k and IRA contributions, the program would not enforce contribution limits because there are too many possible scenarios. That look OK to you?
Yes that would be fine, I just need separation because when I go back and see way to much under tIRA contribution, I then have to recall, what the heck did I do there?
As it stands I added my SEP and tIRA together and put it in under Traditional IRA, row 48. However as you would expect Cell L42 puts a Question about limits, and that's OK and well done.
Also, a place for healthcare insurance premium for those that are self employed? Again, I'm assuming under
'Subtractions for AGI'
I suppose the same caveat user philosophy could be used here, but I've been reluctant to include this due to the difficulty some could have determining the actual limits. See brief comments in these posts: What comes after the ACA? (https://forum.mrmoneymustache.com/welcome-to-the-forum/what-comes-after-the-aca/msg2018185/#msg2018185) and Case Study Spreadsheet updates (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1983651/#msg1983651).
If you (or anyone) has a spreadsheet version of any method for Self-Employed Health Insurance Deduction and PTC (https://taxmap.irs.gov/taxmap/pubs/p974-010.htm)...?
I'll need to read those links, I didn't know about limits, I doubt I'm close, but for others...
You could also add, "you must check your contribution limit" under the Columns
K,L and M and the low 40s rows, regarding that deduction.
As it stands, I put it under Alimony.
Thank you for the CSS, I'm finding it very useful. I find something new everytime I use it. So many details :-)
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I note I have $17,355 in Cell D28, 'Form 1040 Line 13'
It seems like it is calculated, but I can't figure out from what.
Can you help?
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I note I have $17,355 in Cell D28, 'Form 1040 Line 13'
It seems like it is calculated, but I can't figure out from what.
Can you help?
Here's one approach.
First, "Unprotect" the sheet by clicking that icon (bottom right in the screen shot below) after clicking the Review tab in the Excel main menu:
(https://i.postimg.cc/k4KYdScM/screenshot_413.png)
Then select (e.g., click on) cell D28 (or whatever the cell of interest).
To find the cells that directly affect the cell of interest, click the Trace Precedents icon (bottom right in the screen shot below) after clicking the Formulas tab in the Excel main menu:
(https://i.postimg.cc/g2w2Hcsq/screenshot_414.png)
In this case, you should see the following blue arrows, showing that cell D28 comes from Schedule D calculations.
(https://i.postimg.cc/d1z2JQ6q/screenshot_415.png)
Does that help?
To avoid inadvertently changing a calculation, you can toggle the sheet status back to "Protected" using the Review tab shown above. Just accept the suggested settings (including no password) when doing so. Of course, if you want to change a calculation, Unprotect the sheet and have at it!
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Cool!
Thanks.
Oh thought was going to be easy.
How do I get to the -Review View Developer Add-ins Team, section?
All I see is File Edit View Insert Format Tools Data.
Sorry.
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Cool!
Thanks.
Oh thought was going to be easy.
How do I get to the -Review View Developer Add-ins Team, section?
All I see is File Edit View Insert Format Tools Data.
Sorry.
OK, that means you have a different version of Excel (https://www.asap-utilities.com/download-help-excel-version.php).
Try
Tools>Protection>Unprotect Sheet (instead of the Review tab), and
Tools>Formula Auditing>Trace Precedents (instead of Formulas>Trace Precedents)
E.g., see the section starting at ~1:35 in https://www.youtube.com/watch?v=k580CiR5lfY.
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Oh, ya, I'm using Open Office.
For the CSS, it might be worth me splurging for a version of Excel.
I don't want to waste your time on my OpenOffice problem, I'll go looking for the solution.
Thanks,
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Any clarification on the CTC and whether it will be like the optimistic or unoptimistic calculations in the spreadsheet?
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Any clarification on the CTC and whether it will be like the optimistic or unoptimistic calculations in the spreadsheet?
I'm still optimistic, but so far the only applicable Draft Tax Forms (https://apps.irs.gov/app/picklist/list/draftTaxForms.html?value=8812&criteria=formNumber&submitSearch=Find) that have been published require numbers from as yet unpublished forms.
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Any clarification on the CTC and whether it will be like the optimistic or unoptimistic calculations in the spreadsheet?
I'm still optimistic, but so far the only applicable Draft Tax Forms (https://apps.irs.gov/app/picklist/list/draftTaxForms.html?value=8812&criteria=formNumber&submitSearch=Find) that have been published require numbers from as yet unpublished forms.
Thanks, makes a huge difference for my numbers/planning. I wish they would clarify already!
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Any clarification on the CTC and whether it will be like the optimistic or unoptimistic calculations in the spreadsheet?
I'm still optimistic, but so far the only applicable Draft Tax Forms (https://apps.irs.gov/app/picklist/list/draftTaxForms.html?value=8812&criteria=formNumber&submitSearch=Find) that have been published require numbers from as yet unpublished forms.
Thanks, makes a huge difference for my numbers/planning. I wish they would clarify already!
https://www.irs.gov/pub/irs-dft/f1040--dft.pdf is now available. In short, optimism wins!
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Also, a place for healthcare insurance premium for those that are self employed? Again, I'm assuming under
'Subtractions for AGI'
I suppose the same caveat user philosophy could be used here, but I've been reluctant to include this due to the difficulty some could have determining the actual limits. See brief comments in these posts: What comes after the ACA? (https://forum.mrmoneymustache.com/welcome-to-the-forum/what-comes-after-the-aca/msg2018185/#msg2018185) and Case Study Spreadsheet updates (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1983651/#msg1983651).
If you (or anyone) has a spreadsheet version of any method for Self-Employed Health Insurance Deduction and PTC (https://taxmap.irs.gov/taxmap/pubs/p974-010.htm)...?
I'll need to read those links, I didn't know about limits, I doubt I'm close, but for others...
You could also add, "you must check your contribution limit" under the Columns
K,L and M and the low 40s rows, regarding that deduction.
As it stands, I put it under Alimony.
Thank you for the CSS, I'm finding it very useful. I find something new everytime I use it. So many details :-)
For various reasons, it seems a full treatment of the interplay between self-employed health insurance and the ACA is more than I'll tackle anytime soon for the CSS. Some relevant articles if one is interested:
https://obamacareguide.wordpress.com/2014/07/25/self-employed-health-insurance-deduction-the-iterative-calculation/
http://time.com/money/5237795/irs-tax-problem-obamacare-subsidy/
And a calculator (see second article above) that apparently has heuristics to overcome non-convergence problems that can occur with the iterative process:
https://cims.nyu.edu/~ferguson/Calculator%20SE%20ACA.html
But for simpler cases, some approximate solution is possible - stay tuned....
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I'm a new user of this spreadsheet trying to forecast ACA subsidy impact for 2018. The latest spreadsheet seems to be based on IRS data applicable to 2019. Is there possibly an older version of the spreadsheet that may include IRS data for 2018? The IRS data I'm interested in changing to 2018 info is in range AD110:AH118 on the Calculations tab. Thanks
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I'm a new user of this spreadsheet trying to forecast ACA subsidy impact for 2018. The latest spreadsheet seems to be based on IRS data applicable to 2019. Is there possibly an older version of the spreadsheet that may include IRS data for 2018? The IRS data I'm interested in changing to 2018 info is in range AD110:AH118 on the Calculations tab. Thanks
Good point!
The numbers were the estimates available in early 2018 (late 2017?) for what the 2018 Form 8962 would use. Probably the best numbers to use now are the ones on page 7 of https://www.irs.gov/pub/irs-dft/i8962--dft.pdf, published ~5 days ago. I'll update those in the next version, but meanwhile you could simply unprotect the worksheet and enter the correct value (family size and home state) for your situation.
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Version 11.18
- Added entry for self-employed SEP, SIMPLE, etc.
- Added entry for self-employed health insurance deduction.
- The self-employed health insurance entry is accepted as entered. As with the 2018 Volunteer Income Tax Assistance (VITA) program, interactions between SE health insurance and the ACA Premium Tax Credit remain out of scope. I.e., caveat user if this applies to you, and see https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2161492/#msg2161492 for references. - Added the Child Tax Credit (CTC) calculations as done in the CTC worksheet (form 1040 line 12a instructions) and schedule 8812.
- Adjusted the Federal Poverty Line numbers to match page 7 of https://www.irs.gov/pub/irs-dft/i8962--dft.pdf
- Updated Social Security benefit calculations to match version 2019.1 of anypia.exe, the program available from ssa.gov.
- Updated the Instructions tab with changes to cell references.
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Version 11.19
- Allow smooth marginal rate calculations for self-employment tax.
- Correct display calculations for non-zero Foreign Earned Income Exclusion.
- Added SE income as an X-axis choice for the marginal rate graph.
- Added Medicare Part D changes to the IRMAA calculations.
The next planned update will be for 2019 tax changes (brackets, limits, etc.).
If, however, anyone would like to compare the 2018 results from this spreadsheet to results from commercial software, advice on any discrepancies is appreciated and may be helpful for future revisions.
Note that under $100K taxable income the IRS uses table lookups but the CSS uses the tax bracket formulas, so differences of a few dollars may occur.
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Version 12.00
This does not include any revisions to 2019 state tax laws. It usually takes a few months for the Tax Foundation (https://taxfoundation.org/) to publish its handy compilation.
Feedback on any significant differences between 2018 CSS results and 2018 commercial package (TurboTax, TaxSlayer, H&RBlock, etc.) results would be appreciated. And, of course, similar feedback on any errors/omissions introduced with the 2019 changes.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Versions 11.20 and 12.01
- Improved handling of the Self-Employed Health Insurance subtraction.
Premiums possibly eligible for the Self-Employed Health Insurance (SEHI) subtraction may be entered in row 48.
- A limit of Schedule C net income minus 1/2 SE tax is enforced. This will be too generous if one has multiple Schedule Cs.
- Any premiums not eligible for the SEHI subtraction will be added to the itemized medical expense calculation.
- Premiums entered in row 48 should not also be entered in row 114.
- In other words, the spreadsheet will handle either the PTC or the SEHI, but not both.
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Versions 11.21 and 12.02
- Subtract 1/2 SE tax, SE health insurance, and SE SEP/SIMPLE contributions from Schedule C amount to get QBI.
Per paragraph (vi) on p. 198 of https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf, For purposes of section 199A only, deductions such as the deductible portion of the tax on
self-employment income under section 164(f), the self-employed health insurance deduction
under section 162(l), and the deduction for contributions to qualified retirement plans
under section 404 [must be subtracted from Schedule C net income for purposes of computing QBI].
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 12.03
- Fix minor typos in a few numbers.
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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NY State Dependent Exemption is $1000, not 0. Otherwise matches H&R Block, +/-$1 due to tax tables vs formulas.
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NY State Dependent Exemption is $1000, not 0. Otherwise matches H&R Block, +/-$1 due to tax tables vs formulas.
Thanks!
In State Individual Income Tax Rates and Brackets for 2018 | Tax Foundation (https://taxfoundation.org/state-individual-income-tax-rates-brackets-2018/), the personal exemptions for NY are listed as "n.a." with this footnote:
(hh) State provides a state-defined personal exemption amount for each exemption available and/or deductible under the Internal Revenue Code. Under the new federal tax law, the personal exemption is set at $0 until 2026, but not eliminated. Because it is still available, these state-defined personal exemptions could remain in effect, though uncertainty remains in some cases.
One can change the NY state exemption amounts in row 54 of the 'State Tax' tab (after unprotecting that sheet - no password needed). Not going to publish a new version just for that change, but it will be included whenever the next update is published.
Is there only a dependent exemption, or do single and MFJ filers also have an exemption amount for NY?
Feedback on any other state issues is welcome, either here or, particularly for more complex issues, in State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/).
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So in Ohio we have a special tax provision that is not calculated in the sheet but has a large impact on some returns.
Ohio has a "Business income credit", basically the first $250,000 of income from businesses (sole proprietors, LLC etc) is deductible from Ohio taxes. So anything listed as "rental income" or "schedule C net profits" up to $250,000 should be removed from the state tax calculations if OH is the filing state.
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So in Ohio we have a special tax provision that is not calculated in the sheet but has a large impact on some returns.
Ohio has a "Business income credit", basically the first $250,000 of income from businesses (sole proprietors, LLC etc) is deductible from Ohio taxes. So anything listed as "rental income" or "schedule C net profits" up to $250,000 should be removed from the state tax calculations if OH is the filing state.
That looks doable. The schedule C amount seems straightforward: Calculations!D30.
For the rental income (or this could be "schedule E income") should the amount be (all from the Calculations tab) D33, or D33-D34, or D33-D34-D35? Or other?
If there is a loss for either schedule C or E, does Ohio ignore those and let the effect on federal AGI suffice?
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I think I found a glitch in your area for Form 8962, Premium Tax Credit if I'm receiving an ACA subsidy, where you omitted one of the income cliffs. It does a nice job showing the subsidy repayment limits and amount owed if I end up with higher than estimated income, but if I go over the 400% FPL by any amount, the repayment amount on your worksheet goes to zero, whereas I believe I should then be obligated to repay the entire amount of the subsidy received, which should greatly increase my total tax owed.
I'm trying to do an optimization looking at the balance between my ACA subsidy received, and long term capital gains received within the 0% rate. Obviously, 0% on LTCG is good, but a big chunk of the LTCG could be wiped out if that gain pushes me over the ACA subsidy cliff. Knowing my net earned income, it would be nice to be able to increment my LTCG and see the increasing hits I'd take on ACA subsidy repayment, to best plan what to sell in a year and pay the lowest overall tax rate.
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I think I found a glitch in your area for Form 8962, Premium Tax Credit if I'm receiving an ACA subsidy, where you omitted one of the income cliffs. It does a nice job showing the subsidy repayment limits and amount owed if I end up with higher than estimated income, but if I go over the 400% FPL by any amount, the repayment amount on your worksheet goes to zero, whereas I believe I should then be obligated to repay the entire amount of the subsidy received, which should greatly increase my total tax owed.
I'm trying to do an optimization looking at the balance between my ACA subsidy received, and long term capital gains received within the 0% rate. Obviously, 0% on LTCG is good, but a big chunk of the LTCG could be wiped out if that gain pushes me over the ACA subsidy cliff. Knowing my net earned income, it would be nice to be able to increment my LTCG and see the increasing hits I'd take on ACA subsidy repayment, to best plan what to sell in a year and pay the lowest overall tax rate.
Well, it used to work. ;)
What pertinent inputs (SLCSP, family size, monthly premiums, etc.) are you using?
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The SLCSP is 525, just me alone, premium is 528 (I pay just $3/mo net).
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Versions 11.22 and 12.04
- Added (overridable) estimate of % paychecks left for withholding purposes.
- Fix ACA premium tax credit (PTC) cutoff at >400% FPL when advance premium credits have been claimed. Thanks Lhall!
- Improve one-step iteration for SE health insurance + ACA PTC interaction.
- Added $1000 dependent exemption for NY state tax. Thanks Orichalcum!
- Started work to improve OH state tax - need more info (see questions in reply #143) to complete.
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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No, there is no other exemption. However, there is a NY child tax credit of $330/child above age 4.
On another topic, a nice easy addition to this spreadsheet would be the amount of payroll taxes your employer pays on your behalf, as these increase your effective tax rate.
Social Security =0.062*MIN(B3,$G$54/B170)
Medicare =0.0145*B3+MAX(0,(B3-IF(G2=2,250000,200000))*0.009)
Federal Unemployment Tax =0.06*MIN(B3,7000)
State Unemployment Tax complicated....
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No, there is no other exemption. However, there is a NY child tax credit of $330/child above age 4.
Thanks, good to know that we're all set on the exemption. Probably won't add the extra input cell needed to do the NY CTC.
On another topic, a nice easy addition to this spreadsheet would be the amount of payroll taxes your employer pays on your behalf, as these increase your effective tax rate.
Social Security =0.062*MIN(B3,$G$54/B170)
Medicare =0.0145*B3+MAX(0,(B3-IF(G2=2,250000,200000))*0.009)
Federal Unemployment Tax =0.06*MIN(B3,7000)
State Unemployment Tax complicated....
As tax law currently stands, those have no effect on the employee's take home pay, so ignoring them for cash flow purposes seems best. They are included for self-employment tax, for which a person is both employee and employer.
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There's a new Washington payroll tax in town, but it's rather complicated.
It's 0.4% of wages up to the Social Security cap, but employers pay anywhere from 33% to 100% of it, the rest is paid by employees. And it doesn't apply to union shops, tribes, plus a bunch of other quirks.
Full deets: https://paidleave.wa.gov/premiums
Totally understand if you can't be arsed to put that in.
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Versions 11.23 and 12.05
- Updated AMT calculations to match the new form 6251.
- Updated some URLs to point to the most recent IRS forms.
The AMT calculations are affected if one has a QBI deduction.
To Paul der Krake: Looked at that, and you are correct - it's rather complicated. Too complicated for the relatively small audience. ;)
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 12.06
- Updated state income tax calculations for 2019.
Thanks to 2019 State Individual Income Tax Rates and Brackets | Tax Foundation (https://taxfoundation.org/2019-state-individual-income-tax-rates-brackets) for all the legwork.
Note that states may change 2019 law throughout the year, there may have been copy/paste errors, etc. State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/msg1697962/#msg1697962) is a good place to note errors & omissions so they may be corrected in future versions.
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Doing the 2018 version.
Filing status- We're MFS, should that be marked #3 HOH?
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Doing the 2018 version.
Filing status- We're MFS, should that be marked #3 HOH?
Unfortunately it isn't set up to do MFS. Too many exceptions in the tax code for too few people using this status to make it worth doing - at least, that's been the perception....
The spreadsheet is fully changeable by anyone, so if you choose to modify it to handle MFS and the changes aren't too extensive, let me know and perhaps we can release a new version.
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Doing the 2018 version.
Filing status- We're MFS, should that be marked #3 HOH?
Unfortunately it isn't set up to do MFS. Too many exceptions in the tax code for too few people using this status to make it worth doing - at least, that's been the perception....
The spreadsheet is fully changeable by anyone, so if you choose to modify it to handle MFS and the changes aren't too extensive, let me know and perhaps we can release a new version.
I'm not smart enough to modify it. :) The calculations from my 2018 taxes were about $1000 off when I used option #3.
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Hello,
This is my first post. I found your site and especially this thread --priceless !!!
I do a little of tax preparation through AARP foundation, VITA (volunteer tax assistance program), but do have the breadth to whip up this kind of spreadsheet. It takes a lot of time to read the publications and educate on tax laws. I potentially could, but it will take some time. I work full time in a non financial sector and volunteering when I can. Just there isn't all time t o educate yourself in all areas of the tax law.
Curious.. I read that Mr Moneymustache had sold this site, what will happen to the thread? I would love to continue to collaborate with you, friends in the future, especially on this topic.
Also, is a way to remove all the verification questions before I can post? I can't find answers to all the questions in captcha.
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Hello,
This is my first post. I found your site and especially this thread --priceless !!!
I do a little of tax preparation through AARP foundation, VITA (volunteer tax assistance program), but do have the breadth to whip up this kind of spreadsheet. It takes a lot of time to read the publications and educate on tax laws. I potentially could, but it will take some time. I work full time in a non financial sector and volunteering when I can. Just there isn't all time t o educate yourself in all areas of the tax law.
Curious.. I read that Mr Moneymustache had sold this site, what will happen to the thread? I would love to continue to collaborate with you, friends in the future, especially on this topic.
Also, is a way to remove all the verification questions before I can post? I can't find answers to all the questions in captcha.
Apparently you did enough to allow posting. :)
Note the date on which MMM posted that he had sold the site: April ____!
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Yes, I know, I got through the captcha "wall"... :)
He sold the site, just recently (hopefully, this question will not on the captcha list) .
April 1, are you saying, it's his joke ?
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Yes, I know, I got through the captcha "wall"... :)
He sold the site, just recently (hopefully, this question will not on the captcha list) .
April 1, are you saying, it's his joke ?
Yes - April Fools!
See How I Sold This Website for $9 Million (http://www.mrmoneymustache.com/2019/04/01/how-i-sold-this-website-for-9-million/) for the first-person account.
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Thank you for setting the clarity to this article. As far as this work that you'd done. Simply amazing. How did you come to creating this spreadsheet? Lots of reading on IRS site or you have a background in taxes? Also, how long did it take you to whip this up?
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Thank you for setting the clarity to this article. As far as this work that you'd done. Simply amazing. How did you come to creating this spreadsheet? Lots of reading on IRS site or you have a background in taxes? Also, how long did it take you to whip this up?
I'll send a PM. Don't mind answering, but it would be good to keep this thread mostly for issues on the tool itself.
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How do I classify Roth conversions, ie, what line do I enter them on?
Since I have never done one, I assume, if I remove $20k from an IRA or a SEP/IRA and put it into a Roth/IRA, I then need to enter $20,000 into some income box on the spreadsheet.
Thanks.
OK, I need help, I put $12,000 into line 23 Taxable interest, non qualified dividends.
And I put varying numbers in LTCG (line 27) or Short term cap gain (line 26),
$20,000, $50,000, $100,000 and $1,000,000, but I can't generate any taxes due.
Here I'm assuming Line I67 is my tax due line.
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How do I classify Roth conversions, ie, what line do I enter them on?
Since I have never done one, I assume, if I remove $20k from an IRA or a SEP/IRA and put it into a Roth/IRA, I then need to enter $20,000 into some income box on the spreadsheet.
Cell D31. Money coming from a traditional IRA is taxed the same, regardless of whether it is converted to Roth or not.
There are Qualified Charitable Distributions (QCDs) but that's a different topic.
OK, I need help, I put $12,000 into line 23 Taxable interest, non qualified dividends.
And I put varying numbers in LTCG (line 27) or Short term cap gain (line 26),
$20,000, $50,000, $100,000 and $1,000,000, but I can't generate any taxes due.
Here I'm assuming Line I67 is my tax due line.
Yes on I67.
For MFJ, $12000 in D23 and $50000 in D27 does indeed lead to $0 tax, due to the standard deduction and the way LTCGs are taxed.
But $100,000 or $1,000,000 in D27, or any of those four amounts in D26, produces a non-zero amount in I67 for me.
Are you using an Excel version that you have downloaded to your computer, or something else?
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How do I classify Roth conversions, ie, what line do I enter them on?
Since I have never done one, I assume, if I remove $20k from an IRA or a SEP/IRA and put it into a Roth/IRA, I then need to enter $20,000 into some income box on the spreadsheet.
Cell D31. Money coming from a traditional IRA is taxed the same, regardless of whether it is converted to Roth or not.
There are Qualified Charitable Distributions (QCDs) but that's a different topic.
OK, I need help, I put $12,000 into line 23 Taxable interest, non qualified dividends.
And I put varying numbers in LTCG (line 27) or Short term cap gain (line 26),
$20,000, $50,000, $100,000 and $1,000,000, but I can't generate any taxes due.
Here I'm assuming Line I67 is my tax due line.
Yes on I67.
For MFJ, $12000 in D23 and $50000 in D27 does indeed lead to $0 tax, due to the standard deduction and the way LTCGs are taxed.
But $100,000 or $1,000,000 in D27, or any of those four amounts in D26, produces a non-zero amount in I67 for me.
Are you using an Excel version that you have downloaded to your computer, or something else?
As to your last question, I think I'm in Google sheets.
I may need a walk through just to open a sheet that 'I' can put my numbers in.
I click on this link, '2019 Case Study Spreadsheet'
https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing
So first thing, I can't enter any numbers, so I see I'm in "View Only Mode"
I click the drop down and click "Request Edit Access' and write a note.
Hmm, I thought that's what I did last time so I could edit, not working this time.
How do I get access to enter my numbers.
Thanks, for your help.
btw, I added regular payroll income and did generate some taxes due, but even $1,000,000 in short term gains didn't add to the taxes.
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As to your last question, I think I'm in Google sheets.
I may need a walk through just to open a sheet that 'I' can put my numbers in.
I click on this link, '2019 Case Study Spreadsheet'
https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing
So first thing, I can't enter any numbers, so I see I'm in "View Only Mode"
I click the drop down and click "Request Edit Access' and write a note.
Hmm, I thought that's what I did last time so I could edit, not working this time.
How do I get access to enter my numbers.
Thanks, for your help.
btw, I added regular payroll income and did generate some taxes due, but even $1,000,000 in short term gains didn't add to the taxes.
Rather than "Request Edit Access" - which, if granted, would allow one to edit the same file that everyone else sees, so unlikely to be granted ;) - click the "Download" icon (the one with the downward arrow in the image below). That image is probably in the upper right of your screen after you click on the link you described.
(https://i.postimg.cc/t4Kmx7qf/screenshot-492.png)
Then, either open in Excel immediately and later save from Excel to your computer, or save immediately to your computer and later open that file with Excel.
Does that work better?
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As to your last question, I think I'm in Google sheets.
I may need a walk through just to open a sheet that 'I' can put my numbers in.
I click on this link, '2019 Case Study Spreadsheet'
https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing
So first thing, I can't enter any numbers, so I see I'm in "View Only Mode"
I click the drop down and click "Request Edit Access' and write a note.
Hmm, I thought that's what I did last time so I could edit, not working this time.
How do I get access to enter my numbers.
Thanks, for your help.
btw, I added regular payroll income and did generate some taxes due, but even $1,000,000 in short term gains didn't add to the taxes.
Rather than "Request Edit Access" - which, if granted, would allow one to edit the same file that everyone else sees, so unlikely to be granted ;) - click the "Download" icon (the one with the downward arrow in the image below). That image is probably in the upper right of your screen after you click on the link you described.
(https://i.postimg.cc/t4Kmx7qf/screenshot-492.png)
Then, either open in Excel immediately and later save from Excel to your computer, or save immediately to your computer and later open that file with Excel.
Does that work better?
Now I recall from last year, I used Openoffice to use it, but had a few minor issues, so I need to get Excel to do this right.
I did as you requested above, opened it in Excel, saved it and then open the saved file.
Now when I try to put data in a cell, I get "Protected Cells can not be modified"
What now, or is a copy of Excel needed?
EDIT,
"I found my answer, "Remove Protection Using OpenOffice
Click the "Tools" menu, select "Protect Document," and then click "Sheet" to unlock the spreadsheet. OpenOffice does not require the password. Select the "File" menu, click "Save As," and then change the file type to "Excel 97/2000/XP (.xls)."
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"I found my answer, "Remove Protection Using OpenOffice
Click the "Tools" menu, select "Protect Document," and then click "Sheet" to unlock the spreadsheet. OpenOffice does not require the password. Select the "File" menu, click "Save As," and then change the file type to "Excel 97/2000/XP (.xls)."
If this is what you need to make changes in cells with a green background in OpenOffice, then thanks for sharing.
Most non-green-background cells are protected by default because in most situations they shouldn't be changed. But not all situations, so if one needs to remove protection it's easy enough.
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"I found my answer, "Remove Protection Using OpenOffice
Click the "Tools" menu, select "Protect Document," and then click "Sheet" to unlock the spreadsheet. OpenOffice does not require the password. Select the "File" menu, click "Save As," and then change the file type to "Excel 97/2000/XP (.xls)."
If this is what you need to make changes in cells with a green background in OpenOffice, then thanks for sharing.
Yes, that allowed me to edit green cells, BUT it also allows brown cells to be altered and I have enough misunderstanding, I'm not ready to do that. However, I did find I57 Federal Withholding is $4,200 and G55 HSA is $9,000. I don't see what caused those numbers because I think they should be $0.
Your thoughts?
Most non-green-background cells are protected by default because in most situations they shouldn't be changed. But not all situations, so if one needs to remove protection it's easy enough.
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"I found my answer, "Remove Protection Using OpenOffice
Click the "Tools" menu, select "Protect Document," and then click "Sheet" to unlock the spreadsheet. OpenOffice does not require the password. Select the "File" menu, click "Save As," and then change the file type to "Excel 97/2000/XP (.xls)."
If this is what you need to make changes in cells with a green background in OpenOffice, then thanks for sharing.
Yes, that allowed me to edit green cells, BUT it also allows brown cells to be altered and I have enough misunderstanding, I'm not ready to do that. However, I did find I57 Federal Withholding is $4,200 and G55 HSA is $9,000. I don't see what caused those numbers because I think they should be $0.
Your thoughts?
Brown cells should not be changed. They are the ones I (might) need to update every new tax year, based on inflation, etc., as the IRS dictates.
The $4200 is the annual amount per W-4 allowance that is to be used by an employer for withholding calculations. See p. 45 of https://www.irs.gov/pub/irs-pdf/p15.pdf.
The $9000 is the maximum HSA amount for MFJ both 55 or older.
You might find Case Study Spreadsheet club (like a book club...only with a spreadsheet...) (https://forum.mrmoneymustache.com/ask-a-mustachian/case-study-spreadsheet-club-(like-a-book-club-only-with-a-spreadsheet-)/) useful.
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Version 12.07
- Incorporated changes (some GA and NY income subtractions for seniors) discussed in State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/)
- Incorporated changes (better documentation) discussed in Case Study Spreadsheet club (like a book club...only with a spreadsheet...) (https://forum.mrmoneymustache.com/ask-a-mustachian/case-study-spreadsheet-club-(like-a-book-club-only-with-a-spreadsheet-)/)
- Social Security benefit estimates now exactly match the SSA tool anypia.exe for all examples tested.
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
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Version 12.08
- Slight modifications to some state tax calculations
- Small wording and format changes
- Include FEIE in Medicare MAGI
- Add Roth distribution table to 'Basic Terms' tab (more 'advanced' than 'basic' but it seems as good a place as any....
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon. Then, either open in Excel immediately and later save from Excel to your computer, or save immediately to your computer and later open that file with Excel.
- See https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496 regarding warnings one might see, and why those are spurious warnings for these files.
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Version 12.09
- Added 529 deductions/credits to state tax calculations. See State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/msg2489589/#msg2489589).
- Updated IRMAA tiers to the 2020 values. It will be the 2021 tier definitions that are used to compare with 2019 MAGI, but the 2021 values aren't available yet.
- Small wording and format changes
- Updated Social Security calculations to match the October 2019 updates
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon. Then, either open in Excel immediately and later save from Excel to your computer, or save immediately to your computer and later open that file with Excel.
- See https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496 regarding warnings one might see, and why those are spurious warnings for these files.
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Version 12.10
- Updated IRMAA premium amounts to the 2020 values. It will be the 2021 premium amounts that result from 2019 MAGI, but the 2021 values aren't available yet.
- Small wording and format changes
- Fixed income reference for Form 2441 (Child/Dependent Care credit)
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Version 20.00
- First version with all 2020 tax updates.
- Most changes are simply one number for another number. E.g., the start and end of the 12% bracket for single filers, etc.
- The W-4 form and associated withholding calculations will be significantly different from 2019. At this time a draft version from the IRS is used.
Until at least the latter part of January, the 2019 taxes version will remain the default. At some point, people should be using real tax software for their actual 2019 returns and the default for "case studies" will change to the 2020 version. "Default" is defined as "the spreadsheet located at https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing."
As always, suggestions, and notification of errors (either in this thread or via PM), are appreciated.
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Hi all,
I'm doing your end planning trying to use the CSS to help me plan.
I have two problems I don't have Excel, so it kinda works, but it's questionable.
and I just don't have enough understanding.
I have several questions, I was previously self employed so I had so many deductions.
Now I'm retired and only have investment income.
I wonder if I have any this year. I have earned interest on a property and have spent
$4,300 on a lawyer with some problems with that, are those deductible and where on the spreadsheet?
My plan is to withdraw the max but stay in the 12% bracket. I figure that as paying $9,086 in tax. 10% of $19,400 = 1,940 and 12% of $59550 = 7,146 for a total of $9,086.
I'm looking at 3 inputs for income Taxable interest $4,650, tIRA withdrawal possibly $96,000, still to be decided because I can withdraw non tax deferred money, and other income, $2,600.
I have about $31,000 of loss carryover and not sure how to use it or what line to use it on.
I can take distributions from non tax deferred money instead of IRA money.
Can anyone give me some guidance.
-
Is there a line for carryover losses on the CSS? Found it.
But, If I put in $40,000 of LTCG;s it still says I only get to use $3,000 of my carryover.
-
Can anyone give me some guidance.
A few quick answers but if you want more it would be better to start a new thread, perhaps in the Case Study (https://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/) section:
- Unless it is an expense for your own business, the lawyer fee will not be deductible.
- $9086 is indeed the federal tax due for a 12% bracket full of ordinary income.
- See the Schedule D section starting in L54 for capital loss carryover entry. And yes, the law says only $3K/yr can be used to offset ordinary income.
-
Version 20.01
- Revisions to W-4 section.
New W-4 section starting in cell Calculations!F57. See notes there for more information about data entry.
Some filers will have no income other than a single W-2, standard deduction, and no credits other than the Child or Other Dependent. For them, filing the new Form W-4 (https://www.irs.gov/pub/irs-pdf/fw4.pdf) using the number of child and other dependents for step 3 and nothing in step 4 will work well.
For filers with more complicated situations, the Tentative Withholding Amount as outlined on p. 5 of Pub. 15-T (https://www.irs.gov/pub/irs-dft/p15t--dft.pdf) may be too inaccurate. If the expected refund is too large, a positive number entered in Step 3 (without regard to the number of child and other dependents) will reduce annual withholding by that much (but no lower than to $0) and thus reduce the refund.
If the expected tax owed at filing is too large, a positive number entered in Step 4c will increase withholding per pay by that much and thus reduce the tax owed at filing.
Users may adjust the Step 3 or Step 4c numbers to reach a desired refund/tax owed target. Of course, any needed W-4 changes will have to go through Payroll.
Until at least the latter part of January, the 2019 taxes version will remain the default. At some point, people should be using real tax software for their actual 2019 returns planning for 2020 using the 2020 version.
As always, suggestions, and notification of errors (either in this thread or via PM), are appreciated.
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Illinois does not tax Traditional IRA distributions (including Traditional -> Roth IRA conversions), cells A31 - D31 on the "Calculations" tab. See: https://www2.illinois.gov/rev/QuestionsAndAnswers/pages/99.aspx
My apologies if it's been addressed in the new version, but previous versions of the spreadsheet didn't take this into consideration so I had to modify it myself.
Thanks for your invaluable work!
-
Illinois does not tax Traditional IRA distributions (including Traditional -> Roth IRA conversions), cells A31 - D31 on the "Calculations" tab. See: https://www2.illinois.gov/rev/QuestionsAndAnswers/pages/99.aspx
My apologies if it's been addressed in the new version, but previous versions of the spreadsheet didn't take this into consideration so I had to modify it myself.
Thanks for your invaluable work!
Thanks! That one seems easy enough to add: putting =-B11 in cell 'State Tax'!O35 appears to do the trick. Probably won't upload a new version just for that, but it will be in a new version when one comes out.
State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/msg1697962/#msg1697962) is a good place to post other state return issues.
-
Version 20.02
- Slight change to W-4 withholding calculations. Final Publication 15-T (https://www.irs.gov/publications/p15t) differed from the draft version.
- Incorporated changes to Idaho and Illinois state taxes discussed in recent posts
Might add a "Section 199A dividend" entry as those seem much more common on 2019 1099-DIVs than in 2018. Although, the actual amounts are relatively small so...?
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Version 20.03
- State tax brackets and rates updated for 2020 per 2020 State Individual Income Tax Rates and Brackets | Tax Foundation (https://taxfoundation.org/state-individual-income-tax-rates-and-brackets-for-2020)
- Increased default x-axis value range for the marginal rate chart to $0-$19,500 to match the <50 401k contribution limit.
Thanks once again to the folks at Tax Foundation (https://taxfoundation.org/) for aggregating at least the basics for all state and D.C. income taxes.
2018 taxes version: 2018 Case Study Spreadsheet (https://drive.google.com/file/d/0B45krBaG0b6KTWZDeXEySVBHVXc/view?usp=sharing)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Do you know if the program runs successfully in Office 2000 Pro?
Or Office 2000.
-
Do you know if the program runs successfully in Office 2000 Pro?
Or Office 2000.
Don't know. See the two posts linked in the latest update for warnings that can be disregarded, but any others might indicate incompatibility with that version.
One quick test: put 40000 into cell B3 (and do nothing else). If the marginal rate chart (over cell J100) shows -12% until a spike at $7500, and another spike at $18750 (the spikes are saver's credit tiers) then there is a good chance everything is working.
-
Version 12.11 (2019)
Version 20.04 (2020)
- Added Section 199A dividend entry and its QBI deduction effect to both.
- Added suggestions for form W-4 entries to the 2020 version.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Version 20.05 (2020)
- Added $300 above-the-line charitable deduction. Eliminated 60% AGI limit on charitable dedutions.
- Assume an "off list" independent variable for the marginal rate chart is an annual amount.
- Added the Capital Loss Carryover worksheet for the next year's return.
Choosing the $300 above-the-line charitable deduction forces use of the standard deduction (i.e., no itemized deduction used).
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
New user of the CashFlow tool. Very new to this level of finance and investing as well, so sorry if I'm ignorant in more than one area or using the wrong terms. I have three clarifying questions:
I work for a local government entity. In addition to having a (1.) pension "Basic Retirement Plan" and optional (2.) 457(b) Deferred Compensation, we do not pay Social Security. Instead of paying SS, we have a (3.) "Supplemental Retirement Plan". Employees contribute a mandatory 5% pre-tax to this SRP and the employer also contributes 5%. Our W-2 form has in box 14. Other: "SRP" and the one of the 5% amounts (I'm assuming it is the employee's portion). Hopefully this is enough detail, for my questions.
The first question: Where do I indicate this SRP pre-tax contribution on the tool? This isn't a pre-tax pension contribution (we do not contribute to our pension), but that seems about the only place that it would "fit". My W-2 box 1 wages is less all of my pre-tax payments. My W-2 box 5 "Medicare wages and tips" includes a 5% SRP contribution (not sure if mine or my employer's part).
The second question: Do I need to account for the employer contributed 5% to the SRP? I wouldn't think so at this point as it is pre-tax. Some searching about Box 14 indicates it is informational only and not really used for tax calculation purposes.
The third question: what to do about the automatic SS calculation on the form? Shall I just unlock the form and zero out the SS in B60?
Thanks in advance, and thanks for such a powerful tool. It's making this whole experience and figuring out if we should max our tIRA vs. Roth IRAs and whatnot not so hard.
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The first question: Where do I indicate this SRP pre-tax contribution on the tool? This isn't a pre-tax pension contribution (we do not contribute to our pension), but that seems about the only place that it would "fit".
A rose by any other name.... That seems as good a place as any.
My W-2 box 1 wages is less all of my pre-tax payments. My W-2 box 5 "Medicare wages and tips" includes a 5% SRP contribution (not sure if mine or my employer's part).
Can you get the spreadsheet to match those? I.e., row 14 for W-2 box 1 and row 9 for W-2 box 5?
The second question: Do I need to account for the employer contributed 5% to the SRP? I wouldn't think so at this point as it is pre-tax. Some searching about Box 14 indicates it is informational only and not really used for tax calculation purposes.
Correct, it seems irrelevant for current year taxes. If you want to use the simple "Time to FI" section (~rows 166-194) then including whatever you expect from the SRP may be worthwhile. Might mean "some assembly required."
The third question: what to do about the automatic SS calculation on the form? Shall I just unlock the form and zero out the SS in B60?
Sure could. If appropriate, perhaps you could change the 0.062 in cells B60 and C60 to 0.05.
Thanks in advance, and thanks for such a powerful tool. It's making this whole experience and figuring out if we should max our tIRA vs. Roth IRAs and whatnot not so hard.
You're welcome.
If the paycheck and retirement treatment of those throughout the country who don't pay into SS is mostly standardized, it might be feasible to modify the spreadsheet to handle that automatically, using some input cell to indicate "SRP instead of SS" or similar. But if the non-SS plans are dissimilar then it's probably not practical to code multiple permutations.
Any more questions or suggestions, please do respond here or using a Personal Message.
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Version 20.06 (2020)
- Medical expense deduction has a 7.5% AGI floor in 2020
- Handle a "space" in the 529 contribution cell
Although google search results may say otherwise today, in Dec. 2019 congress did extend the 7.5% AGI floor for 2020. See "(f) Temporary special rule" in [USC02] 26 USC 213: Medical, dental, etc., expenses (https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section213&num=0&edition=prelim).
Excel behavior when a cell contains a space may differ from what happens when that cell has a zero or has no entry at all. Ran across the 529 contribution issue working with a case via PM. One option would be to impose data validation on all cells expecting a numeric value, but unless this becomes a more frequent issue....
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Thanks for all your hard work on this MDM.
I have a question about SEP IRA contributions, with a single-member LLC ("sole-proprietor"). In the worksheet, I see A47 for specifying self-employed SEP/SIMPLE contributions. Based on this detailed answer (https://ttlc.intuit.com/community/taxes/discussion/re-does-contributing-to-my-sep-ira-affect-my-magi-for-roth-ira-contribution-limits-if-i-am-solely/01/958978/highlight/true#M345069) and The Balance SMB (https://www.thebalancesmb.com/tax-planning-with-sep-iras-3193211) about whether SEP IRA contributions affect MAGI, I am not sure whether A47 is the right line item to put my "employer contributions" from my LLC as an owner, because it does not lower my MAGI in the sheet as I believe it should, in cell M50 (?). It does adjust M49 and M48 as I expect, but the Roth IRA maximum calculation uses M50.
Deductible self-employed contributions that appear on (2018) Schedule 1 line 28, including a SEP contribution, do reduce your AGI and therefore reduce your MAGI for the purpose of determining the maximum Roth IRA contribution that you are eligible to make. The amount on line 28 and the deductible portion of self-employment taxes on line 27 are not added back to AGI when calculating MAGI.
For a self-employed person contributing to his or her own SEP IRA, contributions are deducted as an adjustment to income on Form 1040 line 28. SEP contributions reduce a person's adjusted gross income, reduce taxable income, and thereby reduce the federal income tax. SEP IRAs do not impact the calculation of the self-employment tax since the self-employment tax is calculated before SEP contributions are calculated. A self-employed person reduces income tax only by contributing to his or her own SEP IRA.
Is this just an issue with the tIRA MAGI vs. the Roth MAGI? Is there a different place you recommend putting SEP IRA contributions so they adjust M50 and therefore the Roth IRA maximum calculation?
I am still personally a ways away from creating a SEP IRA since my spouse still has plenty of room to max out tax-deferred accounts but I expect to deal with this in 2021 at least.
- IRS Publication 560 (https://www.irs.gov/pub/irs-pdf/p560.pdf)
-
Is this just an issue with the tIRA MAGI vs. the Roth MAGI? Is there a different place you recommend putting SEP IRA contributions so they adjust M50 and therefore the Roth IRA maximum calculation?
Great question.
In short: because full compliance with IRS income limits, particularly tIRA deductibility, requires "extra" information (e.g., covered by a retirement plan at work?), the first "Caveat User" on the Instructions tab is "No check is made to enforce compliance with the various IRS rules on IRA, 401k, HSA, etc. contributions." In other words, there has been some, but not exhaustive, effort put into the "limit check" cells in the box starting in K40 and the MAGIs below that.
But it also says "Requests to overcome these (particularly if accompanied by Excel formulas) will be considered," so if you have studied this enough to have a suggestion I'd be happy to look at it. Might look at it myself anyway, but even better if someone else does the legwork. :)
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Version 20.07 (2020)
- Correct a calculation in Form 2441 (Child/dependent care credit)
- Add Roth IRA MAGI and contribution limit calculations
- Add "future value of a growing annuity" to the Misc. calcs
- Note that conventions in the "Solve for any of the five (FV, n, PMT, rate, PV)..." section of Misc. calcs differ from standard Excel.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Version 20.08 (2020)
- Implemented the "tax tables" for Earned Income Credit and tax calculations, as shown in 1040 instructions
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
This comes more from COVID boredom than significant functional improvement, but one now has the option for the CSS to use "tax table" methodology: see p. 46 and p. 62 of https://www.irs.gov/pub/irs-pdf/i1040gi.pdf for the 2019 tables. The 2020 tables haven't been published yet, but using the midpoint in each "At least X But less than Y" row as input to the tax formulas is how the table values are calculated.
To enable this option, change cell R80 from Y to N. This could allow one to match tax filing software results (given the same inputs), but the marginal rate chart will also show the actual tax code marginal rates in all their "glory". To me, a clean marginal rate means more than being $4 off on the absolute tax estimate, but now the option is there.
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
I'm working on the spreadsheet again this year, I have a copy of Excel installed. (I used Openoffice last year and it created some problems).
I don't seem to see where it will calculate 0% tax on my LTCGs under $80,000.
Line 25D Qualified Dividends $6,500
Line 27D LTCGs $78,000
Line 45D HSA $8,100
Line 16G says I have a taxable income of $50,300.
How do I make it recognize 0% LTCGs?
-
I'm working on the spreadsheet again this year, I have a copy of Excel installed. (I used Openoffice last year and it created some problems).
How do I make it recognize 0% LTCGs?
That happens automatically. I'll send a PM.
-
Version 20.09 (2020)
- Added the "Deduction Worksheet for Self-Employed" from IRS Pub. 560
- Changed default x-axis variable for the marginal rate chart to "tIRA withdrawals"
- Added cells to indicate whether one is covered by a retirement plan at work.
- Updated logic for IRS maximums on IRA contributions/deductions. Those remain advisory only.
- Subtract pension amount from PA state taxable income
- Other minor text edits and cosmetic changes, including
- Added a few cell notes for more documentation
- Restricted entry for max. mortgage principal for interest deductibility to $750K or $1000K only.
- Handle "space" instead of a blank cell for state identifier
The "Deduction Worksheet for Self-Employed" could be useful for those making both employee and employer contributions. The cell note for the "Self-employed SEP, SIMPLE, etc." row readsFor column B and C in this row, either delete the reference to the worksheet calculation and enter a fixed amount, or use the worksheet calculation (by deleting *0 from the formula) if intending to deduct the maximum allowed.
Self-employed Roth contributions should be entered on the appropriate row for the worksheet. The worksheet itself is around cell X164.
The spreadsheet implementation has some descriptions, but generally relies on one reading the Pub. 560 instructions.
The change in the default x-axis variable is based on the probably-true-more-often-than-not assumption that those interested in other responses (e.g., 401k contribution marginal rates) are more familiar with spreadsheets and how to make changes.
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Just want to say thanks for building this spreadsheet. I've been using it all this year and it has really been invaluable for my tax planning.
-
Just want to say thanks for building this spreadsheet. I've been using it all this year and it has really been invaluable for my tax planning.
You're welcome! Any suggestions, just post here or send a PM.
-
Version 20.10 (2020)
- Updated the SocialSecurity tab to incorporate the Oct. 2020 changes. See https://www.ssa.gov/oact/anypia/anypia.html
- Minor comment updates and cosmetic changes
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Version 21.00 (2021)
- Updated tax brackets and other changes announced by the IRS for 2021.
- The IRS has not yet updated Pub. 15-T for 2021 withholding. The 2020 tables still in place should be conservative (less likely to under-withhold)
2019 taxes version: 2019 Case Study Spreadsheet (https://drive.google.com/file/d/1aPE6MbD7TM-qp6dsHDWALlSFAaUhqINg/view?usp=sharing)
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Thanks for continuing to work on this. I use this tool religiously throughout the year to track my withholdings.
It probably wouldn't apply to most people, but I also manually track my solar credit (form 5695).
M
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MDM's spreadsheet is better than early release of Turbotax Online.
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Thanks for this great resource.
In the 2020 version (the only one I've looked at), The Earned Income Tax Credit calculation seems not to apply the investment income restriction properly. From Worksheet 1 (https://www.irs.gov/publications/p596#en_US_2019_publink1000297452) in Pub596:
5. Enter the amount from Form 1040 or 1040-SR, line 6. If the amount on that line is a loss, enter -0-
I think this means that the G28 cell needs to change from
=IF(AND((D23+D24+B25*B163+D28+D36)<3650,OR(AND(G8>=25,G8<65),AND(H8>=25,H8<65),G6>0)),MAX(0,Z26),0)
to
=IF(AND((D23+D24+B25*B163+MAX(0,D28)+D36)<3650,OR(AND(G8>=25,G8<65),AND(H8>=25,H8<65),G6>0)),MAX(0,Z26),0)
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I think this means that the G28 cell needs to change....
Right you are!
Not only that limit, but the rental income needs to be limited similarly. Had a thing or two ready for a new version, so I'll add this and release the new version soon.
Gotta love crowd sourcing!
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Version 20.11 (2020)
Version 21.01 (2021)
2020- Allow for less than 12 months in form 1095-A
- Lower limit of 0 for EIC investment income items
2021- Updated withholding tables to match 2021 Pub. 15-T
- Allow for less than 12 months in form 1095-A
- Lower limit of 0 for EIC investment income items
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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After a few failed tries over the years, I finally got my spreadsheet working! I even got 2021 up and running so I can estimate my taxes. Its going to save me a massive headache come April 2022. Thanks MDM!
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After a few failed tries over the years, I finally got my spreadsheet working! I even got 2021 up and running so I can estimate my taxes. Its going to save me a massive headache come April 2022. Thanks MDM!
Nice going!
Speaking of 2021, congress has once again changed the 10% of AGI floor for itemized medical expenses to 7.5% of AGI. Doesn't seem worth a whole version update to change that, so until the next update if anyone care about this nuance then change cell 'Calculations'G39 to replace 10% with 7.5% as shown below:
=MAX(0,SUM(D95:D96)+SUM(D113:D116)+(B48*$B$164+C48*$C$164-D48)+G19-G31-7.5%*G11)
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Version 20.12 (2020)
Version 21.02 (2021)
20202021- 7.5% of AGI floor for itemized medical expenses
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Ah, what the heck, the changes are minimal but anyway....
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
The Cash donation tax credit has changed in 2021.
It is now $600 for MFJ. Also it is now a post-AGI deduction to income, so it is subtracted after AGI is calculated.
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Hi there!
I'm new to MMM. I've been active on Bogleheads for a few years, and have done some editing to the wiki. I'm working on a revision to the Traditional versus Roth wiki page (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=335502). It's become clear that one of the biggest issues for readers is how to to estimate their future marginal tax rate. The wiki page lays out a good method, but it's long enough that only the most ambitious readers are making their own spreadsheets to make the calculation. We discussed adding some kind of tool, and I have my own stand-alone spreadsheet that we could polish and upload. But, given the popularity of the CSS tool, I much prefer the idea of adding this capability to CSS, and then the wiki page can point to there.
So, I took a swing at adding a new worksheet to the CSS tool, which estimates current and future marginal tax rates, and then calculates the future values for five different tax structures: tax-free (eg. HSA for qualifying expenses), Roth, pre-tax, non-deductible (eg. ND-tIRA, VA), taxable. Future marginal rates are estimated by calculating future pre-tax and taxable balances using Future Value functions, then adding in Social Security and other forms of income. It can import data from the Calculations worksheet, or accept over-riding user inputs. It handles special cases of contributing the account maximum, and also not getting the full employer match. I also added a "Social Security Spike Checker" where it runs the math in reverse, to check the case of trying to come in just under the spike in SS taxation (22.2% or 40.7%), then calculating future balances, tax due, and after-tax income in retirement to see if it's a better strategy. Overall, I think this would be a valuable toolset to add to the CSS.
Link: https://drive.google.com/file/d/1InHgvpUOmwAujWAREoV20v7PYpupJA1I/view?usp=sharing (https://drive.google.com/file/d/1InHgvpUOmwAujWAREoV20v7PYpupJA1I/view?usp=sharing)
If this addition is accepted, it would replace the "Non-ded. IRA" worksheet completely, and also the "Growth in a taxable account," "Roth vs. Traditional when contributing the maximum allowed," and "Estimating withdrawal tax rates calculators" on the "Misc. Calcs" worksheet. It would also probably be wise to adapt the "401k vs Taxable" worksheet into mine, so they could work from a common set of inputs, but I decided not to spend the time to do that until it seemed likely that my worksheet would be accepted in some form.
Two difficulties I had: The CSS has a sophisticated tax calculator I didn’t figure out how to use, so I “rolled my own” on that worksheet off to the side. I think I got it pretty close, but if it’s easier to call already existing tax functions, then that’s clearly the right move. I also wasn’t able to have a comprehensive state tax model (like the existing sheet, where you put in the state postal code and it does the rest); mine requires the user to input the state marginal rate manually. These are areas for improvement.
I added a feature where a period of early withdrawal (early retirement, pre-SS Roth conversions) can be added to the FV calculation. This presents a problem for the case of coming in under the SS spike, because it's not clear what the equivalent decision would be in that case. I coded it now to take early withdrawals in proportion to the smaller pre-tax balance, but I'm not 100% sure this is the best approach. Feedback on this would be appreciated, and it could just make sense to eliminate the early withdrawal feature altogether.
Anyway, that's my suggestion; looking forward to hearing the group's thoughts on it.
Best,
"fyre4ce"
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Thanks for the reminders/suggestions. nolesrule, I'm somewhat waiting to see if Congress throws any more curve balls for 2021, but the QBI-ish charitable item should be in the next update.
fyre4ce, welcome to the forum. It is a bit different than Bogleheads, especially in the off-topic board.... Always nice to get suggestions with a potential solution included!
The CSS has developed to where it is thanks to crowd-sourcing such as this. I'll take a look at the details.
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So, I took a swing at adding a new worksheet to the CSS tool....
Nice work! That must have taken some effort!
If you had to pick the most important one or two or three concepts you are proposing, what would they be?
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So, I took a swing at adding a new worksheet to the CSS tool....
Nice work! That must have taken some effort!
If you had to pick the most important one or two or three concepts you are proposing, what would they be?
Here are what I think are the most important concepts, in decreasing order of importance:
1) Powerful and usable tool to estimate future marginal tax rates. This is an input to many types of investment problems, and in my experience most people just guess. This was the motivator behind making this proposed update in the first place. It synergizes well with the tax model in the CSS, because it can do a direct lookup of the current marginal rate for a given contribution size. But, I wrote it so that the user can manually override most of the numbers at various points through the calculation. The core of the math is using a Future Value function to estimate future taxable income:
[estimated future taxable withdrawals] = FV([expected real return],[expected years to withdrawal],-[expected future annual contributions],-[current pre-tax account balance]) * [expected future withdrawal rate]
A similar calculation is repeated for taxable investments. Then, add SS income and other income, subtract the age 65+ standard deduction, and do a lookup in the tax rate table to get an estimated marginal future tax rate.
2) Once you have current and future marginal rates, I like having future values for the different tax structures all in one place. Users can compare pre-tax to Roth, pre-tax and Roth to taxable, non-deductible to taxable, etc. Having them all in one spot makes the spreadsheet more compact and takes the place of separate calculators (like "Growth in a taxable account"). Also, I've noticed not all taxable calculators get the basis correct. I believe I have the most accurate formula (derived here (https://www.bogleheads.org/wiki/Taxable_account)). I coded it to do either annual or continuous compounding, but I'd be OK removing that feature and only offering annual, if it were an issue.
3) A traditional versus Roth calculator should definitely have a "contributing the maximum" feature, which is very easy to add once the other pieces are there. This is partly why it makes a lot of sense to include the taxable formula, because this is necessary for this math. Formulas used are here (https://www.bogleheads.org/wiki/User:Fyre4ce/Retirement_plan_analysis#Maxing_out_returement_accounts).
4) I've never seen a formula for deciding between traditional and Roth when you're not able to get the full employer match, so I derived one here (https://www.bogleheads.org/wiki/User:Fyre4ce/Retirement_plan_analysis#Employer_match). I think it's a nice feature that could help some users, and it makes sense to have it along with the other features of that sheet. But, it probably affects only a small number of users, so that's why I list it further down in my priority list.
5) The "Social Security Spike Checker" is actually the most complicated sub-tool on the page, and the easiest to separate if necessary. But, it could be useful to a lot of users so I included it. It runs the same calculation for an alternate scenario of trying to go underneath the tallest spike of SS taxation in retirement. The algorithm goes like this:
a) Future out the amount of other (non-SS) income in retirement necessary to get the user just barely under the 22.2% or 40.7% spike in SS taxation. Formulas for these values are derived here (https://www.bogleheads.org/wiki/Taxation_of_Social_Security_benefits#Heat_map_representation).
b) Given a withdrawal rate, figure out the future pre-tax balance that will generate this amount of income.
c) Figure out a reduced pre-tax contribution that will get the user to this balance, and contribute the rest to Roth. If this change leaves extra room in the Roth account to switch some taxable investments to Roth, do it, but taxable contributions can't go below 0.
d) Using the new pre-tax, Roth, and possibly taxable contributions, and keeping the other variables the same, calculate the total tax due for this alternate scenario.
e) Calculate the total income available after taxes for this alternate scenario, and compare it to the baseline. The lower-performing scenario is indicated with a "-X.XX%" to show the relative size of the difference.
Hope that helps!
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I went into a little more detail in a PM to fyre4ce, but some of these items may be added piecemeal along with updates for the 2021 state taxes, etc.
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Apologies if this is not a good place to ask this. I'm trying to figure out how much tax savings there would be being taxed as an S-Corp vs. Sole proprietor and I'm wondering if the case study spreadsheet is a good place to do that. Looking specifically to include self employed health insurance, soloK, QBI in the analysis, and it is unclear where I might enter everything I need to get a good estimate on taxes in this spreadsheet. I'm not having success figuring out where to put the 'business profit' or how to do soloK in the spreadsheet. But I also haven't found a good calculator elsewhere online - so far every one I've tried seems to leave some significant parts out of the analysis.
This spreadsheet has proven better even than early-release tax software in the past, so I'm thinking it is just user error. Need to figure this out as I'm going to have one chance with my pending "highly-paid-barista-FIRE" opportunity, that notably due to the part-time hours will put me under the social security wage base on gross. In the past when I've been on 1099, I've been far enough over that line that the usual marginal rate on "save self employment tax" was quite a bit lower than it would be for the usual analysis and I've always landed on "eh not worth it" in terms of actually setting up the S-Corp. Was probably a mistake to be lazy about this even then, but it is potentially an even bigger mistake for this.
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Apologies if this is not a good place to ask this. I'm trying to figure out how much tax savings there would be being taxed as an S-Corp vs. Sole proprietor and I'm wondering if the case study spreadsheet is a good place to do that. Looking specifically to include self employed health insurance, soloK, QBI in the analysis, and it is unclear where I might enter everything I need to get a good estimate on taxes in this spreadsheet.
I'm not at all expert on small business taxes (there are some on this forum who are), but perhaps some of the items in this post (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2688700/#msg2688700) would be relevant?
There will be state tax updates from Individual Income and Payroll Taxes | Tax Foundation (https://taxfoundation.org/state-tax/individual-income-payroll-taxes/), some of fyre4ce's suggestions, etc., that will probably happen over the next few weeks (maybe sooner, but...?) so as long as I'm making changes, if some incremental ones would be useful for your question, this could be a good time. But I may need "guidance". :)
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So what I wound up doing (this is nowhere near the level of quality MDM provides, just how I got the spreadsheet to help me say "yes, this is going to be worth the effort"):
1. Create a "S-Corp" flag in cell E3. If this is 1, then the Social Security & Medicare line items (B60 & B61) double to reflect that I'm paying for both sides.
2. Enter "Salary" + "Heath Insurance" + "HSA" in B3 - in line with guidance that all these will wind up on W-2
3. Enter "Health Insurance" in B4 - again in line with guidance that while we report health insurance premiums reimbursed by the S-Corp as Income on our W-2, it is not subject to FICA and we deduct this on the self-employed health insurance deduction line. Need to put it into this section so we get FICA to calculate right.
4. Enter "HSA" in B7 for same reasoning as for "Health Insurance"
5. Enter Employee-deferral SoloK amount in B11
6. Calculate expected 'profit' from the S-Corp as follows:
Gross - Employer half of FICA - Health Insurance - HSA - Employer SoloK - Corp Fees - Insurance
Basically gross receipts minus expenses. Gets confusing because of how all this is reported to IRS, but end of day, that's what I'm expecting to be treated as business profit.
7. Enter the amount from step 6 as an addition to cell D23 (taxable interest, non qualified dividends and so on). Really put this anywhere that is subject to income tax but not FICA.
8. To simulate QBI deduction, cell B51 for now is "= 6000 + .2 * amount from step 6". I haven't dug far enough into the details on this, but I'm expecting to now be limited by S-Corp profit instead of taxable income for QBI deduction.
So I then take cell D67 for "total taxes" and compare that to what I get for the sole proprietor version (which the spreadsheet handles well already). That gives us 'tax savings for going S-Corp', and then I can decide if that is enough to justify the the additional cost / hassle of setting this all up. Spoiler: it is. About $7500 top line tax savings which means even after LLC fees and so on, I'm expecting $6,000 + per year net benefit. I think I'll also owe unemployment tax, but that's at most about $500 / year. I'd have to be missing a whole lot for this to not be worth an hour or two per month in additional bookkeeping and tax filing. Real happy I'm in Florida - no state income tax oddities to worry about from what I've read.
A whole lot of work to get this to be robust to where it might be considered for inclusion in the case study spreadsheet - maybe I'll spend some of the 2 additional days per week off in the near future doing that.
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Super duper minor comment (prob not even worth posting due to the target audience of this spreadsheet), but cell 16A `Roth 401k/403b` could have `Roth TSP` added to the description.
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Thank you so much for this fantastic tool, MDM!
My employer has a tax-qualified employee stock purchase plan. Where should I put contributions to that in the spreadsheet? Would it interfere with any other formulas if I stuck it in Employer-sponsored HSA or Pretax Commuter Costs?
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Thank you so much for this fantastic tool, MDM!
My employer has a tax-qualified employee stock purchase plan. Where should I put contributions to that in the spreadsheet? Would it interfere with any other formulas if I stuck it in Employer-sponsored HSA or Pretax Commuter Costs?
You're welcome!
By "tax qualified" I'm guessing you mean "as opposed to non-qualified" (see Qualified vs Non-Qualified ESPPs (https://support.carta.com/s/article/qualified-vs-non-qualified-espps))?
For your contributions, row 17, ESPP/After-tax 401k, seems appropriate. The amount you invest does not affect your AGI.
What to do with the bargain element (https://turbotax.intuit.com/tax-tips/investments-and-taxes/employee-stock-purchase-plans/L8NgMFpFX) and any short/long term capital gains depends on when you sell the shares. To get accurate taxes, those would be added to Gross Salary/Wages and/or the appropriate capital gain item.
Or is your employer's plan something altogether different? They do come in various shapes and sizes....
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Super duper minor comment (prob not even worth posting due to the target audience of this spreadsheet), but cell 16A `Roth 401k/403b` could have `Roth TSP` added to the description.
Thanks! Sure could, and why not, given it's already in the traditional description a few rows above?
It's in there now for the next version. Also added "457" to the Roth row. Roth 457s are rare enough that it doesn't seem worth adding a separate row for them.
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By "tax qualified" I'm guessing you mean "as opposed to non-qualified" (see Qualified vs Non-Qualified ESPPs (https://support.carta.com/s/article/qualified-vs-non-qualified-espps))?
For your contributions, row 17, ESPP/After-tax 401k, seems appropriate. The amount you invest does not affect your AGI.
What to do with the bargain element (https://turbotax.intuit.com/tax-tips/investments-and-taxes/employee-stock-purchase-plans/L8NgMFpFX) and any short/long term capital gains depends on when you sell the shares. To get accurate taxes, those would be added to Gross Salary/Wages and/or the appropriate capital gain item.
Or is your employer's plan something altogether different? They do come in various shapes and sizes....
I guess tax qualified was the wrong description to use. It would be more accurate to call it a pre-tax ESPP.
Private company stock is purchased with pre-tax income. The income used to purchase the shares doesn't show up in FICA wages on my W2.
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I guess tax qualified was the wrong description to use. It would be more accurate to call it a pre-tax ESPP.
Private company stock is purchased with pre-tax income. The income used to purchase the shares doesn't show up in FICA wages on my W2.
Yes, that's different - appears good for you. :)
In terms of tax calculations, including that amount in both row 3 and either row 7 or row 8 will provide a correct bottom line.
In terms of the simplified "Time to FI?" calculations, there is no mechanism in the CSS that covers an amount
- not subject to FICA or income tax now, but
- investable now and taxable when withdrawn later.
Does that help?
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Yes, that's different - appears good for you. :)
In terms of tax calculations, including that amount in both row 3 and either row 7 or row 8 will provide a correct bottom line.
In terms of the simplified "Time to FI?" calculations, there is no mechanism in the CSS that covers an amount
- not subject to FICA or income tax now, but
- investable now and taxable when withdrawn later.
Does that help?
Yes this makes sense. Thank you for the feedback.
I guess for the purpose of tax calculation I could leave it out altogether and for FI calculations I could add the account value to my taxable stocks & bonds (row 174).
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Yes, that's different - appears good for you. :)
In terms of tax calculations, including that amount in both row 3 and either row 7 or row 8 will provide a correct bottom line.
In terms of the simplified "Time to FI?" calculations, there is no mechanism in the CSS that covers an amount
- not subject to FICA or income tax now, but
- investable now and taxable when withdrawn later.
Does that help?
Yes this makes sense. Thank you for the feedback.
I guess for the purpose of tax calculation I could leave it out altogether and for FI calculations I could add the account value to my taxable stocks & bonds (row 174).
Cell B72, "Other Untaxed Income", is another possibility. It's just there as a catch-all, and you'll have to divide by 12 because it's a "per month" cell, but it might fit your needs.
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Version 21.03 (2021)
- 2021 version of non-itemized charitable deduction
- Labeling changes
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
The taxfoundation.org state tax update for 2021 hasn't come out yet. It was released February 4 (https://taxfoundation.org/publications/state-individual-income-tax-rates-and-brackets/) in 2020, but there have been a few other tax things afoot so we won't begrudge their free compilation being a little later this year.
For those of you in states like California that don't see fit to release rates and brackets until November of that tax year (https://www.ftb.ca.gov/about-ftb/newsroom/tax-news/november-2020/standard-deductions-exemption-amounts-and-tax-rates-for-2020-tax-year.html), I suppose you are used to guessing....
Thanks to nolesrule and SomedayStache for the suggestions listed above.
As for the more comprehensive suggestions by dandarc and fyre4ce...not yet. ;)
dandarc: as you are already far down the S-corp road, I'm happy to let you press ahead and see if a generic and tractable implementation is feasible.
fyre4ce: The "relatively simple and easy to use" philosophy you mentioned in our PMs seems more appropriate for the CSS than trying for something "powerful" when it comes to estimating withdrawal tax rates. Rather than using the marginal rate chart to feed a detailed calculation table, it seems better to use the existing "Estimating withdrawal tax rates" table that starts on row 198 of the 'Misc. calcs' tab to feed the marginal rate chart. But now that I write this, perhaps moving that table to the 'Calculations' tab so people don't have to flip between tabs.... OK, that's one for the next version.
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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I believe there is a small error on the SocialSecurity sheet. If you enter birth year 1/1/1955, it is using the years 2015/2017 for wage indexing and bend points. I believe this is incorrect as a birth date of Jan 1 triggers a special case:
https://www.ssa.gov/benefits/retirement/planner/ageincrease.html
So these should be 2014/2016.
This issue is exacerbated by the Maximum-Taxable Earnings page which you probably use to calibrate your results:
https://www.ssa.gov/OACT/COLA/examplemax.html
That page specifically says "initial benefit amounts shown in the table below assume retirement in January of the stated year". To retire in January precisely at these ages requires your birthdate to be on January 1st, otherwise February 1st is the earliest you can file. I believe they triggered the special case inadvertently in this documentation. That shift of the base years throws everything off.
EDIT: This page has the clearest language. "Retirement benefits can begin the first month a person is age 62 throughout the entire month. (See RS 00201.001C.) Social Security follows English common law that finds that a person attains an age on the day before the birthday."
https://secure.ssa.gov/poms.nsf/lnx/0300615015
So using the "English common law" definition, the Jan 1 birthdate special case rolls everything back 1 year.
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That's correct, it Doesn't do "born on the first of the month" adjustments (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1041979/#msg1041979) - including "born on the first of the year" adjustments. :)
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That's correct, it Doesn't do "born on the first of the month" adjustments (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1041979/#msg1041979) - including "born on the first of the year" adjustments. :)
I believe you just have to change that C102 calculation to "=YEAR(B102-1)"
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Hello MDM! Thank you, yet again, for this amazing spreadsheet. It makes tax time in our household a breeze.
One small bug (that I was just bit by): Self-employed health insurance premiums (D48) are only deductible up to the limit of:
- Schedule C net profit (D30) minus Deductible SE tax (D46) minus Self-employed SEP, SIMPLE, etc. (D47)
(This year I had very low Schedule C income and maxed out my solo 401(k), hence my Self-employed health insurance premiums were not deductible.)
I think this updated equation for cell D48 should do the trick:
=MAX(MIN(B48*$B$164,B30*$B$163-B46*$B$164-B47*$B$164),0)+MAX(MIN(C48*$C$164,C30*$C$163-C46*$C$164-C47*$C$164),0)
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That's correct, it Doesn't do "born on the first of the month" adjustments (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1041979/#msg1041979) - including "born on the first of the year" adjustments. :)
I believe you just have to change that C102 calculation to "=YEAR(B102-1)"
Thanks! If that's all that is needed, it will go in the next version.
Do you have a similarly easy fix for the "first of the month" situation? :)
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I think this updated equation for cell D48 should do the trick:
Indeed it does - thanks! Already changed for the next version.
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I think this updated equation for cell D48 should do the trick:
Indeed it does - thanks! Already changed for the next version.
Awesome, thank you!
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That's correct, it Doesn't do "born on the first of the month" adjustments (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1041979/#msg1041979) - including "born on the first of the year" adjustments. :)
I believe you just have to change that C102 calculation to "=YEAR(B102-1)"
Thanks! If that's all that is needed, it will go in the next version.
Do you have a similarly easy fix for the "first of the month" situation? :)
Try these:
F115: =YEAR(EDATE(DATE(YEAR($B$102)+$B115,MONTH($B$102),1),IF(DAY($B$102)=1,0,1)+ROUNDUP($C115,0)))
F116: =YEAR(EDATE(DATE(YEAR($B$102)+$B116,MONTH($B$102),1),IF(DAY($B$102)=1,0,1)+ROUNDUP($C116,0)))
F117: =YEAR(EDATE(DATE(YEAR($B$102)+$B117,MONTH($B$102),1),IF(DAY($B$102)=1,0,1)+ROUNDUP($C117,0)))
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@MDM , You're a life saver! Thank you so much for making tax planning so easy!
So what I wound up doing (this is nowhere near the level of quality MDM provides, just how I got the spreadsheet to help me say "yes, this is going to be worth the effort"):
1. Create a "S-Corp" flag in cell E3. If this is 1, then the Social Security & Medicare line items (B60 & B61) double to reflect that I'm paying for both sides.
2. Enter "Salary" + "Heath Insurance" + "HSA" in B3 - in line with guidance that all these will wind up on W-2
3. Enter "Health Insurance" in B4 - again in line with guidance that while we report health insurance premiums reimbursed by the S-Corp as Income on our W-2, it is not subject to FICA and we deduct this on the self-employed health insurance deduction line. Need to put it into this section so we get FICA to calculate right.
4. Enter "HSA" in B7 for same reasoning as for "Health Insurance"
5. Enter Employee-deferral SoloK amount in B11
6. Calculate expected 'profit' from the S-Corp as follows:
Gross - Employer half of FICA - Health Insurance - HSA - Employer SoloK - Corp Fees - Insurance
Basically gross receipts minus expenses. Gets confusing because of how all this is reported to IRS, but end of day, that's what I'm expecting to be treated as business profit.
7. Enter the amount from step 6 as an addition to cell D23 (taxable interest, non qualified dividends and so on). Really put this anywhere that is subject to income tax but not FICA.
8. To simulate QBI deduction, cell B51 for now is "= 6000 + .2 * amount from step 6". I haven't dug far enough into the details on this, but I'm expecting to now be limited by S-Corp profit instead of taxable income for QBI deduction.
So I then take cell D67 for "total taxes" and compare that to what I get for the sole proprietor version (which the spreadsheet handles well already). That gives us 'tax savings for going S-Corp', and then I can decide if that is enough to justify the the additional cost / hassle of setting this all up. Spoiler: it is. About $7500 top line tax savings which means even after LLC fees and so on, I'm expecting $6,000 + per year net benefit. I think I'll also owe unemployment tax, but that's at most about $500 / year. I'd have to be missing a whole lot for this to not be worth an hour or two per month in additional bookkeeping and tax filing. Real happy I'm in Florida - no state income tax oddities to worry about from what I've read.
A whole lot of work to get this to be robust to where it might be considered for inclusion in the case study spreadsheet - maybe I'll spend some of the 2 additional days per week off in the near future doing that.
Thank you for posting what you did. I'm on the same boat so this is very helpful for us.
Can I ask where the $6,000 on step #8 comes from?
Also, I believe on step #6, you'd need to deduct the W2 wages as well (I think you did in your calc, just forgot to note it here)?
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$6000 is a normal traditional IRA contribution - I'm basically semi-retiring in May if the paperwork goes through on this new gig (just got my "Articles of Incorporation are approved" email today - exciting times), so no doubt at all I'll be able to deduct that under the new lower income.
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You are correct about #6 - and I did do that. Just forgot to put it on the post.
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$6000 is a normal traditional IRA contribution - I'm basically semi-retiring in May if the paperwork goes through on this new gig (just got my "Articles of Incorporation are approved" email today - exciting times), so no doubt at all I'll be able to deduct that under the new lower income.
I see. So, I shouldn't enter the $6k IRA contribution in cell B50 and enter it in B51 instead?
From the standard Sch C sheet, the QBI deduction is reduced by 20% of the IRA contribution amount in cell B50, but you mentioned put $6,000 + 20% of the S-corp distribution amount in B51. Does it mean the QBI is taking the whole $6k deduction instead of 20% of it?
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Bah - I see it is cell B50 too. Screwed that line up coming and going in the post.
I also did this specifically for my situation - I'm expecting QBI to be the limiting factor vs. taxable income. In the past for me it has been the other way around. You are right that if 'taxable income' is your limiting factor, then a traditional IRA deduction would reduce your QBI deduction.
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I see another issue - QBI deduction does not reduce AGI, but the way I put it in that IRA line item, it does. AGI has downstream impacts, not the least of which is ACA premium tax credit. Note on that - if stimulus passes the way it was written, then for 2021 and 2022, PTC goes up a little bit and (this next part is absolutely huge for me) the cliff where you go from a $4,000 PTC to $0 with one additional dollar of AGI at the 400% of FPL level goes away.
Fixed that by just making a cell to manually enter S-Corp profit and modifying the existing QBI cell to take 20% of that for now.
Like I said - I was just trying to figure out if S-Corp hassle was worth it.
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I see another issue - QBI deduction does not reduce AGI, but the way I put it in that IRA line item, it does. AGI has downstream impacts, not the least of which is ACA premium tax credit. Note on that - if stimulus passes the way it was written, then for 2021 and 2022, PTC goes up a little bit and (this next part is absolutely huge for me) the cliff where you go from a $4,000 PTC to $0 with one additional dollar of AGI at the 400% of FPL level goes away.
Fixed that by just making a cell to manually enter S-Corp profit and modifying the existing QBI cell to take 20% of that for now.
Like I said - I was just trying to figure out if S-Corp hassle was worth it.
Yup, I'm also on the same boat, hence thought we can team up and cover what the other misses.
I played around some more with the S-corp version and here are the changes I made:
1. Move the S-corp distribution from cell D23 to D40, then change the formula in Y137 to =MAX(0,D40-D46-D47-D48) to update the QBI calculation.
2. Enter the S-corp gross income in E1 and have the formula in D40 deduct all the deductions on your step 6 from the number in E1. This way, I can play around with different income scenarios easily.
3. Put t-IRA as normally in B50 & C50 so AGI is reduced by any t-IRA contribution.
Using a hypothetical scenario for DINK, MFJ with $100k S-corp income, $60k salary, max 401(k) contribution ($19.5k deferral + $15k co matching), $7,100 HSA, $12k tIRA, I'm getting a total tax due of $9,693 in D67, while using Sole Proprietorship, the tax balance becomes $14,130. So, a saving of almost $4,500 but we'll have to do the 1120S, issue K1, and run payrolls.
This scenario is disregarding the health insurance reimbursement to the 2% shareholder that needs to be added to the W2.
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Version 20.13 (2020)
Version 21.04 (2021)
2020- A couple of Soc. Sec. tweaks: include the above the line charitable deduction in SS taxability calculation, and the 1-Jan b'day for benefit calculation.
2021- Updated state brackets, etc., for 2021.
- Fixed SEHI deduction to consider SEP, SIMPLE, solo 401k, etc. contributions.
- Included 1-Jan b'day fix for SS benefit calculations.
- Added an option to use "if the law doesn't change for 2026" brackets and rates for future estimations.
- Copied the "Estimating withdrawal tax rates" box from the 'Misc. calcs' tab to the 'Calculations' tab.
2020 taxes version: 2020 Case Study Spreadsheet (https://drive.google.com/file/d/1klX_6nqOZG-CkGccNQcurzVWjfV5QXoU/view?usp=sharing)
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
As in past years, thanks to the folks at taxfoundation.org for their State Individual Income Tax Rates and Brackets for 2021 (https://taxfoundation.org/publications/state-individual-income-tax-rates-and-brackets/). For those of you familiar with your own state's tax calculations, use State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/msg1697962/#msg1697962) or a PM for "relatively simple" ;) suggested improvements. Blatant numerical errors count as relatively simple.
Thanks to mjb for the SEHI fix, Retireatee1 for the 1-Jan b'day fix, and fyre4ce for ideas on future marginal rate estimation.
See posts from a few weeks ago for details on the SEHI and 1-Jan changes.
The section on estimating future marginal tax rates (a few calculations and instructions for which cells to place results) remains simple, as suggested in Estimating withdrawal tax rates (https://forum.mrmoneymustache.com/investor-alley/estimating-withdrawal-tax-rates/).
Allowing folks to use "2026" brackets and rates has two purposes:
- Caters to those who assume "no change to the law" (meaning a reversion to 2017 regulations) is more likely than "no change to the current rates" (meaning the law will change to keep the rates the same).
- Might be the first step toward allowing use of the same spreadsheet version to calculate federal taxes for different years.
The current implementation affects only ordinary income brackets and rates. True fidelity to 2017 regulations would require changes to exemptions, deductions, alternative minimum tax, etc.
My personal opinion is that, come 2026, neither assumption will have been 100% correct, but I have no better idea of what reality will be.
As always, large changes such as these make fat-fingered and other errors more likely. Corrections/suggestions welcome.
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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I love this spread sheet. I live in WA and there is no state tax. Can I delete the "State Tax' and "State Brackets" without screwing up the entire spreadsheet? Just wanted to to delete those since I dont need them.
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I love this spread sheet. I live in WA and there is no state tax. Can I delete the "State Tax' and "State Brackets" without screwing up the entire spreadsheet? Just wanted to to delete those since I dont need them.
Yes, I just tried and it appears you can do that. Deleting the formula in cell G35 (leave it blank or enter zero) will prevent a bunch of #N/As should you enter WA in cell H35 to do ACA premium tax credit calculations.
For that matter, if all you want are the tax calculations you could delete all the other sheets except the 'Form 6251' and 'Tax Code' sheets. :)
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Thanks for the help!
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OK I went back and revisited the Social Security date arithmetic again.
I see the C102 fix to subtract 1 for English common law is in. That is good.
Really now you just need to revise these three cells slightly with the same fix (disregard my earlier post):
F115: =YEAR(EDATE($B$102-1,B115*12+C115))
F116: =YEAR(EDATE($B$102-1,B116*12+C116))
F117: =YEAR(EDATE($B$102-1,B117*12+C117))
I'd add some rounding to the month count as this should never be a fraction:
C115: =ROUND((B119-B115)*12,0)
You really don't need to worry about the day you were born as all you care about are years, unless it is Jan 1 which is handled. For most people, they cannot retire at age 62. 62 plus 1 month is the earliest and 62 is an invalid entry (I wouldn't try to "fix" it). As you are not performing data validation, you get a slightly inaccurate result if you enter that combination. This is why the government examples all start at 62 + 1/12.
So that should do it. Feel free to compare any results with my calculator:
https://www.retireator.org/
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Is there anywhere in the spreadsheet that accounts for current cash savings in a bank account? I looked a few times, but apologies if this has already been answered. Thank-you!
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Is there anywhere in the spreadsheet that accounts for current cash savings in a bank account? I looked a few times, but apologies if this has already been answered. Thank-you!
Great question! Cash savings in a bank account are assumed to be the "emergency fund" and not part of "invested assets".
The comment for cell A174 is "Ignore cash. Calculations assume cash sits in an emergency fund, or otherwise serves as a buffer to dampen market fluctuations, so it can and should be ignored for withdrawal rate purposes." Not front and center, but it's in there.... ;)
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OK I went back and revisited the Social Security date arithmetic again.
I see the C102 fix to subtract 1 for English common law is in. That is good.
Really now you just need to revise these three cells slightly with the same fix (disregard my earlier post):
F115: =YEAR(EDATE($B$102-1,B115*12+C115))
F116: =YEAR(EDATE($B$102-1,B116*12+C116))
F117: =YEAR(EDATE($B$102-1,B117*12+C117))
Thanks, looks good and those are in the version I'm about to post. That version is primarily for the recent law changes, so I'll discuss the SS ones here.
I'd add some rounding to the month count as this should never be a fraction:
C115: =ROUND((B119-B115)*12,0)
True. The main use of the continuous nature of this cell was to generate a smoothed quadratic fit (see cells G119:I119 and the graph over cell AD107) for SS benefits vs. start date, with the idea of using that as part of some overall retirement planning optimizer. That idea bore some fruit, but nothing suitable for general use. And in the table generation for the curve fit the points are spaced "even twelfths" of a year apart so those are "integer months". I'll think about this one. One can specify year and month directly in row 117.
You really don't need to worry about the day you were born as all you care about are years, unless it is Jan 1 which is handled. For most people, they cannot retire at age 62. 62 plus 1 month is the earliest and 62 is an invalid entry (I wouldn't try to "fix" it). As you are not performing data validation, you get a slightly inaccurate result if you enter that combination. This is why the government examples all start at 62 + 1/12.
Most, but not all. E.g., footnote "a" on Maximum-taxable benefit examples (https://www.ssa.gov/oact/cola/examplemax.html) does have "Retirement at age 62 is assumed here to be at exact age 62 and 1 month," but Social Security Retirement Benefit Calculation (https://www.ssa.gov/oact/ProgData/retirebenefit2.html) has "We assume the worker in case A begins receiving benefits at the earliest possible age, which is age 62."
Again, thanks and good to know that two different tools get the same answer!
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Version 21.05 (2021)
2020- Just a note that the recent retroactive law changes are not, and likely will not be (anytime soon, at least), included in the 2020 version. At this point people should be using real tax software (not that all those commercial programs have themselves been updated, but that's another issue).
2021
Various changes for 2021 included in the American Rescue Plan Act:
- Child Tax Credit
- Third stimulus / 2021 Recovery Rebate Credit
- Unemployment benefits
- Child and Dependent Care Credit
- Earned Income Credit
- Affordable Care Act Premium Tax Credit
Child Tax Credit
- Include age 17 child for Child Tax Credit
- Include extra $1000 CTC for lower incomes (and $1600 for children under 6)
- Remove $1400 limit on refundable CTC
Third stimulus / 2021 Recovery Rebate Credit
- Provide a place to enter how much EIP#3 was received (cell Calculations!I31), as input to the 2021 Recovery Rebate Credit (RRC)
- Add phase-out incomes for RRC calculation, in case the maximum EIP#3 had not already been received
Unemployment benefits
- Add an input row (Calculations row 37) for unemployment benefits
- Limit household income to 133% of the federal poverty line for ACA purposes if unemployment income > 0
Child and dependent care credit
- Change this credit from non-refundable to refundable
- Increase the maximum credit amount
- Implement a new "fraction of expenses vs. income" table
- Implement a phase-out above $400K income
Earned Income Credit
- Change investment income cliff from $3650 to $10000
- Change minimum eligibility age to 19 if not a student, and 24 if a student
- Remove maximum age
- Change income break points and maximum credit for "no children" filers
Affordable Care Act Premium Tax Credit
- Extend eligibility for this credit to income above 400% of the federal poverty level
- Change the "fraction of income allowed for insurance premiums" table
In addition to the usual susceptibility of new releases to error, interpreting the language of the law itself (Text - H.R.1319 - 117th Congress (2021-2022): American Rescue Plan Act of 2021 | Congress.gov | Library of Congress (https://www.congress.gov/bill/117th-congress/house-bill/1319/text#toc-HB3932D87AB6840A6AE50E45116688CB1)) instead of relying on the IRS interpretation in forms and instructions adds another possible source of error.
In other words, if those of you with particular interest/expertise in specific parts of the new law cast a critical eye over this implementation and find deficiencies, that wouldn't be a total surprise. :) Reports of those, either here or via PM, will be appreciated (and useful to others when fixed).
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Version 21.06 (2021)
2021
- Child and Dependent Care Credit "smoothing"
Child and dependent care credit
Implemented a continuous approximation to the actual law. This allows the marginal rate chart for a family with
- Earner #2 wages = $25,100
- One dependent age 10, another age 5
- Dependent care cost = $16,000
to look like
(https://lh3.googleusercontent.com/d/1IWxyTpXRi5y1MJI8bzcfRnmNSDRsq3Uf)
instead of
(https://lh3.googleusercontent.com/d/11luQoLVccGa_bo-7b4R1gO6-wCLvneI2)
Those who prefer to see the discontinuous marginal rates of the tax code (for this and all other included features) in all their glory may change cell R80 from Y to N.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Version 21.07 (2021)
2021
- Improved the tax estimate in the "Time to FI" section
- Added EIP#3 default payment. Only those who did not receive the full $1400/person will need to override.
- Updated childcare pre-tax limit to $10,500 in Form 2441
- Provided an SEHI+PTC iteration capability
Thanks to MountainLakeMaka and Harry Sit for insights and suggestions on these updates.
SEHI+PTC iteration capability
The spreadsheet is now attempting to handle the iterative calculations when both Premium Tax Credits (PTC) and Self-Employed Health Insurance (SEHI) premiums are involved, at least for one Schedule C and one SEHI premium. For people with both self-employment income and Affordable Care Act coverage, determining the optimal amount of the SEHI deduction can be an iterative process. See pp. 57-75 of https://www.irs.gov/pub/irs-pdf/p974.pdf.
These calculations have been tested and appear to converge reliably over a wide range of conditions. To enable this capability,
- Enter the appropriate values in cells B114, B115, AD123 and AE100
- Enter the formula =AD159 in cell B48. This enables the iteration
- Entering a specific value, e.g., 0 (zero) in cell B48, or deleting the cell contents, will eliminate the iteration.
- Ensure the "Enable iterative calculation" box is checked in File > Options > Formulas if the iterations should be, but aren't, occurring.
Iteration requires significant extra calculation and decreases spreadsheet responsiveness. Useful if needed, but avoid it otherwise.
If many #Value, #DIVbyZero, etc., errors propagate, put a specific value in cell B48, fix the root cause, and re-enable iteration. If errors persist, reply or PM.
At least a couple of things are not clear:
- Whether the spreadsheet correctly implements the IRS iteration procedure. AFAIK there are no 2021 examples for comparison yet.
- Whether the IRS procedure always provides the most beneficial result for the taxpayer. I may start a separate thread for this specific issue, but meanwhile if anyone knows of 2021 examples for comparison, please reply or PM.
In general, suggestions/comments/corrections on the SEHI+PTC issue are welcome. Somewhat of a niche issue, but mathematically interesting and financially significant when it occurs.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Couple clarifying questions (sorry if these were already asked prior):
1) When specifying "Guess Time to FI" is the assumption that the "Gross Salary/Wages" (B3 and C3) won't change?
2) What would the right 'procedure' be to map out a cash-out refi where you're taking the cash-out and reinvesting in index funds but also drawing-down from it year over year to supplement your income/earnings (whether pre or post retirement)? I noticed boxes D26 and D27 but if you plug a number into those, it seems the spreadsheet assumes that those are going to be year-over-year numbers versus one-time...?
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Couple clarifying questions (sorry if these were already asked prior):
1) When specifying "Guess Time to FI" is the assumption that the "Gross Salary/Wages" (B3 and C3) won't change?
2) What would the right 'procedure' be to map out a cash-out refi where you're taking the cash-out and reinvesting in index funds but also drawing-down from it year over year to supplement your income/earnings (whether pre or post retirement)? I noticed boxes D26 and D27 but if you plug a number into those, it seems the spreadsheet assumes that those are going to be year-over-year numbers versus one-time...?
1) Yes. More precisely, that they won't change in real terms: inflation is ignored for all calculations.
2) Ignore it? Probably depends on how significant it is relative to your overall finances. You might need more sophisticated tools such as those described in Best and/or Recommended Retirement Calculator - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175) if fine details are needed. Note that the error band on assumed return rates usually dwarfs all other items....
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Couple clarifying questions (sorry if these were already asked prior):
1) When specifying "Guess Time to FI" is the assumption that the "Gross Salary/Wages" (B3 and C3) won't change?
2) What would the right 'procedure' be to map out a cash-out refi where you're taking the cash-out and reinvesting in index funds but also drawing-down from it year over year to supplement your income/earnings (whether pre or post retirement)? I noticed boxes D26 and D27 but if you plug a number into those, it seems the spreadsheet assumes that those are going to be year-over-year numbers versus one-time...?
1) Yes. More precisely, that they won't change in real terms: inflation is ignored for all calculations.
2) Ignore it? Probably depends on how significant it is relative to your overall finances. You might need more sophisticated tools such as those described in Best and/or Recommended Retirement Calculator - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175) if fine details are needed. Note that the error band on assumed return rates usually dwarfs all other items....
Ah okay thanks.
One other question/clarification: I'm having trouble understanding how a mortgage impacts the "Time to FI" section and particularly the "Projected Expenses in Retirement" - how/where does that all factor in or relate?
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One other question/clarification: I'm having trouble understanding how a mortgage impacts the "Time to FI" section and particularly the "Projected Expenses in Retirement" - how/where does that all factor in or relate?
The assumption is that the "Stash needed for retirement" is composed of two terms:
a) (Retirement expenses) / (Safe Withdrawal Ratio), plus
b) Loan balances
A further assumption is that if one has invested the loan balance, the return on those investments will be at least as high as the mortgage interest rate.
So the mortgage doesn't impact the expenses in retirement, because the payments
- do not increase with inflation, and
- usually end prior to the 30 years usually associated with "Safe Withdrawal Ratios".
Make sense?
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One other question/clarification: I'm having trouble understanding how a mortgage impacts the "Time to FI" section and particularly the "Projected Expenses in Retirement" - how/where does that all factor in or relate?
The assumption is that the "Stash needed for retirement" is composed of two terms:
a) (Retirement expenses) / (Safe Withdrawal Ratio), plus
b) Loan balances
A further assumption is that if one has invested the loan balance, the return on those investments will be at least as high as the mortgage interest rate.
So the mortgage doesn't impact the expenses in retirement, because the payments
- do not increase with inflation, and
- usually end prior to the 30 years usually associated with "Safe Withdrawal Ratios".
Make sense?
Stupid me... I overlooked plugging in the number to "Current Principal" which was throwing things off. Haha. I think I have a better understanding now...
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Hi.
I'm using V20.13 (3/3/2021) of the 2020 CSS. If that's not the latest, could someone point me to it?
I'm having trouble with my
1040 Total Income (cell D42)
1040 AGI (cell D52)
Taxable (cell G16)
all being "off" (over in the CSS) by the amount of my Qualified Dividends. Basically, the CSS seems to be including them where the tax return I'm entering them from has them excluded.
thanks in advance....
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Hi.
I'm using V20.13 (3/3/2021) of the 2020 CSS. If that's not the latest, could someone point me to it?
I'm having trouble with my
1040 Total Income (cell D42)
1040 AGI (cell D52)
Taxable (cell G16)
all being "off" (over in the CSS) by the amount of my Qualified Dividends. Basically, the CSS seems to be including them where the tax return I'm entering them from has them excluded.
thanks in advance....
If your 1099-DIV has $1000 in box 1a (Total ordinary dividends) and $925 in box 1b (Qualified dividends) the spreadsheet entries would be
Cell D23: $75
Cell D25: $925
Does that make sense?
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If your 1099-DIV has $1000 in box 1a (Total ordinary dividends) and $925 in box 1b (Qualified dividends) the spreadsheet entries would be
Cell D23: $75
Cell D25: $925
Does that make sense?
Thanks. That got me fixed up. I see the comment now that asks for "non-qualified dividends" as opposed to "total ordinary dividends".... I'm just used to entering the latter into tax software since that's what's reported in Box 1a.
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One question about the 'Safe Withdrawal Rate', Cell B168. When I increase that value from 4% to say 6%, the value for 'Stash needed for retirement' in cell B194 decreases. Shouldn't that number go up if I'm increasing the withdrawal rate?
Very possible I hosed something up, or misunderstanding how this works.
Appreciate the work put into this spreadsheet, great tool, Thanks!
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One question about the 'Safe Withdrawal Rate', Cell B168. When I increase that value from 4% to say 6%, the value for 'Stash needed for retirement' in cell B194 decreases. Shouldn't that number go up if I'm increasing the withdrawal rate?
Very possible I hosed something up, or misunderstanding how this works.
Appreciate the work put into this spreadsheet, great tool, Thanks!
See Safe withdrawal rates (https://www.bogleheads.org/wiki/Safe_withdrawal_rates) (SWR) for details, but in short the equation is "Spending = SWR * Stash", or "Stash = Spending / SWR". As your estimate of SWR goes up, the required stash goes down.
Of course, the "S" part of the acronym is known only in hindsight....
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See Safe withdrawal rates (https://www.bogleheads.org/wiki/Safe_withdrawal_rates) (SWR) for details, but in short the equation is "Spending = SWR * Stash", or "Stash = Spending / SWR". As your estimate of SWR goes up, the required stash goes down.
Of course, the "S" part of the acronym is known only in hindsight....
Ah, makes sense now. Thanks for the clarification!
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Version 21.08 (2021)
2021
- Allow refundable dependent care credit for lower incomes
- Added cell B6 (Daycare FSA) as an allowable x-axis variable for the marginal rate chart
SEHI+PTC iteration capability update
"Worksheet Y" has been added, but none of its calculations are currently used. With the elimination of the >400% FPL cliff, the IRS will be changing some things in this area. If anyone is interested in collaborating on more work in this area, let me know (reply here or PM). Otherwise, the fact that iteration converges reliably(?) for at least "straightforward" situations may be good enough for estimation purposes....
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Kind of an off-topic but related question here but what is your guys' general opinion of the "Have $XXXXX extra" amount and what you *prefer* that number to be in order to feel comfortable about RE?
Was also wondering about the state abbreviation in H32 - I tried entering "CA" and it doesn't seem to be able to recognize it - EDIT: nm, I entered a couple other states and it eventually populated.
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Version 21.09 (2021)
- Added entry for advance Child Tax Credit payments
- Updated line number references to some IRS forms
- Excluded pensions from Illinois state tax
- Added some options to the "Traditional assets needed to reach..." tables
- Added some options to allow more "exact estimates," e.g., number of blind filers, use of 2019 earned income, etc.
- Miscellaneous edits to some cell descriptions and comments
- Added "marginal tax rate cost of selling equities" to the "Roth vs. Traditional when contributing the maximum allowed" calculation in the 'Misc. calcs' tab
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
"Enter the amount of Child Tax Credit already received"
Should this be the amount expected to be received? Specifically for purposes of trying to estimate my tax return. I will get $3300 advance CTC this year so should I just deduct this amount from the expected return amount?
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"Enter the amount of Child Tax Credit already received"
Should this be the amount expected to be received? Specifically for purposes of trying to estimate my tax return. I will get $3300 advance CTC this year so should I just deduct this amount from the expected return amount?
Yes, that's it for the CTC.
For the purpose of estimating the refund or amount owed when filing, one also needs to account for withholding and estimated tax payments. See cells I70 and I71, and the rest of the "Form W-4" section for that.
In general I'd suggest calculating the tax liability and then adjusting W-4s as needed to owe ~$0 when filing, but individual circumstances can vary.
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See How do RMDs affect Roth conversion choices? (https://forum.mrmoneymustache.com/investor-alley/how-do-rmds-affect-roth-conversion-choices/new/#new) for some work to address that question. Seems it ought to be a relatively straightforward calculation but something isn't adding up. If you have some spreadsheet ability (or can do the analysis in any programming language) your input would be appreciated.
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There are Qualified Charitable Distributions (QCDs) but that's a different topic.
Do we just subtract QCDs from box 31D or do they go elsewhere?
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There are Qualified Charitable Distributions (QCDs) but that's a different topic.
Do we just subtract QCDs from box 31D...?
Yes, exactly that!
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Hello and thank you for creating this spreadsheet, it is fantastic. Unless I'm doing something wrong, I see one error: it seems that you have unemployment income taxable on the California state taxes. UI is not taxable in CA - it is taken as a deduction on column B of the CA adjustments section of Schedule 540. If I am correct here, is this something you can fix? Thank you.
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Hello and thank you for creating this spreadsheet, it is fantastic. Unless I'm doing something wrong, I see one error: it seems that you have unemployment income taxable on the California state taxes. UI is not taxable in CA - it is taken as a deduction on column B of the CA adjustments section of Schedule 540. If I am correct here, is this something you can fix? Thank you.
That's not an error, it's a missing feature. ;)
Without committing to incorporate all of the CA state tax code, that one seems simple enough to go in the next release. Meanwhile, you could try the following to see if it gives the desired results:
- put =Calculations!D37 into 'State Tax'!E14
- put =-E14 into 'State Tax'!P27
Does that work?
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That highlighted the feature (or fixed the bug, tomato tomahto :)) perfectly! Thank you very much.
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That highlighted the feature (or fixed the bug, tomato tomahto :)) perfectly! Thank you very much.
Thanks for the feedback!
State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/) has other examples of state tax details that have (and have not) been added over time.
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Hi MDM. Thanks so much for putting so much effort into this spreadsheet - it looks great.
I would like to use it to estimate my taxes for 2021, but I'm a little confused about if I need to do something for RSUs. I'm a little bit of a newbie to doing my own taxes, but it appears that RSUs are reported as regular income. So it would seem that I don't need to do anything special when filling out this spreadsheet, other than making sure that I'm reporting everything as it would show up on my W-2. Does that sound right? Is there anything that I need to consider for the Box 12 Code V, " Income from exercise of non-statutory stock option(s)"? I just wasn't sure if there was some threshold that triggered something that I didn't consider.
Thank you.
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So it would seem that I don't need to do anything special when filling out this spreadsheet, other than making sure that I'm reporting everything as it would show up on my W-2. Does that sound right?
Yes.
Is there anything that I need to consider for the Box 12 Code V, " Income from exercise of non-statutory stock option(s)"?
Not for the purposes of the spreadsheet. That amount will already be included in your W-2 Box 1, so as far as the W-2 is concerned it's only for informational purposes.
But when you do your actual tax return, be sure to include that amount in the basis when you report the sale of those shares. See http://www.ashmeadcpa.com/uploads/1/2/7/7/12773217/stock_options_-_same_day_sales.pdf and Your 1099-B form for an ESPP sale will probably be wrong (https://forum.mrmoneymustache.com/investor-alley/your-1099-b-form-for-an-espp-sale-will-probably-be-wrong/msg464676/#msg464676) for more on that.
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@MDM I am so thankful you took the time to create Version 21.09 (2021). Thank you so much!
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@MDM this spreadsheet is great. Some users may have already mentioned the fact that functionality is limited within Google Sheets. The Tax Rate vs. tIRA Withdrawal graph is an example that I just bumped into. The source data appears to use a formula that isn't supported within Google Sheets.
I opened this up in the web version of Excel, but couldn't look much deeper because the web version doesn't let you unlock sheets. So all I see is that the source data for that graph (cells Q84:R584) all contain the "formula" {=TABLE(,D31)} which maybe is indicating that there's some even more advanced setup going on here since TABLE isn't even listed in the Excel function list I looked up.
I'm sure you're already aware that this spreadsheet is linked on the Bogleheads wiki (https://www.bogleheads.org/wiki/Tools_and_calculators#Personal_finance_toolbox). They do note that works best in Excel, but it's hosted on Google, so it gives options to open in Google Sheets. I wouldn't be surprised if others have opened it in Google Sheets as I had hoping it'd work quite well (and in fact, a lot does seem to work well).
I'd love to help in whatever way I can to make this more compatible with Google Sheets if you're open to it. If not, is there any insight you could share as to the functionality of the cells for that graph so I may be able to recreate something personally that works similarly to this?
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@MDM this spreadsheet is great. Some users may have already mentioned the fact that functionality is limited within Google Sheets. The Tax Rate vs. tIRA Withdrawal graph is an example that I just bumped into. The source data appears to use a formula that isn't supported within Google Sheets.
I opened this up in the web version of Excel, but couldn't look much deeper because the web version doesn't let you unlock sheets. So all I see is that the source data for that graph (cells Q84:R584) all contain the "formula" {=TABLE(,D31)} which maybe is indicating that there's some even more advanced setup going on here since TABLE isn't even listed in the Excel function list I looked up.
I'm sure you're already aware that this spreadsheet is linked on the Bogleheads wiki (https://www.bogleheads.org/wiki/Tools_and_calculators#Personal_finance_toolbox). They do note that works best in Excel, but it's hosted on Google, so it gives options to open in Google Sheets. I wouldn't be surprised if others have opened it in Google Sheets as I had hoping it'd work quite well (and in fact, a lot does seem to work well).
I'd love to help in whatever way I can to make this more compatible with Google Sheets if you're open to it. If not, is there any insight you could share as to the functionality of the cells for that graph so I may be able to recreate something personally that works similarly to this?
TABLE is probably a named range, not a function. I'd be surprised if Google Sheets didn't support named ranges, though, so I sort of doubt that's the compatibility problem.
I think the curly braces make it a matrix function, but it's been a while since I've had to do advanced Excel stuff.
I'd also offer to make it compatible with LibreOffice, but I think my lazy workaround is going to be to go to my local public library where I can use Official (tm) Excel.
And I think it's a great resource and am very appreciative to @MDM and anyone else who has contributed to it.
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I'd love to help in whatever way I can to make this more compatible with Google Sheets if you're open to it.
I'd also offer to make it compatible with LibreOffice....
Happy to take whatever help either of you could provide. Any Google Sheets knowledge? (https://forum.mrmoneymustache.com/ask-a-mustachian/any-google-sheets-knowledge/) and Any LibreOffice Calc knowledge? (https://forum.mrmoneymustache.com/ask-a-mustachian/any-libreoffice-calc-knowledge-86335/) didn't pan out, but that was a few years ago, so...?
Calculate multiple results by using a data table (https://support.microsoft.com/en-us/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) is one source that describes what the Excel "Table" function does.
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@MDM, thank you so much for creating and updating these sheets! I depend on them every year. Do you have an estimate roll out for the 2022 sheet?
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@MDM, thank you so much for creating and updating these sheets! I depend on them every year. Do you have an estimate roll out for the 2022 sheet?
I was just thinking about this question yesterday. :)
Given all the uncertainty regarding which "only for 2021" tax changes would be extended to 2022, and that some 2021 things still aren't finalized, I'll probably wait until it appears the dust is settling in January. Of course, Congress can change things whenever Congress wants to change things so...? Best guess for the 2022 version at this point is "mid-January 2022" but if Congress is still embroiled in tax code debate, then...?
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I imagine that this is my error. I am plugging in various Roth Conversion amounts and when I go from ~$60K AGI to ~$70K AGI, my Excess APTC tax jumps from $2700 to $20,112. Can you suggest what I might be doing wrong? This would be reasonable last year with the ACA Cliff, but shouldn't jump this year. I am using V21.09 version of the spreadsheet. TIA.
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I imagine that this is my error. I am plugging in various Roth Conversion amounts and when I go from ~$60K AGI to ~$70K AGI, my Excess APTC tax jumps from $2700 to $20,112. Can you suggest what I might be doing wrong? This would be reasonable last year with the ACA Cliff, but shouldn't jump this year. I am using V21.09 version of the spreadsheet. TIA.
You might check Harry Sit's excellent article, Roth Conversion and Capital Gains On ACA Health Insurance (https://thefinancebuff.com/tax-calculator-aca-obamacare-subsidy.html), that does a walk-through of the common inputs.
If that doesn't help, and comparing the Form 8962 section that starts in cell AC88 to how you would fill the 2021 version of 8962 (see https://www.irs.gov/pub/irs-dft/f8962--dft.pdf and https://www.irs.gov/pub/irs-dft/i8962--dft.pdf) doesn't shed any light, you could save a copy of your file to a google drive, dropbox, etc., and PM a link to me.
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Thanks. I missed an entry for SLCSP. All is good now.
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This is a great tool. Many thanks for doing this MDM.
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MDM,
I cannot thank you enough for this phenomenal spreadsheet. I know that an incredible amount of (ongoing) work goes into building it, and I found it invaluable in forecasting and trying "what-if" scenarios for this year's taxes. Thank you so much!
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Quick question: I am using your Version 21.09 and cannot find where self-employment taxes are added to total tax. I am referring to Form 1040, Line 23 "Other taxes, including self-employment tax, from Schedule 2, line 21".
I see SE tax calculated in cell D66. I see Form 1040 Line 16-1040 Tax (cell G17) and "Tax after n-r credit" (cell G25) and Net tax (cell G33). But I don't see my SE tax added into the Net Tax. Would you please help? Thanks!
That's a good point, and I've more or less been waiting for someone to ask about that before fixing it. So now that you have, .... :)
The CSS pays some attention to the Form 1040 structure, but ignores things such as amounts withheld (except in the W-4 suggestion section starting in F57) that go into the refund or amount owed when filing. The SE tax is included if one plots "Total" taxes in the marginal rate chart starting in cell F82, but it wouldn't hurt to add it to G33 also.
For a temporary fix (who knows? This might be how the "permanent" fix is implemented) you could change the formulas in the cells below:
G33: =G25+G26+G27-G28-G29-G30-G31-G32-G21+D66
D67: =SUM(D60:D65)
T45: =D63+D64 (in other words, delete +D66)
I69: =D63 (in other words, delete +D66)
C66: =IF($R$80="Y",... (in other words, just change "S80" to "$R$80" and keep the rest of that formula intact)
That should not affect the "Total tax marginal rate" curves but should give you a better G33 result. Please let me know how it goes if you try it.
Calculations when there is more than one Schedule C in a return, whether that is multiple distinct businesses for one person or spouses each with a business, can get complicated (or at least I perceive they can get complicated). There are differences in how cell B30 influences other cells vs. how C30 influences other cells. Those differences may be sufficient for some situations with two Schedules C, but perhaps not all. Anyone dealing with those complications in real life should probably use an accountant specializing in small business tax rather than use the CSS, but I'm open to incremental suggestions in that area.
Thanks and good luck!
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Quick question: I am using your Version 21.09 and cannot find where self-employment taxes are added to total tax. I am referring to Form 1040, Line 23 "Other taxes, including self-employment tax, from Schedule 2, line 21".
I see SE tax calculated in cell D66. I see Form 1040 Line 16-1040 Tax (cell G17) and "Tax after n-r credit" (cell G25) and Net tax (cell G33). But I don't see my SE tax added into the Net Tax. Would you please help? Thanks!
That's a good point, and I've more or less been waiting for someone to ask about that before fixing it. So now that you have, .... :)
The CSS pays some attention to the Form 1040 structure, but ignores things such as amounts withheld (except in the W-4 suggestion section starting in F57) that go into the refund or amount owed when filing. The SE tax is included if one plots "Total" taxes in the marginal rate chart starting in cell F82, but it wouldn't hurt to add it to G33 also.
For a temporary fix (who knows? This might be how the "permanent" fix is implemented) you could change the formulas in the cells below:
G33: =G25+G26+G27-G28-G29-G30-G31-G32-G21+D66
D67: =SUM(D60:D65)
T45: =D63+D64 (in other words, delete +D66)
I69: =D63 (in other words, delete +D66)
C66: =IF($R$80="Y",... (in other words, just change "S80" to "$R$80" and keep the rest of that formula intact)
That should not affect the "Total tax marginal rate" curves but should give you a better G33 result. Please let me know how it goes if you try it.
Calculations when there is more than one Schedule C in a return, whether that is multiple distinct businesses for one person or spouses each with a business, can get complicated (or at least I perceive they can get complicated). There are differences in how cell B30 influences other cells vs. how C30 influences other cells. Those differences may be sufficient for some situations with two Schedules C, but perhaps not all. Anyone dealing with those complications in real life should probably use an accountant specializing in small business tax rather than use the CSS, but I'm open to incremental suggestions in that area.
Thanks and good luck!
Oh, wow, and see, I just now deleted my question because I thought I finally figured out that "final tax' is down in D67, (not G33). Thank you for the detailed options to correct. I'll be about it, now and get back to you.
Two more questions while I have you here:
1) Is the correct way (in your spreadsheet) to enter $300 in contributions (for a Form 1040 Line 12b deduction), to enter $25 in cell B86?
2) I earn some wages as an election/poll worker that are not subject to Social Security and Medicare (FICA) Withholding (https://www.irs.gov/government-entities/federal-state-local-governments/election-workers-reporting-and-withholding). I found that putting them in cell B3 doesn't work (even though they are Box 1 wages on a W-2). Should I put those in cell D40? (That's what I did.)
Thanks, again, for all the help! You are a godsend.
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By the way, welcome to the forum mangorunner.
1) Is the correct way (in your spreadsheet) to enter $300 in contributions (for a Form 1040 Line 12b deduction), to enter $25 in cell B86?
2) I earn some wages as an election/poll worker that are not subject to Social Security and Medicare (FICA) Withholding (https://www.irs.gov/government-entities/federal-state-local-governments/election-workers-reporting-and-withholding). I found that putting them in cell B3 doesn't work (even though they are Box 1 wages on a W-2). Should I put those in cell D40?
1) Yes
2) Yes, that will work. Poll worker wages are an odd thing tax-wise. They aren't subject to FICA but they do count as earned income for the earned income credit and can be used to justify IRA contributions. If the earned income credit is of interest, doing odd things in the spreadsheet such as entering the poll worker wages as a negative number in cell B13 will work. Otherwise just do what you did. :)
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By the way, welcome to the forum mangorunner.
1) Is the correct way (in your spreadsheet) to enter $300 in contributions (for a Form 1040 Line 12b deduction), to enter $25 in cell B86?
2) I earn some wages as an election/poll worker that are not subject to Social Security and Medicare (FICA) Withholding (https://www.irs.gov/government-entities/federal-state-local-governments/election-workers-reporting-and-withholding). I found that putting them in cell B3 doesn't work (even though they are Box 1 wages on a W-2). Should I put those in cell D40?
1) Yes
2) Yes, that will work. Poll worker wages are an odd thing tax-wise. They aren't subject to FICA but they do count as earned income for the earned income credit and can be used to justify IRA contributions. If the earned income credit is of interest, doing odd things in the spreadsheet such as entering the poll worker wages as a negative number in cell B13 will work. Otherwise just do what you did. :)
Thanks for the welcome to the forum (I'm a long-time lurker!) and your confirmation on those last two questions.
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Quick question: I am using your Version 21.09 and cannot find where self-employment taxes are added to total tax. I am referring to Form 1040, Line 23 "Other taxes, including self-employment tax, from Schedule 2, line 21".
I see SE tax calculated in cell D66. I see Form 1040 Line 16-1040 Tax (cell G17) and "Tax after n-r credit" (cell G25) and Net tax (cell G33). But I don't see my SE tax added into the Net Tax. Would you please help? Thanks!
That's a good point, and I've more or less been waiting for someone to ask about that before fixing it. So now that you have, .... :)
The CSS pays some attention to the Form 1040 structure, but ignores things such as amounts withheld (except in the W-4 suggestion section starting in F57) that go into the refund or amount owed when filing. The SE tax is included if one plots "Total" taxes in the marginal rate chart starting in cell F82, but it wouldn't hurt to add it to G33 also.
For a temporary fix (who knows? This might be how the "permanent" fix is implemented) you could change the formulas in the cells below:
G33: =G25+G26+G27-G28-G29-G30-G31-G32-G21+D66
D67: =SUM(D60:D65)
T45: =D63+D64 (in other words, delete +D66)
I69: =D63 (in other words, delete +D66)
C66: =IF($R$80="Y",... (in other words, just change "S80" to "$R$80" and keep the rest of that formula intact)
I'm pretty good at Excel (not nearly as good as you, though) and I understand your formula changes. However, I got tremendous use out of your spreadsheet and everything I needed, so I decided not to change any of your formulas. Your CSS allowed me to pinpoint my Roth IRA conversion down to the last cent, so thank you very much. You are my hero.
(It may be worth noting that in the last line of your instructions, above, I think you mean B66 rather than C66?)
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I'm pretty good at Excel (not nearly as good as you, though) and I understand your formula changes. However, I got tremendous use out of your spreadsheet and everything I needed, so I decided not to change any of your formulas. Your CSS allowed me to pinpoint my Roth IRA conversion down to the last cent, so thank you very much. You are my hero.
You are welcome!
(It may be worth noting that in the last line of your instructions, above, I think you mean B66 rather than C66?)
Ha! That's what comes from having accumulated a bunch of changes while waiting for Congress and the IRS to make up their minds about 2022 and even 2021 tax laws. The formula in C66 should be identical to what is in B66, just referencing different columns - except for the first "if" test that should reference the same cell. Version 21.10 (in development, not yet released, and what I was looking at to address your question) includes some changes to address the "multiple Schedules C" issue mentioned earlier, and had all the C66 calculations correct but the first "if" test incorrect. Would I have caught that when going through normal "new release due diligence" without looking at the changes your question prompted? Don't know but thanks for the prompt!
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Aw, that's fantastic! I'm glad you got something good out of it, too! :)
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Version 21.10 (2021)
- Updated Social Security average wage index and maximum earnings for another year.
- Miscellaneous labeling changes (e.g., to conform to line numbers on newly-released IRS forms)
- Excluded unemployment from California state tax
- Implemented the new Child Tax Credit form 8812 for US residents
- Allowed more (but not complete) flexibility for Schedule C incomes for spouses
- Treat self-employment tax as "federal" instead of "payroll"
- Reordered credits to match new Form 1040 ordering better
- Keep endpoint constant on the marginal rate chart as the initial point changes
Although the IRS hasn't released all the 2021 forms and publications (in particular, Publication 974, Premium Tax Credit (https://www.irs.gov/forms-pubs/about-publication-974) that I'd like to use for checking the iterative Self-Employed Health Insurance plus Affordable Care Act calculations), there don't appear to have been any significant changes needed in tax calculations from the previous version. This release cleans up a few things (see above) and will make the next one (whether for 2021 or 2022) that much less of a chore to check for unintended changes.
Most of the bulleted points should be straightforward enough (if not, just ask here or via PM), but "Keep endpoint constant on the marginal rate chart as the initial point changes" probably deserves explanation. Cell Calculations!P83 is the increment used for the marginal rate chart's X axis, and Calculations!P84 is the starting value for the X axis variable. If one wants to look at a larger range for the X axis variable, just increase the P83 value. But if one wants to keep the same ending X variable value while changing the starting value, the formula in P83 (=220-P84/500) does that. In other words, if P84 is changed from the default of zero, the increment will decrease to keep the same ending value. The "500" comes from there being 500 points on the chart. If one wants to keep this functionality but wants to change the ending value, edit cell P83 and change "220" to whatever increment gives the desired result. If one forgets there is an equation in P83 and simply enters a number, things will still work the same way they have in previous versions.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;) - click the "Download" icon.
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Hey @MDM, do you have any update on when the 2022 version will be launched? Debating just adapting my old 2021 version to include confirmed 2022 changes (e.g. 401k limit increase), but figure I’ll probably miss something. Happy to use any draft version you may have! Thank you again for this incredible tool.
-
Hey @MDM, do you have any update on when the 2022 version will be launched? Debating just adapting my old 2021 version to include confirmed 2022 changes (e.g. 401k limit increase), but figure I’ll probably miss something. Happy to use any draft version you may have! Thank you again for this incredible tool.
I had hoped there would be more clarity out of Congress on which of the significant "2021 only" (e.g., Child Tax Credit, Child/Dependent Care Credit, etc.) tax law changes would in fact be made permanent (or at least extended) through 2022. But the political gameplaying continues, with no such clarity in evidence....
I suppose if they are still posturing instead of legislating by February I'll bite the bullet and release a "subject to change..." version.
-
Okay thanks for the update! Will stay tuned.
-
Hey MDM, I love this spreadsheet. One discrepancy that I'm seeing in the calculation for schedule 8812. The Line 5 calculation, according to the IRS website (https://www.irs.gov/instructions/i1040s8#en_US_2021_publink100077560) is giving me a $29 dollar difference from your spreadsheet. It's not a huge difference but I'm just trying to understand why. Unfortunately I can't really follow the cell calculation well enough to figure out the difference.
-
Hey MDM, I love this spreadsheet. One discrepancy that I'm seeing in the calculation for schedule 8812. The Line 5 calculation, according to the IRS website (https://www.irs.gov/instructions/i1040s8#en_US_2021_publink100077560) is giving me a $29 dollar difference from your spreadsheet. It's not a huge difference but I'm just trying to understand why. Unfortunately I can't really follow the cell calculation well enough to figure out the difference.
If you could PM me (or post here) your inputs, I'd be happy to take a look.
-
Hey MDM, I love this spreadsheet. One discrepancy that I'm seeing in the calculation for schedule 8812. The Line 5 calculation, according to the IRS website (https://www.irs.gov/instructions/i1040s8#en_US_2021_publink100077560) is giving me a $29 dollar difference from your spreadsheet. It's not a huge difference but I'm just trying to understand why. Unfortunately I can't really follow the cell calculation well enough to figure out the difference.
If you could PM me (or post here) your inputs, I'd be happy to take a look.
Thanks, I appreciate you taking a look. Here is the info for inputs:
Schedule 8812, Part 1-A
Line 1: 189430
Line 4a: 2
Line 4b: 2
Line 13: A checked, B unchecked
Schedule 8812, Part 1-B
Line f: 3600
Please let me know if that's all of the info that you need.
According to my calculations, for Part 1-A, Line 5, I get a result of $5200, while the Case Study spreadsheet gets $5229.
Thanks!
-
Hey MDM, I love this spreadsheet. One discrepancy that I'm seeing in the calculation for schedule 8812. The Line 5 calculation, according to the IRS website (https://www.irs.gov/instructions/i1040s8#en_US_2021_publink100077560) is giving me a $29 dollar difference from your spreadsheet. It's not a huge difference but I'm just trying to understand why. Unfortunately I can't really follow the cell calculation well enough to figure out the difference.
If you could PM me (or post here) your inputs, I'd be happy to take a look.
Thanks, I appreciate you taking a look. Here is the info for inputs:
Schedule 8812, Part 1-A
Line 1: 189430
Line 4a: 2
Line 4b: 2
Line 13: A checked, B unchecked
Schedule 8812, Part 1-B
Line f: 3600
Please let me know if that's all of the info that you need.
According to my calculations, for Part 1-A, Line 5, I get a result of $5200, while the Case Study spreadsheet gets $5229.
Thanks!
Assuming you're MFJ and Schedule 8812 line 3 is the same as line 1 (which are both probable), then my results basically match the CSS (depending on rounding). My Line 5 worksheet results are:
1 7200
2 0
3 7200
4 4000
5 3200
6 12500
7 3200
8 150000
9 39430
10 1971.5
11 1971.5
12 5228.5
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Thanks for the question. It is a great example of "it depends what you want to see," and cell Calculations!R80 controls that.
In case anyone else wants to look, putting 189430 in cell B3, and 2 in cells G2 through G7 will reproduce john6221's question.
If you change cell R80 from "Y" to "N", you should see the correct result of $5200. But then look at the marginal rate chart and all those spikes for the first ~$24K of tIRA withdrawals/conversions.
The note for cell R80 is "Use Y for a "clean" graph (at left) and continuous derivatives. Anything else (e.g., N) will use actual tax calculations that can have discontinuous derivatives."
The default is "Y" because the clean marginal rate chart seems, in general, the more useful output. But if one wants to see exactly what the tax code does, "N" will do that.
-
All makes sense to me now. Thank you for the clarification!
Sent from my iPhone using Tapatalk
-
Version 21.10 (2021)
Version 22.00 (2022)
- Minor cleanup in the 2021 version
- Introduction of the 2022 version
The 2021 version appears to match all the TaxSlayer (several of the Tax-Aide Workbook exercises) and TurboTax (our own return) comparisons I've done, so that's good.
The 2022 version, as previous posts have mentioned, has to be considered "subject to change as Congress does whatever Congress will do" this year. That's always true, but perhaps more so this year than most. We'll see....
To prepare for changes, all of the inflation-indexed numbers (and some of the tax law affected ones) are gathered in the 'Tax Code' sheet. The corresponding HLOOKUPs needed to bring those to the 'Calculations' sheet may be slowing calculations a bit so this strategy may or may not persist.
If it is working as designed, setting cell Calculation!R2 to 2021 should provide the same results in the 2022 version for 2021 taxes as the 2021 version calculates. Of course, setting that cell to 2022 would be the usual mode for the 2022 version.
Still haven't seen a 2021 Pub. 974, so I'm not 100% sure the CSS can be used to get an accurate-to-the-dollar answer to the iterative calculations needed when one has both self-employed health insurance (SEHI) and premium tax credits (PTC) with an Affordable Care Act policy - at least if one's tax situation is covered by the CSS - but it is looking good.
Another task it may be able to do - although it will take a little jury-rigging - is determine the amount of unrestricted scholarship money that should be declared as income in order to increase the American Opportunity Tax Credit and have a net tax saving.
More on both the SEHI/PTC iteration and the education credit hacking in future versions.
As always (and particularly after major changes such the 2022 version), comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
2022 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Hurray for 2022!
Is there a way built-in to enter the energy-efficiency credit? I'm expecting to probably owe negative income tax to the extent we get a PTC for 2022, in large part due to the tax credit on our new solar panels they turned on earlier this month.
Off the bat, I think I could just write over the foreign tax credit in G21?
-
Off the bat, I think I could just write over the foreign tax credit in G21?
That would work perfectly if you have no other non-refundable credits (see https://www.irs.gov/pub/irs-pdf/f1040s3.pdf). There is a hierarchy to those credits in that the ones further down the list on Schedule 3 become worthless if the ones higher on the list have taken tax liability to zero.
Coding a full Schedule 3 with all the hierarchical limits is a bit more than I've contemplated, but maybe a catch-all "line 5 and below" item would suffice....
-
Off the bat, I think I could just write over the foreign tax credit in G21?
That would work perfectly if you have no other non-refundable credits (see https://www.irs.gov/pub/irs-pdf/f1040s3.pdf). There is a hierarchy to those credits in that the ones further down the list on Schedule 3 become worthless if the ones higher on the list have taken tax liability to zero.
Coding a full Schedule 3 with all the hierarchical limits is a bit more than I've contemplated, but maybe a catch-all "line 5 and below" item would suffice....
Knocking on all the wood - I think 2021 was the last year to feature the Lifetime Learning Credit for a good while. Wife should graduate this at the end of April, which we paid for before year end (knocking on wood again).
Reading through all that and looking at the most relevant form to me - I don't think I'd attempt to get this into the spreadsheet either. One of the reasons I pulled the trigger on the panels finally is this tax credit is going to not only offset our entire tax bill this year, the carryforward is likely to offset a good chunk or all of next year too. Even more so if they somehow get something through congress that bumps 26% to 30%.
-
This is probably a tax ignorance problem rather than a spreadsheet problem, but I was surprised that my backdoor Roth contribution increased the taxes due. For "tIRA distribution (converted to Roth or not)" in Calculations cell D31, I put 12000 total Annual. I also filled in the sheet for form 8606, not sure whether that feeds into the Calculations tab or is totally separate. For 8606, I have this: (we did the contribution and the conversion in 2021)
Year: 2021
31-Dec-2020 tIRA basis (after-tax amount in all tIRAs) 0
Contributions made for this tax year in this calendar year
Pre-tax 0
Post-tax 12000
Distributions made in this calendar year
Not converted to Roth 0
Converted to Roth 12000
31-Dec tIRA balance 0
End result was to increase my Net Tax by $4440. Fair warning, I am using the spreadsheet in Google sheets so I understand macros might be broken e.g. the total tax rate chart update button.
-
This is probably a tax ignorance problem rather than a spreadsheet problem, but I was surprised that my backdoor Roth contribution increased the taxes due. For "tIRA distribution (converted to Roth or not)" in Calculations cell D31, I put 12000 total Annual. I also filled in the sheet for form 8606, not sure whether that feeds into the Calculations tab or is totally separate. For 8606, I have this: (we did the contribution and the conversion in 2021)
Year: 2021
31-Dec-2020 tIRA basis (after-tax amount in all tIRAs) 0
Contributions made for this tax year in this calendar year
Pre-tax 0
Post-tax 12000
Distributions made in this calendar year
Not converted to Roth 0
Converted to Roth 12000
31-Dec tIRA balance 0
End result was to increase my Net Tax by $4440. Fair warning, I am using the spreadsheet in Google sheets so I understand macros might be broken e.g. the total tax rate chart update button.
Thanks, good feedback for how one could interpret that line.
Based on that, the note in cell A31 will read "Use this for any taxable traditional withdrawal from an IRA, 401k, etc., whether converted to Roth or not. This does not include the non-taxable amounts from a backdoor Roth process. Use line 55, Roth IRA, for those amounts" when a new version is released.
The Form8606 sheet is completely separate from the Calculations sheet.
-
Version 22.01 (2022)
- Updated the Social Security benefit examples to use the latest ones from the SSA. No change in the calculations, which do match the examples exactly.
- Added an input cell for the non-refundable credits that appears on Schedule 3 lines 5 and 6.
- Added the ability to find the exact maximum Self-Employed Health Insurance amount when the Affordable Care Act Premium Tax Credit is also present.
- Added Long Term Care (LTC) insurance amounts to itemized medical deductions. Haven't added the age-dependent test on the maximum LTC premiums that may be used - probably won't bother unless/until someone has a particular need for this.
- Added the ability to determine the optimum amount of unrestricted college scholarship funds to include as income.
- Updated state tax brackets and rates - thanks once again to the Tax Foundation (https://taxfoundation.org/publications/state-individual-income-tax-rates-and-brackets/) who publishes this summary.
- Updated comments in some cells to give better directions.
Thanks to dandarc and Mrs Brightside for their suggestions that have been incorporated in this version. So far no errors have surfaced, so this release is all new functionality and documentation.
As a reminder, setting cell Calculation!R2 to 2021 should provide the same results in the 2022 version for 2021 taxes as the 2021 version calculates. One could do that to check whether this tool gives a "close enough" 2021 calculation when compared with your commercial tax software of choice. If so, there is a good chance it will provide (to the extent income is predicted correctly) a good estimate of 2022 tax liability when R2 = 2022.
Here's the "More on both the SEHI/PTC iteration and the education credit hacking in future versions" mentioned in the last update.
------------------------------
I'll use Harry Sit's 2021 Self-Employed ACA Health Insurance Deduction In TurboTax (https://thefinancebuff.com/self-employed-health-insurance-aca-taxes.html) article for an SEHI/PTC example.
- Set cell B30 = 45000, B114 = 500, B115 = -150, AE100 = 7200, G2 =1, G9 = 35, R2 = 2021, and R80 = N. Those should match the income and ACA values.
- To have the CSS do the iterative SEHI/PTC calculations, in Excel go to "File > Options > Formulas" and use the settings shown below. If iterations will converge, they usually converge quickly. These settings seem to give accurate-enough results in a short-enough time.
(https://lh3.googleusercontent.com/d/1ulezUEO2S6diIfvtKjmVDOgGhHf2vmDS)
- Put the formula =AD159 into cell B48
That should give the result of $1,388 for the SEHI deduction, and a total PTC (cell AD102) of $4,612, same as in the linked example. Deleting the formula in B48 and entering 1388 as a value shouldn't change the PTC, and thus confirm the calculations.
Things get trickier if the selected premium is $498/mo instead of $500/mo. Change B114 to 498, put =AD159 into B48, and the SEHI result is $1,377 with a total PTC of $4,612. This is not a legal result because $1377+$4612=$5989 and that is more than $498*12=$5976. At least it's closer than what TurboTax calculates (see comment #3 in the linked article). But there is a way to get the exact best legal answer:
- An SEHI guess of $1377 gives a result only $13 too high, so the correct number is probably close to that.
- Put "B48" (w/o quotes) into cell G107. Click the "Update chart" button near L114.
- Ensure =AH96 is in cell R83
- Set P84 = 1200 and P83 = 1. This will check every whole dollar value from $1200 to $1700.
- See the result of $1,371 in cell R78.
- Confirm that by putting 1371 into B48. The PTC is $4,599 for a total of $5,970.
- Putting 1372 into B48, the PTC is $4,611 for a total of $5,983. $1371 provides a legal result, but $1372 is too high.
------------------------------
See p. 16-17 of Pub. 970, and the Education Benefits Calculator (https://cotaxaide.org/tools/Education%20Calculator.html) tool page, for background on choosing to make some types of college scholarship money taxable in order to receive more in education credits than the additional tax on that amount.
Picking up where the SEHI/PTC example left off (i.e., $498/mo premium), assume the filer has $6000 in qualified education expenses and a $4000 unrestricted (e.g., it can be used for room & board in addition to tuition) scholarship. This would be simpler without the SEHI/PTC complication, but let's do both at once:
- Set cell B48 back to the =AD159 formula.
- In cell B92, put the formula =MAX(0,(AOTC_Expense - (Unrestricted_Scholarship-D40))/12). Use 6000 for AOTC_Expense and 4000 for Unrestricted_Scholarship, so the actual formula will be =MAX(0,(6000-(4000-D40))/12)
- Put "D40" (w/o quotes) into cell G107. Click the "Update chart" button near L114.
- If needed, put "D67" (w/o quotes) into cell L107. Click the "Update chart" button near L114.
- Set P84 = 0 and P83 = 8. See the result of $1,896 in cell Q78.
In words, what the above accomplished was to check every $8 increment of taxable scholarship money from $0 to $4000 (there are ~500 points in the chart) for the lowest overall tax bill, including all credits. Assuming $1,896 is close to "the middle of the ballpark", now try P84 = 1650 and P83 = 1. That refines the answer to $1,899.
The iterated SEHI amount comes to $1618, but that is not a converged solution, as one can verify using the SEHI/PTC procedure above. The dollar-by-dollar test gives $1612 for the SEHI amount.
Cells P76:R78, along with this write-up, can help as a guide for what needs doing on both the SEHI/PTC and education credit issues.
------------------------------
Don't know if anyone will use either of these (let along both at the same time), but maybe....
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
2022 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Love the case study spreadsheet. Is it possible to add C47 (spouse SE,SEP) to the X-axis options for the tax rate graph? Thanks!
-
Love the case study spreadsheet. Is it possible to add C47 (spouse SE,SEP) to the X-axis options for the tax rate graph? Thanks!
noppenbd, welcome to (at least your first post on) the forum.
There are two ways to do this:
1. Swap your definition of "Earner #1" and "Earner #2" and then use B47 for the X-axis. :)
2. Excel will allow you to bypass the data validation if, instead of trying to type C47 into G107, you enter C47 into another cell and then copy that into G107. E.g., type C47 into cell B107 (yes, that makes no sense by itself, but wait...) then copy B107 into G107, click the "Update chart" button, and go back and delete the B107 entry. The chart title will now say "... vs. Something" but you'll know what that Something is and the chart numbers/curves will be correct.
-
Hi MDM,
This is my first post. I have question about Line 10 Form 8812 (cell Y190 in the 2021 spreadsheet). The IRS instructions for line 10 is
"Subtract line 9 from line 3.
• If zero or less, enter -0-.
• If more than zero and not a multiple of $1,000, enter the next multiple of $1,000. For
example, if the result is $425, enter $1,000; if the result is $1,025, enter $2,000, etc.
"
Currently, cell Y190 has
=MAX(0,Y181-Y189)
should it be something like
=MAX(0,IF(Y181>Y189,CEILING(Y181-Y189,1000)))
to match with the instructions?
Thank you.
-
Currently, cell Y190 has
=MAX(0,Y181-Y189)
should it be something like
=MAX(0,IF(Y181>Y189,CEILING(Y181-Y189,1000)))
to match with the instructions?
mmm999, welcome to the forum and thanks for the observation.
Yes, for those of you filing MFJ with AGI>$400K or single/HOH with AGI>$200K and wanting an exact tax calculation, something like that is needed. E.g., see cell Y185.
See replies #299-#304 in this thread for some discussion about exact tax calculations for specific inputs vs. smooth marginal rate charts for a range of values.
Shouldn't be hard to add similar "If smooth curves desired, don't use the CEILING function, otherwise do" logic for the next release.
-
Hi MDM,
Thanks for your answer. I looked at replies #299-#304 and realized that I also had discrepancy on line 5 Form 8812 (cell Y185) too. For my case, however, changing smoothing value did not help.
H&R Block: $2000
CSS No smoothing: $1950
CSS Yes smoothing: $1993
Here are my values for Form 8812
Line 1: 400144
Line 3: 400144
Line 4a: 1
Line 4b: 0
Thanks.
-
LOL! mmm999, you may be the only person with AGI > $400K and Child Tax Credits looking at this calculation (that may disappear after 2021), but I sincerely appreciate the feedback and will investigate. Should be a quick fix once I get time but that may not be until the weekend or early next week.
-
LOL! mmm999, you may be the only person with AGI > $400K and Child Tax Credits looking at this calculation (that may disappear after 2021), but I sincerely appreciate the feedback and will investigate. Should be a quick fix once I get time but that may not be until the weekend or early next week.
First attempt doing Roth conversion to top 24% + LTCG which pushed my AGI > $400K. I was aiming for <= $400K to maximize the CTC but forgot to add foreign tax $ to my income estimate. This resulted in a loss of $50 tax credit or $50/$144= 44% tax rate on my last $114 ($400,144 - $400,000) conversion 8-(. Lesson learned!
No rush. I love your spreadsheet and greatly appreciate your time and effort.
-
Version 22.02 (2022)
Version 21.12 (2021)
- Changes to the 2021 version of Form 8812.
- Minor tweaks to the SEHI/ACA convergence calculations.
Thanks to mmm999 for noticing the 8812 issue.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
2022 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Feature request!
In California there is a 1.1% disability tax on wage income, up to the usual social security cap of $145k and some change. Washington also has 0.58% flat tax on wage income, but this one has no cap. I realize it'd be impractical to model every single county and city taxes out there, but perhaps focusing on the statewide ones is doable?
-
Feature request!
In California there is a 1.1% disability tax on wage income, up to the usual social security cap of $145k and some change. Washington also has 0.58% flat tax on wage income, but this one has no cap. I realize it'd be impractical to model every single county and city taxes out there, but perhaps focusing on the statewide ones is doable?
Those might be doable, especially if you could provide/confirm some specific Excel cell formulas. E.g., I got a private request for a (simplified) MI property tax credit calculation, including cell formulas and comments, so that will probably make it into the next version.
On the 'State Tax' tab would those CA and WA taxes be =0.011*MIN(E8,some_cap) and =0.0058*E8 respectively?
-
Feature request!
In California there is a 1.1% disability tax on wage income, up to the usual social security cap of $145k and some change. Washington also has 0.58% flat tax on wage income, but this one has no cap. I realize it'd be impractical to model every single county and city taxes out there, but perhaps focusing on the statewide ones is doable?
Those might be doable, especially if you could provide/confirm some specific Excel cell formulas. E.g., I got a private request for a (simplified) MI property tax credit calculation, including cell formulas and comments, so that will probably make it into the next version.
On the 'State Tax' tab would those CA and WA taxes be =0.011*MIN(E8,some_cap) and =0.0058*E8 respectively?
As far as I understand it, both of these taxes are assessed on gross wages, just like FICA, whereas E8 links to W-2 Box 1.
-
Feature request!
In California there is a 1.1% disability tax on wage income, up to the usual social security cap of $145k and some change. Washington also has 0.58% flat tax on wage income, but this one has no cap. I realize it'd be impractical to model every single county and city taxes out there, but perhaps focusing on the statewide ones is doable?
Those might be doable, especially if you could provide/confirm some specific Excel cell formulas. E.g., I got a private request for a (simplified) MI property tax credit calculation, including cell formulas and comments, so that will probably make it into the next version.
On the 'State Tax' tab would those CA and WA taxes be =0.011*MIN(E8,some_cap) and =0.0058*E8 respectively?
As far as I understand it, both of these taxes are assessed on gross wages, just like FICA, whereas E8 links to W-2 Box 1.
Looking at DB101 California - California State Disability Insurance (SDI): Eligibility and Application (https://ca.db101.org/ca/programs/income_support/sdi/program2.htm) it says "Your paycheck is $1,000 before taxes. Every time you get a paycheck, 1.1% of that goes automatically to SDI." Usually the "paycheck" amount goes to W-2 Box 1, because employer-based HSA, medical insurance, etc., have already been subtracted.
New State Employee Payroll Tax Law for Long-Term Care Benefits - Washington State Hospital Association (https://www.wsha.org/articles/new-state-employee-payroll-tax-law-for-long-term-care-benefits/) refers to "wages reported on a Form W-2" which also implies W-2 box 1.
Those articles also note many reasons why a W-2 wage earner would not be subject to the taxes, so if they get added to the CSS it will be (same as I'll do for the MI credit) with a "*0" at the end so users will have to take action beyond entering the state ID to included the calculation.
All I did, however, was quickly skim those two linked articles. Does a more detailed study lead to a different conclusion?
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Regarding California: it's on gross wages, not after deductions. I have confirmed this empirically by looking at a recent CA paycheck with a sizeable 401(k) contribution where the amount withheld is exactly 1.1% of the gross wages.
Regarding WA: oh boy it's complicated. I'm pretty sure it's also on gross wages BUT it turns out there's not one but two separate taxes in different life stages, with different rules.
All this to say: perhaps instead of opening this can of worms, the best way forward is to provide a free-form row (around F37?) where users can enter their own formula.
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Regarding California: it's on gross wages, not after deductions. I have confirmed this empirically by looking at a recent CA paycheck with a sizeable 401(k) contribution where the amount withheld is exactly 1.1% of the gross wages.
Regarding WA: oh boy it's complicated. I'm pretty sure it's also on gross wages BUT it turns out there's not one but two separate taxes in different life stages, with different rules.
All this to say: perhaps instead of opening this can of worms, the best way forward is to provide a free-form row (around F37?) where users can enter their own formula.
Can you tell if in CA it is wages before any deductions (including medical insurance, etc.)?
In any case, providing free form calculation space seems a good idea. E.g., it would be easy enough to make cells X23:AG73 on the 'State Tax' tab editable, with column AB taken as a refundable credit and column AG as an additional tax. The specific state result would go via cells H17 and I17 to B19 and then to Calculations!G37. Seem reasonable?
Of course, one can always remove sheet protection and edit anything....
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Can you tell if in CA it is wages before any deductions (including medical insurance, etc.)?
Yep, it's unambiguously before medical/dental/FSA/401(k) deductions. This is from a leading payroll provider so I'd bet good money that they have this right. I think it's safe to assume any other type of deduction would be ignored as well.
In any case, providing free form calculation space seems a good idea. E.g., it would be easy enough to make cells X23:AG73 on the 'State Tax' tab editable, with column AB taken as a refundable credit and column AG as an additional tax. The specific state result would go via cells H17 and I17 to B19 and then to Calculations!G37. Seem reasonable?
Yes!
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Washington also has 0.58% flat tax on wage income, but this one has no cap. I realize it'd be impractical to model every single county and city taxes out there, but perhaps focusing on the statewide ones is doable?
FWIW, that tax has been delayed until July 2023 (and I'm guessing might die before then) and there are ways to opt out as well.
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Regarding California: it's on gross wages, not after deductions. I have confirmed this empirically by looking at a recent CA paycheck with a sizeable 401(k) contribution where the amount withheld is exactly 1.1% of the gross wages.
Regarding WA: oh boy it's complicated. I'm pretty sure it's also on gross wages BUT it turns out there's not one but two separate taxes in different life stages, with different rules.
All this to say: perhaps instead of opening this can of worms, the best way forward is to provide a free-form row (around F37?) where users can enter their own formula.
Can you tell if in CA it is wages before any deductions (including medical insurance, etc.)?
In any case, providing free form calculation space seems a good idea. E.g., it would be easy enough to make cells X23:AG73 on the 'State Tax' tab editable, with column AB taken as a refundable credit and column AG as an additional tax. The specific state result would go via cells H17 and I17 to B19 and then to Calculations!G37. Seem reasonable?
Of course, one can always remove sheet protection and edit anything....
Looking at my returns, California's "Schedule 540 (CA)" starts with the Federal income and itemized deductions, and has a columns for subtractions and additions. Without adding customization for each state, the simplest thing would be to provide a free form that allowed amounts to be added/subtracted from the Federal income and itemized deductions. Personally, I'd then customize my own document and make those free form field to calculate the exact income additions/subtractions and deductions additions/subtractions.
The CA tax form is here:
https://www.ftb.ca.gov/forms/2021/2021-540-ca.pdf (https://www.ftb.ca.gov/forms/2021/2021-540-ca.pdf)
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Thanks for this thing of BEAUTY!
Using Version V22.02 dated 03/08/2022. One minor thing I noticed:
Cells AD98 and AE98 are locked (even though green). I do realize they can be unlocked manually.
Thanks again for the tremendous effort you have put into this extremely helpful planning tool!
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Another item:
Cell AD100 is using a full-year amount (12 months) even if "No" is entered in cell AD98 and number of months in cell AE98. Of course, it's easy enough to game the system (spreadsheet) to get around that.
Same with cell AI100. It's also using a full-year amount.
If we only have 11 months of coverage (registered in January 2022; coverage started on Feb 1), should we be taking the total of 11 months and dividing that total by 12 to enter a monthly amount in Column B (cells B114 and B115)? That's how I'm gaming the system to get it to work right now. Thanks in advance for your advice.
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Thanks for this thing of BEAUTY!
Using Version V22.02 dated 03/08/2022. One minor thing I noticed:
Cells AD98 and AE98 are locked (even though green). I do realize they can be unlocked manually.
Thanks again for the tremendous effort you have put into this extremely helpful planning tool!
Thanks - easy fix (already done) for the next release.
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Another item:
Cell AD100 is using a full-year amount (12 months) even if "No" is entered in cell AD98 and number of months in cell AE98. Of course, it's easy enough to game the system (spreadsheet) to get around that.
Same with cell AI100. It's also using a full-year amount.
If we only have 11 months of coverage (registered in January 2022; coverage started on Feb 1), should we be taking the total of 11 months and dividing that total by 12 to enter a monthly amount in Column B (cells B114 and B115)? That's how I'm gaming the system to get it to work right now. Thanks in advance for your advice.
This one is less clear, because there can be a conflict between using the CSS for cash flow analysis vs. tax estimation. Yes, it would be nice if those goals always coincide :) and see below for how we might do this.
One way the CSS is tested is by comparing its results to the annual Tax-Aide Workbook problem answers. Don't recall offhand what I did to get a "less than 12 month" 1095-A situation to match, but it may have been exactly as you are "gaming it." Or maybe it didn't matter because...?
Anyway, at a quick glance the following changes might allow you to enter your actual monthly cash flow numbers in B114 and B115 while also matching what will be on your 2022 1095-A. Could you test and let me know?
AD100: =IF(AD94="Yes","",IF(AD98="Yes",D114,AE98/12*D114))
AI100: =IF(AD98="Yes",-D115,-AE98/12*D115)
You would also have to enter 11/12 of the annual SLCSP in AE100 to match what the 1095-A will show, because there is no formula in that cell - it's a pure input.
That could fit your situation of expecting ACA premiums to continue. For someone expecting ACA coverage to stop later in the year (e.g., anticipating a shift to employer-provided coverage), however, that may not be appropriate. Any thoughts on that?
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Anyway, at a quick glance the following changes might allow you to enter your actual monthly cash flow numbers in B114 and B115 while also matching what will be on your 2022 1095-A. Could you test and let me know?
AD100: =IF(AD94="Yes","",IF(AD98="Yes",D114,AE98/12*D114))
AI100: =IF(AD98="Yes",-D115,-AE98/12*D115)
You would also have to enter 11/12 of the annual SLCSP in AE100 to match what the 1095-A will show, because there is no formula in that cell - it's a pure input.
That could fit your situation of expecting ACA premiums to continue. For someone expecting ACA coverage to stop later in the year (e.g., anticipating a shift to employer-provided coverage), however, that may not be appropriate. Any thoughts on that?
Thank you so much for your reply and input! I let this get away from me but I will test and get back to you over the weekend.
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I'm just discovering this amazing tool, it's obviously complex and I'm running into issues that are likely my misunderstanding on how to use it, but I can't seem to figure out on my own.
My employer pays $1500 towards my HSA when I choose a HDHP and I pay the rest to max it out including the catchup ($5800): I think I need to put the $1500 (is that what "employee-sponsored means? I would have thought is simply meant offered by your employer and taken from your paycheck rather than paid for separately) and I put the $5800 in B45, Personal HSA? I supposed it doesn't really matter except to check that the tool estimated paycheck matches my actual check to show everything was accounted for.
I TLH'd this year and have about $50K in STCG (no carry-overs). when I enter -50,000 in cell D26, I properly see the 1040 income D42 go down by $3000 as expected, but the amount in B42 goes down by $50K, which I did not expect. As a result, the monthly budget calculations are thrown off (B73 and below) because hte tool thinks my income is %50K lower than it is. What am I doing wrong?
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I'm just discovering this amazing tool, it's obviously complex and I'm running into issues that are likely my misunderstanding on how to use it, but I can't seem to figure out on my own.
Good that you found this thread - that's what it's here for!
My employer pays $1500 towards my HSA when I choose a HDHP and I pay the rest to max it out including the catchup ($5800): I think I need to put the $1500 (is that what "employee-sponsored means? I would have thought is simply meant offered by your employer and taken from your paycheck rather than paid for separately) and I put the $5800 in B45, Personal HSA? I supposed it doesn't really matter except to check that the tool estimated paycheck matches my actual check to show everything was accounted for.
"Employer-sponsored" means the HSA contribution occurs via payroll deduction. Row 45 is for those who contribute to an HSA by sending a check to Fidelity (or whomever).
The HSA employer match can go in B19 "employer match" along with the 401k employer match, or the total (contributions + employer match) can go in "employer-sponsored HSA". If the latter, you have to add the HSA match to "gross salary/wages" to keep everything consistent.
I TLH'd this year and have about $50K in STCG (no carry-overs). when I enter -50,000 in cell D26, I properly see the 1040 income D42 go down by $3000 as expected, but the amount in B42 goes down by $50K, which I did not expect. As a result, the monthly budget calculations are thrown off (B73 and below) because hte tool thinks my income is %50K lower than it is. What am I doing wrong?
Hah, good point! Maybe I should just delete the calculations in B42 and C42, because those cells' results aren't used anywhere. I'll think about that some more...might just have to included a note saying "one time events, especially those that occur within one's investment accounts, may incorrectly affect budget calculations" or something like that.
If the "-50,000 in cell D26" leads to a correct tax calculation for this year (I think it does - do you see anything to the contrary?) then that may be as good as we can hope for.
Presumably (and we hope) the $50K TLH is a one time event. I.e., you don't plan on losing $50K in each subsequent year. Thus that amount would not be a useful input to the "simplified evaluation of 'how long to Financial Independence?'" section in row 165 and below.
Feedback from first-time users such as yourself is great, because fresh eyes see things "more experience" eyes glaze over. Any specific suggestions on documentation/feature additions that would be (or would have been) helpful? Thanks!
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I'm mostly using this for looking at this year (taxes, will I exceed the MAGI for IRA if I switch to Roth 401(k) for example, etc...) so I'm fine informing the budgeting/projections. I know what I spend pretty well and how much is leftover to invest in taxable for example, so I was more exploring the sheet than trying to get budget right.
Thanks for the help, I wouldn't be surprised if I have more questions as I play with it more. I've barely glanced at the SD tab for example although I'm pretty sure I have another spreadsheet that does the same but it's always fun to compare different tools and understand how they differ.
EDIT: the tax calculations see reasonable, so I have no reason to suspect they are messed up, but not qualified to know if they're right when I add ST/LT losses in, that's the main reason I started looking at this spreadsheet :)
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It looks like B63:B64 show income taxes for both earners, I expected to see the tax share of earner 2 in C63:64 instead of instructions/info.
It makes sense though, for MFJ it's the total of both incomes that matter, each individual is not taxed separately, but at first it was confusing me.
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EDIT: the tax calculations see reasonable, so I have no reason to suspect they are messed up, but not qualified to know if they're right when I add ST/LT losses in, that's the main reason I started looking at this spreadsheet :)
They should be fine for that scenario, because that's something that has been tested multiple times. The rest of the calculations should also be fine, based on testing a variety of inputs against the results from a couple of commercial programs in previous years.
When the tax law itself changes, that opens more room for error, but when there aren't any law changes except for inflation adjustment of brackets, etc., it's highly likely that what worked in previous years continues to work for the current tax year. Not an ironclad guarantee (pretty much any software ever written has a bug or two), but.... :)
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It looks like B63:B64 show income taxes for both earners, I expected to see the tax share of earner 2 in C63:64 instead of instructions/info.
It makes sense though, for MFJ it's the total of both incomes that matter, each individual is not taxed separately, but at first it was confusing me.
Exactly. There just aren't that many Married Filing Separately - and for that matter Qualifying Widow(er) - situations to add the complexity of forcing all income to be split between "Spouse A" and "Spouse B" so the total MFS tax could be compared with the MFJ tax.
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I TLH'd this year and have about $50K in STCG (no carry-overs). when I enter -50,000 in cell D26, I properly see the 1040 income D42 go down by $3000 as expected, but the amount in B42 goes down by $50K, which I did not expect. As a result, the monthly budget calculations are thrown off (B73 and below) because hte tool thinks my income is %50K lower than it is. What am I doing wrong?
Hah, good point! Maybe I should just delete the calculations in B42 and C42, because those cells' results aren't used anywhere. I'll think about that some more...might just have to included a note saying "one time events, especially those that occur within one's investment accounts, may incorrectly affect budget calculations" or something like that.
If the "-50,000 in cell D26" leads to a correct tax calculation for this year (I think it does - do you see anything to the contrary?) then that may be as good as we can hope for.
Presumably (and we hope) the $50K TLH is a one time event. I.e., you don't plan on losing $50K in each subsequent year. Thus that amount would not be a useful input to the "simplified evaluation of 'how long to Financial Independence?'" section in row 165 and below.
Feedback from first-time users such as yourself is great, because fresh eyes see things "more experience" eyes glaze over. Any specific suggestions on documentation/feature additions that would be (or would have been) helpful? Thanks!
After thinking for a bit, deleting the calculations in B42 and C42 seems appropriate because they weren't adding any value and could cause distractions.
It's also likely that any capital loss is a one-time thing (often for TLH), and plays no part in current or future cash flows. Given that, using "the larger of zero or the entered value" for STCG and LTCG in D73 and D147 seems appropriate. It's possible that some capital gains would also be one-time things, but not as likely as for capital losses.
At least, that's where a little thinking has led and those changes are in the test version for the next release....
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I just got a bonus and it pushed me over the MAGI to qualify for tIRA/Roth IRA ($204K to $214K this year). The only "trick" I think I can use was to contribute to my traditional 401(k) (my employer offers both), but it looks like I have crossed the line where I will qualify for IRA contributions for the foreseeable future unless I don't get a bonus next year. By the way, the "over IRA limit?" message in L42 was confusing me. I thought it meant I was contributing too much to the IRA ($7K since I'm over 50) when I think it was telling me I was over the MAGI limit to qualify for IRA. Maybe the message should say "over MAGI IRA limit" in one case and "over IRA contribution limit" in the other?
Since I was doing traditional (pre-tax) 401(k) to be able to contribute to IRAs, and that reason had gone away, I now need to decide if it's worth my time doing Roth 401(k). I think the tool for that is "Misc Calcs" row 150? I need to read through the Boglehead content and others to understand what numbers I need to plug in (I think B162 for me should be 15% not 20% for example but need to figure out what they mean). Today my income (with trad 401k) puts me at the bottom of the 24% bracket whereas I would be at the bottom of the 22% bracket in retirement (using today's numbers even though they are likely to change)
I also plan to retire at 62, so possibly 10 years before RMDs and want to understand if/how much I should do Roth conversions during that time. In today's number, my retirement needs ($100 post-tax as a round number) put me at the top of the 12% bracket or the bottom of 22% depending on where I draw the money from (how much in taxes to get to $100K post taxes). This means that Roth conversion would likely be in the 22% bracket and if worth doing at that rate could go all the way to the top of the bracket (about $90K in conversion every year?). Is there a tool to decide whether I should plan on converting to the top of 22% or even at 24%?
Also is there a tool to decide if it's worth doing a backdoor roth? I'd have to move a sizable rollover IRA ($800K+) into my 401(k) and my 401(k) as has a 0.04% administration fee on top of what a similar fund would cost in my Fidelity rollover. so it's costing me $3200 a year (compounded) to hold the money in the 401(k), so the advantage of a backdoor Roth needs to be at least that much to break even, so I think I shouldn;t backdoor. My 401(k) plan won't support mega backdoor.
All rates are federal only, add 4.55% for state
I realize these are both questions about the tool and advice about my particular situation, so I need ot post somewhere else for non-generic tool questions (I'm new to this forum)
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By the way, the "over IRA limit?" message in L42 was confusing me. I thought it meant I was contributing too much to the IRA ($7K since I'm over 50) when I think it was telling me I was over the MAGI limit to qualify for IRA. Maybe the message should say "over MAGI IRA limit" in one case and "over IRA contribution limit" in the other?
Thanks for that feedback. I'll have to think about that, especially for the phase-out situations in which one could say "income too high" or "deduction (for tIRA) / contribution (for Roth) too high", depending on which way one looks at it.
Since I was doing traditional (pre-tax) 401(k) to be able to contribute to IRAs, and that reason had gone away, I now need to decide if it's worth my time doing Roth 401(k). I think the tool for that is "Misc Calcs" row 150? I need to read through the Boglehead content and others to understand what numbers I need to plug in (I think B162 for me should be 15% not 20% for example but need to figure out what they mean). Today my income (with trad 401k) puts me at the bottom of the 24% bracket whereas I would be at the bottom of the 22% bracket in retirement (using today's numbers even though they are likely to change)
Yes, if you can contribute the maximum to the Roth choice, the fair comparison to traditional includes the need for some taxable contribution to make the total pre-tax amount going to Roth equal the total pre-tax amount going to traditional+taxable. When entering tax rates, include any state tax rates that apply.
I also plan to retire at 62, so possibly 10 years before RMDs and want to understand if/how much I should do Roth conversions during that time. In today's number, my retirement needs ($100 post-tax as a round number) put me at the top of the 12% bracket or the bottom of 22% depending on where I draw the money from (how much in taxes to get to $100K post taxes). This means that Roth conversion would likely be in the 22% bracket and if worth doing at that rate could go all the way to the top of the bracket (about $90K in conversion every year?). Is there a tool to decide whether I should plan on converting to the top of 22% or even at 24%?
The Roth conversion choice is similar to the traditional vs. Roth contribution choice: compare a known marginal tax rate now to an estimated tax rate later. There is even a similarity to the "contribute the maximum" situation discussed above, if you pay the conversion tax out of taxable funds. The Bogleheads wiki on Roth IRA conversion (https://www.bogleheads.org/wiki/Roth_IRA_conversion) goes into more detail.
Also is there a tool to decide if it's worth doing a backdoor roth? I'd have to move a sizable rollover IRA ($800K+) into my 401(k) and my 401(k) as has a 0.04% administration fee on top of what a similar fund would cost in my Fidelity rollover. so it's costing me $3200 a year (compounded) to hold the money in the 401(k), so the advantage of a backdoor Roth needs to be at least that much to break even, so I think I shouldn;t backdoor. My 401(k) plan won't support mega backdoor.
I think your analysis here is all the tool you need. :)
I realize these are both questions about the tool and advice about my particular situation, so I need ot post somewhere else for non-generic tool questions (I'm new to this forum)
Whether new or not, all good questions!
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Is that a 0.04% fee ($320 per year on an $800K balance) or 0.4% ($3,200)?
No idea where the line is for you on this, but if your 'additional fees to hold in 401K' is off by an order of magnitude, I could see that swaying the call for you regarding the backdoor Roth.
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sorry, 0.04% / $320 I messed up. Less clearcut now :)
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sorry, 0.04% / $320 I messed up. Less clearcut now :)
You're probably in coin-flip territory in that case.
For a quick approximation, you could use the "Growth in a taxable account" section (Misc. calcs tab rows 129-148). Changing C131 and C139 to zero makes "Case B" act like a Roth. Changing C137 to =B137-320 approximates the cost of the 401k .04% fee.
Setting B136=0, B137=7000, and using the other numbers already entered for Case A (without any comment on the likelihood they will be correct going forward), facilitating the backdoor Roth loses for several years, then catches up between 7 and 8 years, and stays favorable after that. But it's not a huge effect, so either way is defensible.
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Another question:
My wife started a business this year (in addition to a part-time W2 job) and according to her accountant we can deduct enough of her startup costs to get our MAGI back into IRA contribution territory, so I was trying to plug those numbers in the sheet.
I am covered by a 401(k) at work but my spouse is not, even though she has W2 income, my understanding is that it changes the tIRA contribution income limit from $109k to $204k (which happens to match the Roth limit). I got the non-covered spouse numbers from here: https://www.forbes.com/advisor/retirement/ira-contribution-limits
I think that means that G45 should be $204k, not $109K? How do I tell the spreadsheet my spouse is not covered by a plan at work? or am I confused?
My widf has enough W2 wages to fully fund a tIRA, although I think that even if she didn't we can complement under "spousal IRA".
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I think that means that G45 should be $204k, not $109K? How do I tell the spreadsheet my spouse is not covered by a plan at work? or am I confused?
Enter what you know is correct. As it says on row 40 of the Instructions, " - No check is made to enforce compliance with the various IRS rules on IRA, 401k, HSA, etc. contributions"
But if you want the - advisory only - comments in K41:M46 to be more accurate, use L39 and M39 to denote work plan coverage.
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Thanks for the help, I wish I *knew* that what I think is correct, so second-guessing of/when the magic spreadsheet doesn't say the same thing :)
I had missed the L39/M39 section, perfect, it was user error!
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Version 22.03 (2022)
Mostly a bunch of niche issues, but always of interest to those in such a niche. ;)
- Added the ability to have a "free form input" (row 129) entry for the marginal rate chart
- Cleaned up some temporary calculations at the bottom of the Misc. calcs tab
- Added space for "free form calculations" on the State Tax tab
- See recent discussion in this thread about CA and MI state taxes and the worked example for a MI credit on that row.
- Thanks Paul der Krake, Telecaster, Jason95357, and an anonymity-requesting person from MI. - Eliminated the separate "1040 Total Income" subtotals for earners #1 & #2: this tool isn't set up to do MFS taxes and those cells were confusing and not used anyway (thanks passionfruit17).
- Account for unused W-2 dependent care benefit
- Assume capital losses are one-time things (e.g., a paper loss for tax loss harvesting) and do not affect cash flow
- Non-itemized charitable deduction applicable only to 2021
- Use the Tax Code tab values for >65 std. deduct. values in the "traditional balance needed..." tables.
- Check if W-2 401k plus SE 401k contributions over the maximum
- Use of 133% of FPL for ACA calculations with unemployment applies only to 2021
- ACA changes for part-year situations per mangorunner's comments (see previous posts).
Use of the free form input for the marginal rate chart is limited only by one's imagination. One example:
- MFJ both under age 50, neither participating in a workplace retirement plan, and $50K W-2 income.
- Use cell F129 as "Total IRA contribution" and enter that text in H129.
- Enter F129 in cell G107 and click the "Update chart" button
- in cell B50, enter =IF(F129<=2000,F129,IF(AND(F129>2000,F129<=4000),2000,IF(AND(F129>4000,F129<=8000),F129-2000,6000)))
- in cell C50, enter =F129-B50
- Those formulas give the maximum saver's credit for the couple as their combined tIRA contribution increases.
- Change cell P83 to 24.
- This gives the chart below:
(https://lh3.googleusercontent.com/d/1l5QPnVVC_SB2UQyA8Juob4dZePrHYc7k)
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
2022 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Thank you for all the hard work on this. This is an invaluable tool!
I'm not savy enough to diagnose, but it appears LT Capital Gains and Qualified Dividends are showing as taxed in the 0% LTCG/QD bracket in Version 22.03
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Thank you for all the hard work on this. This is an invaluable tool!
I'm not savy enough to diagnose, but it appears LT Capital Gains and Qualified Dividends are showing as taxed in the 0% LTCG/QD bracket in Version 22.03
Changing only cells D25 and D27 from the template by entering 20000 in each gives $0 for federal tax in cell G35. Do you see something different?
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My apologies. Complete user error! Feel free to remove my post
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Not a problem - better the occasional false alarm than real problems continuing unnoticed.
And welcome to the forum!
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Version 22.04 (2022)
Very minor update: delete the formula in cell B72.
IIRC, I was looking at cash flow for a sale of stock with a 50% basis. Setting the "other untaxed income" equal to the LTCG was correct for that situation, but the formula should not have been left in the template for general use.
No effect on tax calculations, but the beta test team should have caught this. ;)
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
2022 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Getting to be time for me to triple-check that in fact the solar tax credit + premium tax credits will actually fully wipe out our federal tax bill this year. Can I successfully copy my 2021 mods for the S-Corp and the iterative ACA premium tax credit into the 2022 sheet accurately? Stay tuned to find out.
I've paid nothing all year beyond FICA which payroll provider handles for me, but have not done anywhere near maxing tax-advantaged accounts this year. Going to be interesting to see how this comes out in the wash.
Mostly posting today with a heartfelt "Thank you" to @MDM for giving away for free the best tax estimating spreadsheet out there.
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Getting to be time for me to triple-check that in fact the solar tax credit + premium tax credits will actually fully wipe out our federal tax bill this year. Can I successfully copy my 2021 mods for the S-Corp and the iterative ACA premium tax credit into the 2022 sheet accurately? Stay tuned to find out.
For those interested in the background, see this dandarc post (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2786140/#msg2786140) and follow-ups on that page.
One may include the potential solar tax credit in the amount for cell Calculations!G25. One reason this tool remains free is that some complicated math (e.g., multiplying the solar costs that go on https://www.irs.gov/pub/irs-pdf/f5695.pdf by 30% for 2022) must be done by the user outside the spreadsheet. ;)
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Thanks to @MDM and everyone who has contributed to this sheet!
I already have an S-Corp so I'm just trying to get the 1040 tax calculations correct rather than compare Schedule C to S-Corp.
On V22.02 I performed the following steps:
- Use a blank cell for "S-Corp net profit" near the "Non-paycheck income" section
- Add the cell from step 1 to D42 "1040 Total Income"
- Add the cell from step 1 to Y137 "QBI Deduction" "Business Income"
- Add W-2 wages and any other "Paycheck Items" to the "Paycheck Items" section
Steps 1-3 seem nice and general so perhaps worth including in a future version of the sheet. However, this seems too simple so I'm probably missing something significant...
I know I haven't tried to tackle the Deduction Worksheet for Self-Employed
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Getting to be time for me to triple-check that in fact the solar tax credit + premium tax credits will actually fully wipe out our federal tax bill this year. Can I successfully copy my 2021 mods for the S-Corp and the iterative ACA premium tax credit into the 2022 sheet accurately? Stay tuned to find out.
I already have an S-Corp so I'm just trying to get the 1040 tax calculations correct rather than compare Schedule C to S-Corp.
On V22.02 I performed the following steps:
- Use a blank cell for "S-Corp net profit" near the "Non-paycheck income" section
- Add the cell from step 1 to D42 "1040 Total Income"
- Add the cell from step 1 to Y137 "QBI Deduction" "Business Income"
- Add W-2 wages and any other "Paycheck Items" to the "Paycheck Items" section
Steps 1-3 seem nice and general so perhaps worth including in a future version of the sheet. However, this seems too simple so I'm probably missing something significant...
I know I haven't tried to tackle the Deduction Worksheet for Self-Employed
If the two of you (and any others that care) can concur on some "relatively simple" additions that cover many "straightforward S-Corp" (if there is such a thing) tax situations, the theorem of "multiple people are unlikely to make the same mistake" could be used to support inclusion in the public template. :)
I have no knowledge of S-Corp details....
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Getting to be time for me to triple-check that in fact the solar tax credit + premium tax credits will actually fully wipe out our federal tax bill this year. Can I successfully copy my 2021 mods for the S-Corp and the iterative ACA premium tax credit into the 2022 sheet accurately? Stay tuned to find out.
For those interested in the background, see this dandarc post (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2786140/#msg2786140) and follow-ups on that page.
One may include the potential solar tax credit in the amount for cell Calculations!G25. One reason this tool remains free is that some complicated math (e.g., multiplying the solar costs that go on https://www.irs.gov/pub/irs-pdf/f5695.pdf by 30% for 2022) must be done by the user outside the spreadsheet. ;)
Is that retroactive to January 1? I was sort of pissed initially that the system wasn't actually in service until January 2022, but another 4% in tax credit would certainly be nice.
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Getting to be time for me to triple-check that in fact the solar tax credit + premium tax credits will actually fully wipe out our federal tax bill this year. Can I successfully copy my 2021 mods for the S-Corp and the iterative ACA premium tax credit into the 2022 sheet accurately? Stay tuned to find out.
For those interested in the background, see this dandarc post (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2786140/#msg2786140) and follow-ups on that page.
One may include the potential solar tax credit in the amount for cell Calculations!G25. One reason this tool remains free is that some complicated math (e.g., multiplying the solar costs that go on https://www.irs.gov/pub/irs-pdf/f5695.pdf by 30% for 2022) must be done by the user outside the spreadsheet. ;)
Is that retroactive to January 1? I was sort of pissed initially that the system wasn't actually in service until January 2022, but another 4% in tax credit would certainly be nice.
Based on the (g) Applicable percentage (http://uscode.house.gov/view.xhtml?hl=false&edition=prelim&req=granuleid%3AUSC-prelim-title26-section25D&num=0) section it appears the answer is "yes".
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I can't seem to find how I tell the system my wife is self-employed?
her business will show a loss this year so she should not have additional self-employment taxes, but I want to be ready for next year when she will be profitable
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I can't seem to find how I tell the system my wife is self-employed?
her business will show a loss this year so she should not have additional self-employment taxes, but I want to be ready for next year when she will be profitable
Will either Calculations!B30 or C30, Schedule C net profit, work?
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Ah, silly me, schedule C does mean self-employed!
We're new at this.
I had entered her first year losses I'm this very cells, so looks like we're good.
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I had entered her first year losses in this very cells, so looks like we're good.
Good indeed! And thanks for the feedback - the next version will have "Schedule C (Self-Employment) net profit" in A30.
"
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Thanks to @MDM and everyone who has contributed to this sheet!
I already have an S-Corp so I'm just trying to get the 1040 tax calculations correct rather than compare Schedule C to S-Corp.
On V22.02 I performed the following steps:
- Use a blank cell for "S-Corp net profit" near the "Non-paycheck income" section
- Add the cell from step 1 to D42 "1040 Total Income"
- Add the cell from step 1 to Y137 "QBI Deduction" "Business Income"
- Add W-2 wages and any other "Paycheck Items" to the "Paycheck Items" section
Steps 1-3 seem nice and general so perhaps worth including in a future version of the sheet. However, this seems too simple so I'm probably missing something significant...
I know I haven't tried to tackle the Deduction Worksheet for Self-Employed
This is an interesting thing - the way I've done it, FICA is wrong in the spreadsheet (handled by payroll so less concerned with this than income tax). Because I put the health insurance and HSA on the "Subtractions for AGI" section and using the iterative calculation between Self Employed Health Insurance deduction and the premium tax credit. I kinda need health insurance to be in that iterative calculation because I'm on the line this year to where that matters - if I don't fund any IRAs or soloK, then we are not going to get a premium tax credit. If I do fund traditional IRAs, then we will get a premium tax credit.
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Ok, so I guess I should submit work. Attached is what I have so far. Reminder for anyone this is in no way an "official" Case Study Spreadsheet. Just wanted to estimate 2022 taxes for our situation where I'm working via my one-person LLC taxed as an S-Corp to see if I need to adjust withholding.
Some complicating factors that are specific to us include
buying insurance on the marketplace which the LLC reimburses us for
Funding an HSA
have a solo-K
income in a range that we are eligible for ACA premium tax credits
solar tax credit (we over-payed but at least this mitigates that somewhat)
Note that some changes below required unprotecting the calculations worksheet - I'm sure this voids MDM's warranty, so you're warned.
List of Changes:
1. Added a worksheet for S-Corp and Misc. I just like to see all the numbers layed out this way, and then I can pull numbers in to the calculations tab so I can change them there and not have to remember where everything goes.
2. Earner 1 gross salary/wages includes B5 from the new S-Corp & Misc tab
3. Earner 1 Pretax Health/Dental includes B2 from the new S-Corp & Misc tab (this gets FICA right)
4. Earner 1 Employer-sponsored HSA includes B3 from the new S-Corp & Misc tab (this gets FICA right)
4. Change Calculations Cell B14 to add back B2 & B3 cells from the S-Corp & Misc tab - this makes the total match what your W-2 should show if you're self-employed through your own 1-person S-Corp. The deduction for income tax purposes with the HSA and Health Insurance happens later.
5. Insert a row (columns A-D only) at line 23 of the Non-paycheck income - label / format it S-Corp Net Profit. Note that cell references below in columns A-D are now 1 row down from where they are in MDM's official versions of this preadsheet.
6. Calculations B23 equals S-Corp cell B18 (S-Corp Profit)
7. Calculations B46 equals S-Corp cell B3 (Personal HSA)
8. Cell B49 =AD159 (also turn on iterative calculations - this is self-employed health insurance and it has a circular relationship with the premium tax credits)
9. Cell D49 - change B31 to SUM(B23,B31) and C31 to SUM(C23,C31) but leave remainder of formula the same
10. Enter monthly health insurance premium in B115 (for premium tax credit calculation)
11. Enter any advanced premium tax credit in B116 (for premium tax credit calculation)
12. Add the new S-Corp profit (D23) to Cell Y137 for QBI deduction purposes
13. Cell AD138 - modify from "N/A" to = B9. This is the IRS instructions for above 2% shareholders - skip to line 11 and put the "for FICA" amount here, but is not implemented in a robust way.
14. Cell AD140 - =MAX(AD137,AD138)-AD139 - just pulls in the number from AD138 in our situation.
So changes for PTC / SEHI deduction work for me with these changes, but probably not done in a way that would work for many others. Most other changes fairly generic for a single-person S-Corp, but I agree with MDM that small business taxes get awfully complex / specific, so maybe there isn't a good way to include all this in this spreadsheet?
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Conclusion - unlikely that I need to increase withholding from $0. Would have to make $6,000 more than estimated for remainder of year and also not off-set that with things like "IRA" contribution for my wife, soloK for myself which could potentially even make it so my tIRA would be fully deductible, etc. So I guess I'm free to earn more than planned and not worry about whether I had enough federal income tax withheld.
Kind of a strange situation though - I overpaid for the solar panels, and took them up on 2% financing at a higher price than cash would have been that makes it really more like 5% financing. But those added together mean I'm likely to have a tax-credit carry forward with the non-refundable solar tax credit. So when I play around with numbers without using up the whole solar tax credit this year, marginal tax rate is 8.5% (PTC percentage) except I should be counting the carry-forward, which I am nearly certain to be able to use within the 5 years (really probably zero this out next year) which brings the marginal tax rate that initially looks like just 8.5% up to at least 20%. Anyway, good times with non-refundable tax credits that are kinda-sorta refundable.
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Version 22.05 (2022/2023)
- Added 2023 inflation-dependent updates, mostly using https://www.irs.gov/pub/irs-drop/rp-22-38.pdf as a source. Two items are (AFAIK) currently unavailable from the usual sources:
1) estimates of the 2025 IRMAA tiers which will be based on 2023 income
2) how 2023 withholding will be calculated (Pub. 15-T).
Some numbers have been entered for those, probably good enough for now seeing as it's only Oct. 2022. - Updated the SocialSecurity tab with the recently released COLA and AWI numbers, projections from the 2022 Trustees' report, and examples from the SSA web site.
Use cell Calculations!R2 to choose the federal tax year. The ability to choose among multiple years is nice, but raises the minor irritation of how to describe the various release versions as they occur. The state tax estimates will continue to be updated for only one tax year. For example, choosing 2023 now will give a good federal estimate but will be using 2022 state tax estimates.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
2022/2023 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Version 22.05a (2022/2023)
All inputs and formulas are identical to v22.05. For some reason, Excel had not updated a variety of calculated cells. Thanks to mmm999 for pointing out cells not updating in excel 2003 (https://www.techguy.org/threads/cells-not-updating-in-excel-2003.456583/) as one possibility. Saving v22.05 as a .xlsm or .xlsx file, however, did not cause the calculations to update.
Using CTRL+ALT+F9 as suggested by the final post in the above article did work. The result is v22.05a, and that is what the "2022/2023 taxes version" link below will retrieve.
I hope this was a one-time fluke. It would be bad, not just for the CSS, but for any Excel user, if this were a recurring problem.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
2022/2023 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Version 22.06 (2022/2023)
Primarily a "maintainability" update: simplifying some cell formulas for the Earned Income and Child Tax credit eligibility and calculations.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021 taxes version: 2021 Case Study Spreadsheet (https://drive.google.com/file/d/18uN77cP1m9ztZ5boHmqMnQ3CngkaDf6p/view?usp=sharing)
2022/2023 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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I'm a new user to to the Personal Finance Tookit, aka 2022 Cash Flow, and am on the Calculations tab. There is a graph with various options for the X-Y axis, near cell G107. If I change the values for the X or Y axis, a message "Click button below to update the chart". However, no button appears. I enabled macros on the spreadsheet using the "Macro Security" option on the Developer tab (or think I did), but this did not help. I'm using the latest version of excel that come with Microsoft 365.
Thanks,
Fisherboy
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If I change the values for the X or Y axis, a message "Click button below to update the chart". However, no button appears. I enabled macros on the spreadsheet using the "Macro Security" option on the Developer tab (or think I did), but this did not help. I'm using the latest version of excel that come with Microsoft 365.
See the Roth Conversion and Capital Gains On ACA Health Insurance (https://thefinancebuff.com/tax-calculator-aca-obamacare-subsidy.html) article. Find the "What happens if instead of Roth conversions they realize some long-term capital gains?" section.
Are you saying that the "Update chart" button that appears on the screenshot there is not present for you?
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Are you saying that the "Update chart" button that appears on the screenshot there is not present for you?
Correct, there isn't a button, just some text "push button below to update chart" at cell K113. Clicking the cells below has no effect.
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Are you saying that the "Update chart" button that appears on the screenshot there is not present for you?
Correct, there isn't a button, just some text "push button below to update chart" at cell K113. Clicking the cells below has no effect.
Could be that you are still working with the Google Sheets version of the file. That is what appears when clicking on the link to the spreadsheet. If that is the case, to get it into Excel use File > Download > Microsoft Excel (.xls). Then things should work much better.
Does that work?
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I downloaded the latest CSS spreadsheet for 2022, saved it to excel. Then I opened it, enabled macros, and pulled down and changed they Y axis of the graph, and the button appeared. I'm not sure what happened to the earlier downloaded excel file. I noticed the earlier version was only 525K, and the newer download 1457K. Maybe some macros got deleted somehow. Regardless, thanks for the help!
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FYI - this sheet / thread just got a shout-out from The Finance Buff (Roth Conversion with Social Security and Medicare IRMAA (https://thefinancebuff.com/roth-conversion-social-security-medicare-irmaa.html)) Good work MDM!
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FYI - this sheet / thread just got a shout-out from The Finance Buff (Roth Conversion with Social Security and Medicare IRMAA (https://thefinancebuff.com/roth-conversion-social-security-medicare-irmaa.html)) Good work MDM!
Thanks.
Harry Sit (aka The Finance Buff) does excellent work. I use his projections for various inflation-indexed things (e.g., IRMAA tiers) and appreciate this and other great step-by-step articles he has published.
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Hi, I'm wondering where to put the Federal EV tax credit of $7500 and heat pump water heater of $300 into the spreadsheet? I'm afraid my tax liability is too low this year to get the entire $7,800 and may need to do a Roth conversion to increase my taxable income. Thanks..
P.S. I'm concerned I don't have the sheet filled out correctly in the taxes section. I should probably do a trial run with turbo tax or something to double check?
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Hi, I'm wondering where to put the Federal EV tax credit of $7500 and heat pump water heater of $300 into the spreadsheet? I'm afraid my tax liability is too low this year to get the entire $7,800 and may need to do a Roth conversion to increase my taxable income. Thanks..
P.S. I'm concerned I don't have the sheet filled out correctly in the taxes section. I should probably do a trial run with turbo tax or something to double check?
That would be $7800 into cell G25, "Sched. 3 Lines 5&6" - see https://www.irs.gov/pub/irs-pdf/f1040s3.pdf.
Screenshot examples others have done such as Roth Conversion with Social Security and Medicare IRMAA (https://thefinancebuff.com/roth-conversion-social-security-medicare-irmaa.html), and using a spreadsheet to evaluate Roth IRA conversions (https://www.bogleheads.org/wiki/Roth_IRA_conversion#Using_a_spreadsheet), might help for other entries.
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Hi, I'm wondering where to put the Federal EV tax credit of $7500 and heat pump water heater of $300 into the spreadsheet? I'm afraid my tax liability is too low this year to get the entire $7,800 and may need to do a Roth conversion to increase my taxable income. Thanks..
P.S. I'm concerned I don't have the sheet filled out correctly in the taxes section. I should probably do a trial run with turbo tax or something to double check?
That would be $7800 into cell G25, "Sched. 3 Lines 5&6" - see https://www.irs.gov/pub/irs-pdf/f1040s3.pdf.
Screenshot examples others have done such as Roth Conversion with Social Security and Medicare IRMAA (https://thefinancebuff.com/roth-conversion-social-security-medicare-irmaa.html), and using a spreadsheet to evaluate Roth IRA conversions (https://www.bogleheads.org/wiki/Roth_IRA_conversion#Using_a_spreadsheet), might help for other entries.
Hmm, G25 for me is "Tax after n-r credit". I'll keep looking as I'm sure I'm just overlooking it.
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Version 22.07 (2021/2022/2023)
- Update the 2023 withholding calculations per the recently released Pub. 15-T
- Fix ACA lookup for Hawaii
- Clarify that charitable "above the line" contributions apply only to 2021
The main purpose of this update is to enter the last IRS updates for TY2023 (the 15-T withholding calculations). At this point, unless/until Congress changes the rules, the 2023 tax estimate should be good to go.
One of these days I'll figure out how to name new versions, as use of the 'Tax Code' tab (and provided tax law changes don't become too extreme) means any of several tax year estimates can be done with the same spreadsheet. The 2021 option will probably go away when the IRS 2024 numbers are released, and we'll see what happens as 2026 approaches, but until then....
When Harry Sit (aka The Finance Buff) estimates the 2025 IRMAA tiers, the impact of 2023 income will be updated. Currently (see row 180 and below on the 'Tax Code' tab) those are merely a linear extrapolation from the 2023 and 2024 tiers (that apply to 2021 and 2022 income). See 2022 2023 2024 Medicare Part B IRMAA Premium MAGI Brackets (https://thefinancebuff.com/medicare-irmaa-income-brackets.html) for those estimates.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021/2022/2023 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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MDM, do you have a plan for handling changes to state taxes by year with the sheet?
I think it's been a couple of years since I've provided any feedback. I started filling out a 2023, and noticed it's using North Carolina's 2022 tax rate. They've been lowering the rate every year and plan to continue to do so for the foreseeable future
Current changes under NC law....
2021 - 5.25%
2022 - 4.99%
2023 -4.75%
2024 - 4.6%
2025 - 4.5%
2026 - 4.25%
2027+ - 3.99%
https://www.ncdor.gov/taxes-forms/tax-rate-schedules
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MDM, do you have a plan for handling changes to state taxes by year with the sheet?
Good question! Now that one can select different years for federal returns by changing cell Calculations!R2 (currently 2021, 2022, or 2023) that does leave the questions of state taxes.
Historically I wait for the Tax Foundation's State Individual Income Tax Rates and Brackets (https://taxfoundation.org/publications/state-individual-income-tax-rates-and-brackets/) update, usually in February, and with a little reformatting that provides the update to the 'State Brackets' tab. Presumably the 2023 NC rate will be updated then.
Currently there is no plan to allow the same choice of state tax year as there is for the federal tax year. Although (and thanks in no small part to feedback from yourself and others) I believe the federal calculations to be extremely accurate, in general there isn't nearly the same effort expended for state calculations. Even so, most if not all of the state calculations are "reasonably accurate" (or at least any egregious errors have gone unreported).
Thus the timing of the Tax Foundation updates works well: by ~mid-February of any year, people seeking "accuracy for federal and state filing purposes" should be using commercial tax software to prepare the previous year's taxes, and using the previous year's state tables for the first ~1.5 months of the new year is probably well within the margin of error for predicting brokerage income, etc.
Perhaps a longer reply than needed, but your question gave me the impetus to think through what I had only vaguely considered.... Further feedback welcome!
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That's a fair answer. I use your sheet to compare the numbers with my owns sheet (which was built only for our specific situation and I have to add on new features as necessary). Fed has been pretty accurate lately and that's great and probably most important. When I see a discrepancy I try to figure out the root cause and if it's in my sheet I make adjustments and if it's in yours I provide feedback.
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Firstly, Wowza! Thank you very much for this tool.
I'm using the tool to understanding my marginal bracket when determining IRA contributions.
Sheepishly -- I think I found a bug in my situation. But maybe there's a knob I don't see! Here are the moving parts:
Filing Jointly; Wages $1234; Non-Qual divs $70 ; Qual Divs $480; STCG ($3000)
tIRA distribution $100
Pension $35857; SS Benefits $24343
Parameter under study tIRA contributions: Start with $1000
The tool calculates my tax bracket as -38%, while H&R Block SW says -34%
The discrepancy is saver's tax credit.
I've also received Roth IRA distributions larger than the proposed $1000 potential IRA contribution.
Therefore, according to 8880 I'm not eligible for Savers Credit.
Yet, I don't see how I can enter my Roth distributions and thereby disabling saver's credit in the tool.
Regardless of this issue the tool, via the graphic of tIRA contribution vs. tax, has demonstrated my marginal bracket sufficiently
for me to make any tax decisions.
I'm open to the likelihood that is not worth offering, but maybe it's there and I just don't see it.
Thank you so very much
Mark
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I've also received Roth IRA distributions larger than the proposed $1000 potential IRA contribution.
Therefore, according to 8880 I'm not eligible for Savers Credit.
Thanks for the feedback!
Your situation is real but somewhat unusual, and how the CSS can handle it is there but somewhat obscure. If one enters IRA distributions (but not trad->Roth conversions) in cell V58 (and W58 for MFJ) it should work correctly. Do let us know if not.
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Has the spreadsheet been updated to eliminate the ACA cliff as was done in the “inflation reduction” act late last year? I’m using v22.07 with the same inputs as last year and seeing a big Excess APTC tax that I didn’t have in 2022. If I change cell AD94 so that tax year 2023 results in “No” then things seem to work as I expect. Thanks!
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Your situation is real but somewhat unusual, and how the CSS can handle it is there but somewhat obscure. If one enters IRA distributions (but not trad->Roth conversions) in cell V58 (and W58 for MFJ) it should work correctly. Do let us know if not.
That did it! Now that I see the reference to the IRS form numbers that's what I'll look for when using the tool in the future.
Thanks for responding to my request and thanks again so much for creating and maintaining the tool.
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Has the spreadsheet been updated to eliminate the ACA cliff as was done in the “inflation reduction” act late last year? I’m using v22.07 with the same inputs as last year and seeing a big Excess APTC tax that I didn’t have in 2022. If I change cell AD94 so that tax year 2023 results in “No” then things seem to work as I expect. Thanks!
Thanks for the feedback - yes, "2023" was missing from AD94.
I and the other usual beta testers are unusually busy right now. ETA: Found some time. See update for version 2208 below.
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Relieved to confirm I wasn't so perilously close to falling off the ACA cliff!
I checked my situation using draft version 2208 and comparing to a hand calc using the 2022 form 8962. I found that the poverty level in the spreadsheet is a bit higher than in 2022 (I'm assuming that's just an updated amount for 2023 and is correct). It looks like the table of values in cells AG109:AH117 need to be checked though--in my situation (FPL% = 401) the Applicable Figure should be 0.085 (the limit in the 2022 legislation eliminating the cliff). If I use 0.085 then the Form 8962 values calculated by draft version 2208 are correct for my situation.
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I found that the poverty level in the spreadsheet is a bit higher than in 2022 (I'm assuming that's just an updated amount for 2023 and is correct).
Yes.
It looks like the table of values in cells AG109:AH117 need to be checked though--in my situation (FPL% = 401) the Applicable Figure should be 0.085 (the limit in the 2022 legislation eliminating the cliff).
Always good to check! In this case the numbers are correct: see Applicable Percentage Table for 2022 (https://www.irs.gov/irb/2021-35_IRB#REV-PROC-2021-36) and p. 3 of https://www.irs.gov/pub/irs-drop/rp-22-34.pdf to confirm 2022 and 2023 respectively.
Thanks for the beta test!
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Always good to check! In this case the numbers are correct: see Applicable Percentage Table for 2022 (https://www.irs.gov/irb/2021-35_IRB#REV-PROC-2021-36) and p. 3 of https://www.irs.gov/pub/irs-drop/rp-22-34.pdf to confirm 2022 and 2023 respectively.
Thanks for the beta test!
Happy to help!
I think, though, that those numbers (from the American Recovery Plan) were superseded by the more recent "Inflation Reduction" Act.
See SEC. 12001.IMPROVE AFFORDABILITY AND REDUCE PREMIUM COSTS OF HEALTH INSURANCE FOR CONSUMERS at https://www.congress.gov/bill/117th-congress/house-bill/5376/text
And the IRS code it amended, at https://www.taxnotes.com/research/federal/usc26/36B (see the second table on that page).
Not a huge deal if I'm understanding it correctly, but it could lead to material changes in spreadsheet values.
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Always good to check! In this case the numbers are correct: see Applicable Percentage Table for 2022 (https://www.irs.gov/irb/2021-35_IRB#REV-PROC-2021-36) and p. 3 of https://www.irs.gov/pub/irs-drop/rp-22-34.pdf to confirm 2022 and 2023 respectively.
Thanks for the beta test!
Happy to help!
I think, though, that those numbers (from the American Recovery Plan) were superseded by the more recent "Inflation Reduction" Act.
See SEC. 12001.IMPROVE AFFORDABILITY AND REDUCE PREMIUM COSTS OF HEALTH INSURANCE FOR CONSUMERS at https://www.congress.gov/bill/117th-congress/house-bill/5376/text
And the IRS code it amended, at https://www.taxnotes.com/research/federal/usc26/36B (see the second table on that page).
Not a huge deal if I'm understanding it correctly, but it could lead to material changes in spreadsheet values.
No. The Inflation Reduction Act did not change the more beneficial applicable figures for ACA subsidies that were initially implemented in ARPA (American Rescue Plan Act). It merely extended them through the end of 2025.
I haven't checked the spreadsheet, but I'm sure @MDM has the most recent more beneficial figures already implemented since ARPA is almost two years old now. The spreadsheet should be fine in this regard, at least until the law changes again.
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The Inflation Reduction Act did not change the more beneficial applicable figures for ACA subsidies that were initially implemented in ARPA (American Rescue Plan Act). It merely extended them through the end of 2025.
That’s why I questioned the “applicable percentage” reported on line 7 of form 8962. For 2022 incomes over 400% of poverty level, it reports 8.5%, but 9.12% when I switch to 2023. 9.12% is the affordability percentage for 2023 employer sponsored plans, perhaps coincidentally.
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Thanks to dagraf63, I believe Congress did change the rules a few weeks after the IRS published the revenue procedure that updated the 2023 table.
Based on "Text contains those laws in effect on January 12, 2023" I'll modify the CSS to reflect 26 USC 36B: Refundable credit for coverage under a qualified health plan (https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section36B&num=0&edition=prelim).
dagraf63, welcome to the informal beta test crew!
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The Inflation Reduction Act did not change the more beneficial applicable figures for ACA subsidies that were initially implemented in ARPA (American Rescue Plan Act). It merely extended them through the end of 2025.
That’s why I questioned the “applicable percentage” reported on line 7 of form 8962. For 2022 incomes over 400% of poverty level, it reports 8.5%, but 9.12% when I switch to 2023. 9.12% is the affordability percentage for 2023 employer sponsored plans, perhaps coincidentally.
Ah, OK. I misunderstood the point you were making. Sounds like you and MDM have it figured out anyway.
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Man this case study spreadsheet is so cool, I wish their was a Canadian version of it!!
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Version 22.08 (2021/2022/2023)
- Fixed issues with 2023 ACA premium tax credits described in recent posts.
Thanks again to dagraf63 for spotting the change Congress made. Not only was the enormous 400% FPL cliff removed through 2025, any inflation-dependent increases to expected contribution percentages are also on hold through 2025. Of course, that is subject to Congress not making further changes....
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021/2022/2023 taxes version: 2022 Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- For the 2021 version, click the "Download" icon at the top right after the file opens.
- For the 2022 version, click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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#props to the CSS.
Just entered everything into Turbotax and the 2022 CSS (with some mods to handle my S-Corp and other random details about our specific tax situation), and initially it didn't match by a fair amount, and so I of course I investigated. About an hour to find a single checkbox in TurboTax that I had missed related to self-employed health insurance deduction in TurboTax and boom - matches within $1 (and with turbotax rounding all the inputs to the dollar, this level of discrepancy is almost expected). So CSS was correct right away and it was a data entry error I made in TurboTax.
I again will suggest you make a tip-jar for this because this is the best tax-planning thing out there.
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#props to the CSS.
Just entered everything into Turbotax and the 2022 CSS (with some mods to handle my S-Corp and other random details about our specific tax situation), and initially it didn't match by a fair amount, and so I of course I investigated. About an hour to find a single checkbox in TurboTax that I had missed related to self-employed health insurance deduction in TurboTax and boom - matches within $1 (and with turbotax rounding all the inputs to the dollar, this level of discrepancy is almost expected). So CSS was correct right away and it was a data entry error I made in TurboTax.
I again will suggest you make a tip-jar for this because this is the best tax-planning thing out there.
Thanks for the endorsement - good to see that it matches the commercial software for your situation.
The Tax-Aide folks publish a bunch of practice returns for training volunteers in that program. With some jury-rigging to cover oddball situations (e.g., a 10% penalty on the amount of early IRA distribution that exceeds the itemizable medical expense deduction), the CSS matched the answer key they provide for TY2022, so that was also good to see.
Knowing that it is useful to others is sufficient compensation. :)
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Been sick and tired the last week - wow that was some writing straight from the department of redundancy department yesterday.
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Version 22.09 (2021/2022/2023)
- State tax parameters updated for 2023
- Default year for federal taxes changed to 2023
- Help with future marginal rate estimates, when considering qualified dividends, pension, Social Security, and traditional withdrawals
- Allow loss carryforward in the QBI deduction calculation
Thanks to the Tax Foundation's State Individual Income Tax Rates and Brackets for 2023 (https://taxfoundation.org/publications/state-individual-income-tax-rates-and-brackets/), those values will be used for state tax estimates. If there are some easily added features for your state's taxes, or if the Tax Foundation numbers are incorrect, comments in the State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/) thread are welcome.
Assuming that by now most people are using commercial tax software for their 2022 returns, the default year in Calculations!R2 is now 2023. That can be changed if one wants to look at a different year's federal taxes.
When dealing with traditional vs. Roth contributions, or the timing/amount of traditional to Roth conversions, a comparison of current vs. future marginal tax rates is needed. Current rates can be calculated exactly (that's the main feature of the CSS), but any estimate of future rates is subject to the vagaries of tax law, market returns, and individual circumstances. See Estimating withdrawal tax rates (https://forum.mrmoneymustache.com/investor-alley/estimating-withdrawal-tax-rates/) for more discussion on that.
Although great detail in a future tax estimate isn't justified, some back-of-the-envelope calculations can be worthwhile. That's what the "Estimating withdrawal tax rates" section that has been around cell Calculations!R60 since March 03, 2021 (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2802074/#msg2802074) is for. To make it clearer how to use this (I hope, although the potential for confusion also exists), formulas that reference those estimated cells have been added to the inputs for qualified dividends, pension, Social Security, and "other taxable income". All these formulas (see cells D25, B32, B38, and D40 on the Calculations tab) are of the form =Rxx*0. The "*0" must be deleted if one wants to use the future estimates. For current year estimates, one can simply type numbers into those cells or add a number after the "*0". For example, if one wants to enter $1287 for current year qualified dividends, cell D25 could have =R66*0+1287.
The future "other taxable income" entry is the annual traditional withdrawal one expects based on the growth of the current traditional balance. Then the marginal rate chart that uses cell D31 [B31 since the November 07, 2023 (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg3197259/#msg3197259) update] for the x-axis shows the marginal rates that additional traditional contributions will encounter when they and their gains are withdrawn.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021/2022/2023 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Many thanks for the update - getting to where I should probably be estimating 2023 taxes to decide on a plan regarding withholding should, as I suspect the case will be for 2023 for us, the federal tax figure come in above $0.
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Hello I'm eager to keep learning more about my financials with this amazing spreadsheet. My question is (and I'm sure I'm overlooking it, how do I enter SSN so that I retire at 50, and then begin withdrawals at 62.
I entered estimated salary until 2030 (50yr) in column B, age in B102.
I'm a little confused by B117 and B119. Is that where I'd put "50" in?
How do I indicate that I intend to draw at 62. I think I understand that my benefit will sit unadjusted (no COLAs) from 2030 to 2042.
Thanks for any support you might be able to offer.
~catbend
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Hello I'm eager to keep learning more about my financials with this amazing spreadsheet. My question is (and I'm sure I'm overlooking it, how do I enter SSN so that I retire at 50, and then begin withdrawals at 62.
Great question. For anyone following along, this refers to the SocialSecurity tab, not the Calculations tab.
I entered estimated salary until 2030 (50yr) in column B, age in B102.
By age I hope you mean birth date, e.g., 1-Jul-1980.
I'm a little confused by B117 and B119. Is that where I'd put "50" in?
No need to enter the age at which you expect to stop earnings for SS purposes. The absence of any salary/wages in any given year is sufficient. B117 and C117 are used to enter the age in years and months respectively for the start of benefits.
B119 can also be used (e.g., enter =62+1/12 for a start age of 62 years and 1 month) with the results in B115:J115. The main purpose of B119 is to be input for the table in V95:W192, where you can find the annual benefits for all starting months between age 62 and 70 inclusive. The graph of that table is to the right of the table, with the table numbers in blue and a curve fit in orange.
How do I indicate that I intend to draw at 62. I think I understand that my benefit will sit unadjusted (no COLAs) from 2030 to 2042.
The short answer is "currently you can't, because the spreadsheet only goes through 2040." I've thought about extending the range (and maybe deleting some of the 1960s rows) and might do so for the next version.
Meanwhile, using an estimate that starts benefits 17 years from now instead of 19 years from now, and assuming a 1978 birth year instead of 1980, is probably within the error band on what those 2042 benefits (in today's dollars) will be anyway.
If I take the default earnings ("The template scenario is for someone born in 1957 who makes the SS maximum taxable earnings for 40 years, starting in 1983. This is the same as "Case B" starting in cell T29.") and change the birth date to 1-Jul-1978, the age 62 benefit is $30,684. Changing cell G104 to 0.5 (so the assumption becomes "...makes 50% of the SS maximum..."), the age 62 benefit is $22,128.
The extent to which any such estimate is worth the pixels used to display it is debatable, but it is a place to start. And I probably will extent the date range for the next version....
Thanks for the question!
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Perhaps I'm not seeing it, but can the SocialSecurity tab add the ability to account for the Windfall Elimination Provision? Like anything with the government, there are a ton of "if then" rules that apply. This document appears to sum them up:
https://www.ssa.gov/pubs/EN-05-10045.pdf (https://www.ssa.gov/pubs/EN-05-10045.pdf)
In my specific case, I have 15 years of "substantial earnings" before I went to work for a government employer that doesn't pay into SS. If I read that SS publication correctly, I believe means the first PIA will be reduced from 90% to 40%.
An update to account for WEP would need a handful of input questions that are allowed exceptions to WEP.
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Perhaps I'm not seeing it, but can the SocialSecurity tab add the ability to account for the Windfall Elimination Provision?
It is not there now. If someone were to suggest specific spreadsheet changes, that would greatly increase the likelihood it would be added. ;)
Off the top of my head, Benefits Planner: Retirement | Windfall Elimination Provision (WEP) Online Calculator | SSA (https://www.ssa.gov/benefits/retirement/planner/anyPiaWepjs04.html) is one existing tool that might suffice.
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Thank you for creating such an amazing resource. I have a question re: IRMAA spikes. Specifically, based on inputs whereby my 2023 MAGI is $58,500, the spreadsheet indicates the first IRMAA spike occurs if I withdraw an additional $143,900 of Traditional IRA income ("Calculations" tab, cell Q261). Thus, I'm inferring the MAGI threshold assumption here (where IRMAA kicks in) is $202,400. I also assume $202,400 is the projected IRMAA MAGI threshold for 2025 (based on 2023 MAGI), is this correct? And if so, how was the assumed $202,400 threshold derived? I appreciate your help here - Thanks!
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...how was the assumed $202,400 threshold derived?
That came from 2023 2024 2025 Medicare Part B IRMAA Premium MAGI Brackets (https://thefinancebuff.com/medicare-irmaa-income-brackets.html) when it was first updated for a 2025 estimate. Inflation has continued to run high since that time, so if you check that article now, the author estimates the first IRMAA tier will occur between $204K (if future annual inflation is 0%) and $216K (if future annual inflation is 5%).
Roth Conversion with Social Security and Medicare IRMAA (https://thefinancebuff.com/roth-conversion-social-security-medicare-irmaa.html) is an excellent guide if you haven't seen that already.
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Thanks MDM - Much appreciated. So, just to confirm, is the MAGI threshold of 202,400 I inferred correct, in terms of what the spreadsheet is currently assuming?
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Thanks MDM - Much appreciated. So, just to confirm, is the MAGI threshold of 202,400 I inferred correct, in terms of what the spreadsheet is currently assuming?
Actually $200K for 2022 income affecting 2024 IRMAA. See the box starting in Calculations!AC76. For 2023 (change cell Calculations!R2) income affecting 2025 IRMAA, it is $210K.
See the 'Tax Code' tab starting at row 180 for the raw numbers that go to the Calculations tab based on the year chosen.
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Thanks so much for updating your spreadsheet to allow a proper estimate of 2023 taxes. One request however: in 2022 the state of New Mexico updated its income tax code to exempt Social Security proceeds for single filers up to $100K and joint filers up to $150K. This is not reflected in the current spreadsheet for either tax year 2022 or 2023. Is this an easy fix?
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Thanks so much for updating your spreadsheet to allow a proper estimate of 2023 taxes. One request however: in 2022 the state of New Mexico updated its income tax code to exempt Social Security proceeds for single filers up to $100K and joint filers up to $150K. This is not reflected in the current spreadsheet for either tax year 2022 or 2023. Is this an easy fix?
Might be easy.
If you put
=IF(B3<=IF(B1=1,100000,150000),B12,0)
into cell 'State Tax'!N53, does that give the correct results?
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If you put
=IF(B3<=IF(B1=1,100000,150000),B12,0)
into cell 'State Tax'!N53, does that give the correct results?
Thanks a lot, this works perfectly for my filing situation. (If you decide to incorporate this fix into a release version of your spreadsheet, note that there is also a third category: no NM tax on social security proceeds for a married individual filing separately with an income up to $75K.)
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If you put
=IF(B3<=IF(B1=1,100000,150000),B12,0)
into cell 'State Tax'!N53, does that give the correct results?
Thanks a lot, this works perfectly for my filing situation. (If you decide to incorporate this fix into a release version of your spreadsheet, note that there is also a third category: no NM tax on social security proceeds for a married individual filing separately with an income up to $75K.)
Thanks for checking. It's already in the next version, for whenever that comes out. MFS is so rare, compared with S, MFJ, and HOH, that the effort to include it has never seemed worthwhile. Gotta draw the line somewhere. ;)
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Hello I'm eager to keep learning more about my financials with this amazing spreadsheet. My question is (and I'm sure I'm overlooking it, how do I enter SSN so that I retire at 50, and then begin withdrawals at 62.
Great question. For anyone following along, this refers to the SocialSecurity tab, not the Calculations tab.
I entered estimated salary until 2030 (50yr) in column B, age in B102.
By age I hope you mean birth date, e.g., 1-Jul-1980.
Yes, thanks, birthdate
I'm a little confused by B117 and B119. Is that where I'd put "50" in?
No need to enter the age at which you expect to stop earnings for SS purposes. The absence of any salary/wages in any given year is sufficient. B117 and C117 are used to enter the age in years and months respectively for the start of benefits.
B119 can also be used (e.g., enter =62+1/12 for a start age of 62 years and 1 month) with the results in B115:J115. The main purpose of B119 is to be input for the table in V95:W192, where you can find the annual benefits for all starting months between age 62 and 70 inclusive. The graph of that table is to the right of the table, with the table numbers in blue and a curve fit in orange.
Ahhh... Now I get it. Thanks again.
How do I indicate that I intend to draw at 62. I think I understand that my benefit will sit unadjusted (no COLAs) from 2030 to 2042.
The short answer is "currently you can't, because the spreadsheet only goes through 2040." I've thought about extending the range (and maybe deleting some of the 1960s rows) and might do so for the next version.
Meanwhile, using an estimate that starts benefits 17 years from now instead of 19 years from now, and assuming a 1978 birth year instead of 1980, is probably within the error band on what those 2042 benefits (in today's dollars) will be anyway.
I backed my actual earnings up two years (to 1978) so I could get all my data into the chart that currently ends in 2040, and with estimating my earned salary as static (even though I'll get the occasional government (read small) raise) I came out to $23,616 in today's dollars. Side note for other government employees (non special status) the fixed payment part of your portfolio will sit unadjusted from the time you withdraw from govt service (if before the minimum retirement age) until the time when you are able to begin drawing on that fixed benefit. (read no inflation increases, no cost of living increases). So in my case (govt employee) it really does mean in today's dollars.
If I take the default earnings ("The template scenario is for someone born in 1957 who makes the SS maximum taxable earnings for 40 years, starting in 1983. This is the same as "Case B" starting in cell T29.") and change the birth date to 1-Jul-1978, the age 62 benefit is $30,684. Changing cell G104 to 0.5 (so the assumption becomes "...makes 50% of the SS maximum..."), the age 62 benefit is $22,128.
The extent to which any such estimate is worth the pixels used to display it is debatable, but it is a place to start. And I probably will extent the date range for the next version....
This was actually fairly accurate compared to my data $22 vs $23k. This work has already been a big help to validate I'm not way out in left field with my SS benefit estimates. I appreciate you taking the time to tell me how I can "hack" the spreadsheet. Thanks again MDM.
Cheers! (Class of 2030!)
Thanks for the question!
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I don't believe the NY income tax calculation is completely correct. Take a look at Form IT-201 instructions starting on page 45. Some of the tax computation worksheets include a "recapture base amount" and an "incremental benefit amount" that get folded into the tax calculation. The recapture base amount looks like a tax cliff, and the incremental benefit amount phases in over a $50,000 range. Maybe it could be argued that these are TECHNICALLY not income tax because of the name, but they are included in the calculation, are income-dependent, and behave exactly as a tax, so I would think they should be included.
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I don't believe the NY income tax calculation is completely correct. Take a look at Form IT-201 instructions starting on page 45. Some of the tax computation worksheets include a "recapture base amount" and an "incremental benefit amount" that get folded into the tax calculation. The recapture base amount looks like a tax cliff, and the incremental benefit amount phases in over a $50,000 range. Maybe it could be argued that these are TECHNICALLY not income tax because of the name, but they are included in the calculation, are income-dependent, and behave exactly as a tax, so I would think they should be included.
It is possible, perhaps even likely, that all state (not to mention local) tax calculations have some deficiency. I don't envy the commercial tax software vendors who have to keep up with all the different state laws.
But if a particular state situation is simple enough to handle, that can happen (especially if a solution couched in Excel is offered) so thanks for noting this one.
My first (and, so far, only) reaction, however, is that sixteen tax worksheets is not "simple enough" but if there is an Excel formula that would encompass those, then maybe....
If you would like to pursue this, State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/) would be a better thread. Not a big deal, but having state-specific discussions there is convenient.
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Version 22.10 (2021/2022/2023)
- Social Security beginning benefit projections extended to 2050
- Minor changes to MI and NM state tax calculations
The SS benefit calculation extension is based on current SS law. What benefit reduction, if any, that will occur sometime in the mid-2030s is left for the user to estimate.
The NM change was the SS benefit subtraction described by normalize, and I've been told the MI flat rate for 2023 is 4.05% instead of 4.25%.
I looked more at the NY state tables. Between adding HOH calculations (all state tax estimates currently assume either S or MFJ) and adding a calculation method unlike that present in any other state, that still appears too far down the slippery slope that leads to replicating the intricate details of every state's tax law. But if there is a way to add it without much more complexity than the NM change it could still happen.... For those interested in more detailed state tax calculations, there are the free-form cells described in the Version 22.03 (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg3040148/#msg3040148) post, and of course there is "Unprotect Sheet" and have at it, for personal use.
Repeating from the last update: Thanks to the Tax Foundation's State Individual Income Tax Rates and Brackets for 2023 (https://taxfoundation.org/publications/state-individual-income-tax-rates-and-brackets/), those values will be used for state tax estimates. If there are some easily added features for your state's taxes, or if the Tax Foundation numbers are incorrect, comments in the State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/) thread are welcome.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021/2022/2023 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Hey there! I'm not sure when this error cropped up, but there's a problem in the calculation of "Federal tax", cell D63, when a user has self-employment income. This causes an incorrect calculation of "Total income taxes", cell B67.
It looks like D63 gets its value from G35, "Net tax", which adds up 1040 tax, savers credit, self-employment tax, credits, etc.
Self-employment tax is then also added in cell B66, causing a double-counting of tax in B67.
I think changing the calculation in G35 to remove Self-employment tax does the trick, but could someone double-check for me?
Confirmed this was not the case in v21.09, but was as of at least v22.0.
Screenshots attached. Thanks!
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Hey there! I'm not sure when this error cropped up, but there's a problem in the calculation of "Federal tax", cell D63, when a user has self-employment income. This causes an incorrect calculation of "Total income taxes", cell B67.
Thanks for looking at details, and for the screen shots!
Yes, if I recall correctly, at one time the SE tax was not being included in "federal tax", so a change was made to include it in the D63 calculation, primarily so the marginal rate chart would include any SE tax changes when plotting "federal tax".
But (I think) if you look closer at B67, that calculation is correct. In your example, B67 is the sum of $2,065 + $483 + $1,740 + $630. The $1,740 is only added once. Yes, at first glance it appears that B67 would be the sum of B60:B66, but it isn't.
Perhaps B67 should be left blank to avoid this confusion. It isn't used in any other calculation. What do you think?
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Hey there! I'm not sure when this error cropped up, but there's a problem in the calculation of "Federal tax", cell D63, when a user has self-employment income. This causes an incorrect calculation of "Total income taxes", cell B67.
Thanks for looking at details, and for the screen shots!
Yes, if I recall correctly, at one time the SE tax was not being included in "federal tax", so a change was made to include it in the D63 calculation, primarily so the marginal rate chart would include any SE tax changes when plotting "federal tax".
But (I think) if you look closer at B67, that calculation is correct. In your example, B67 is the sum of $2,065 + $483 + $1,740 + $630. The $1,740 is only added once. Yes, at first glance it appears that B67 would be the sum of B60:B66, but it isn't.
Perhaps B67 should be left blank to avoid this confusion. It isn't used in any other calculation. What do you think?
The calculation of B67 (Total income taxes) is indeed correct -- it adds up Social Security, etc just fine.
The problem is D67 (and therefore G35, "Federal Tax" and "Net Tax"). IMHO it should not include Self-Employment tax because it's not an income tax -- it's a replacement for Social Security and Medicare for self-employed folks, its own separate line items, as you can see from the screenshot of my 2021 1040.
The fact that it's it own separate line item -- but included in the "Federal Tax" total -- has been causing me a lot of confusion since the update, as the spreadsheet shows my Federal Tax == Self-employment tax, when I know my actual Federal income tax is $0.
Thanks!
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The calculation of B67 (Total income taxes) is indeed correct -- it adds up Social Security, etc just fine.
The problem is D67 (and therefore G35, "Federal Tax" and "Net Tax"). IMHO it should not include Self-Employment tax because it's not an income tax -- it's a replacement for Social Security and Medicare for self-employed folks, its own separate line items, as you can see from the screenshot of my 2021 1040.
The fact that it's it own separate line item -- but included in the "Federal Tax" total -- has been causing me a lot of confusion since the update, as the spreadsheet shows my Federal Tax == Self-employment tax, when I know my actual Federal income tax is $0.
Thanks!
I suppose it is a matter of taste, and good arguments can be make for different perspectives. See posts #288 - #295 (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2954056/#msg2954056) for what, IIRC, led to the current treatment.
Open to thoughts from you or anyone else.
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The calculation of B67 (Total income taxes) is indeed correct -- it adds up Social Security, etc just fine.
The problem is D67 (and therefore G35, "Federal Tax" and "Net Tax"). IMHO it should not include Self-Employment tax because it's not an income tax -- it's a replacement for Social Security and Medicare for self-employed folks, its own separate line items, as you can see from the screenshot of my 2021 1040.
The fact that it's it own separate line item -- but included in the "Federal Tax" total -- has been causing me a lot of confusion since the update, as the spreadsheet shows my Federal Tax == Self-employment tax, when I know my actual Federal income tax is $0.
Thanks!
I suppose it is a matter of taste, and good arguments can be make for different perspectives. See posts #288 - #295 (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2954056/#msg2954056) for what, IIRC, led to the current treatment.
Open to thoughts from you or anyone else.
While you could indeed leave B67 blank, that would still leave the rather confusing situation of having Self-employment tax (B66) the only item in the whole A59:D66 block that is its own line item, but also added into another line (D63, Federal Tax). But then again, I only use the spreadsheet as a tax return prep and AGI calculation -- obviously there's more to the spreadsheet than that.
I guess I don't understand the original question posed in the post you referenced. SE taxes have no effect on Marginal Tax rates, which seems to in question there?
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While you could indeed leave B67 blank, that would still leave the rather confusing situation of having Self-employment tax (B66) the only item in the whole A59:D66 block that is its own line item, but also added into another line (D63, Federal Tax). But then again, I only use the spreadsheet as a tax return prep and AGI calculation -- obviously there's more to the spreadsheet than that.
I guess I don't understand the original question posed in the post you referenced. SE taxes have no effect on Marginal Tax rates, which seems to in question there?
Perhaps we should add "large spreadsheets" to "sausages and laws" as examples of things Better Not to See Them Being Made (https://quoteinvestigator.com/2010/07/08/laws-sausages/).
I don't recall all the discussion from 2021, some of which may have occurred via PM, but one other point: self-employment tax is included in the amount one must pay to avoid federal underpayment penalties. See Form 2210 (https://www.irs.gov/forms-pubs/about-form-2210), especially the Line 2 (https://www.irs.gov/instructions/i2210#en_US_2022_publink1000305526) instructions that say to include Schedule 2 line 4 (SE tax) but not Schedule 2 lines 5-7 (uncollected Social Security and Medicare tax on tips and wages).
I agree that in many respects SE tax is "the same" as SS and Medicare payroll taxes. The fact that one must withhold or make estimated payments to cover SE tax, however, tilts the scales toward including it in "federal tax".
Based on your feedback I have deleted the calculation in cell B67 and added a note to A66 that "These amounts are included in the 'Federal tax' amount 3 rows above." These changes will appear in the next release. Hope that helps!
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While you could indeed leave B67 blank, that would still leave the rather confusing situation of having Self-employment tax (B66) the only item in the whole A59:D66 block that is its own line item, but also added into another line (D63, Federal Tax). But then again, I only use the spreadsheet as a tax return prep and AGI calculation -- obviously there's more to the spreadsheet than that.
I guess I don't understand the original question posed in the post you referenced. SE taxes have no effect on Marginal Tax rates, which seems to in question there?
Perhaps we should add "large spreadsheets" to "sausages and laws" as examples of things Better Not to See Them Being Made (https://quoteinvestigator.com/2010/07/08/laws-sausages/).
No kidding, ha!!
I don't recall all the discussion from 2021, some of which may have occurred via PM, but one other point: self-employment tax is included in the amount one must pay to avoid federal underpayment penalties. See Form 2210 (https://www.irs.gov/forms-pubs/about-form-2210), especially the Line 2 (https://www.irs.gov/instructions/i2210#en_US_2022_publink1000305526) instructions that say to include Schedule 2 line 4 (SE tax) but not Schedule 2 lines 5-7 (uncollected Social Security and Medicare tax on tips and wages).
I agree that in many respects SE tax is "the same" as SS and Medicare payroll taxes. The fact that one must withhold or make estimated payments to cover SE tax, however, tilts the scales toward including it in "federal tax".
Ahh yes, I can see how that makes sense then.
Actually, in previous versions of the spreadsheet I would add my own tab that included any W2 withholding and calculated/kept track of estimated tax payments. I haven't bothered in a while as my Schedule C income plummeted during COVID and I'm also incredibly lazy.
Based on your feedback I have deleted the calculation in cell B67 and added a note to A66 that "These amounts are included in the 'Federal tax' amount 3 rows above." These changes will appear in the next release. Hope that helps!
Thanks! If @mangorunner comes back with their hackles up I take full responsibility!
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Thank you for this awesome spreadsheet! I am trying to use the solo 401k contribution computation in the Deduction Worksheet for Self-Employed section and I'm not sure if there's an error or if I'm entering things incorrectly.
My spouse has no W-2 income but has a side business (a sole proprietorship with no employees). For the past several years, they have made the maximum solo 401k contribution that TurboTax reports when doing our return. The contribution is lower than the max of $20,500. I entered our 2022 numbers into the case study spreadsheet to try to plan for 2023 and it is reporting that the contribution is too high, but only when there is no W2 income (or W2 income < line 3 of the deduction worksheet).
I think the problem is cell Z165 (step 11 of the worksheet), which is supposed to be Step 9 - Step 3. If I enter W2 income equal to the net business income (Step 3/Z156), Z165 will be 0 which I believe is the right number. However, if you have $0 in W2 income, like we do, Z165 is equal to the contribution, leading to Z167 to be equal to Z161, which ends up being the reduced/allowable contribution calculated.
It doesn't seem correct that this is tied to W2 income since it's a side business, so I've either missed entering something somewhere else on the spreadsheet or there's an issue.
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My spouse has no W-2 income but has a side business (a sole proprietorship with no employees). [Etc.]
Thanks for taking the time to to comment! If you don't mind spending a little more time - more information would help. E.g., I put 20000 into cell C30. That made Z175 3717. Then I also put 20000 into cell C3. Z175 did not change: still 3717.
This part of the spreadsheet probably hasn't received much use, so an error is certainly possible. Can you provide a "worked example" with all applicable cell entries and actual vs. expected results?
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Here's a simple example starting from a blank spreadsheet.
Set G2 = 2 and B3 to anything.
Now for earner #2's business income, set C30 = 10,000
Scroll down to the Deduction Worksheet for Self-Employed
What I believe is the correct max contribution is shown in Z156 ($9294). Using our numbers, this matches what TurboTax tells us is the max contribution.
Put $9294 in Z163 for elective deferral - we have always used "employee contribution" as opposed to employer.
You'll see it give a warning in X164, and the Max Deduction in Z175 is shown as $1859 (Z175 should be $9294)
Where it goes wrong I believe is starting at Z165, which shows $9294, but I believe it should be 0. If you look at the worksheet in the IRS publication (Page 34 of the pdf linked in the spreadsheet),
you'll see that Z165 (Step 11) is supposed to be Step 3 - Step 9 (Z156 - Z163). Now look at the calculation for the value of Z165. You see it would be Z156-Z163, but only if Z163 is less then G52-C11*C162. G52 is 0 because person #2 has no W2 income so without W2 income this will be wrong.
So now, enter W2 income for person #2 in C3 - set it to $10,000 or anything greater. Now Z165 will be 0, and the cascading effect leads to $9294 in Z175, which I believe is correct.
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Here's a simple example starting from a blank spreadsheet....
Take a look at <deleted: superseded by the release below>.
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Here's a simple example starting from a blank spreadsheet....
Take a look at this version (https://docs.google.com/spreadsheets/d/0B45krBaG0b6KTWZDeXEySVBHVXc/edit?usp=share_link&ouid=106381934049078964615&resourcekey=0-SqeHkUzBZvvRd8KGbKWAbQ&rtpof=true&sd=true). Better? Good enough? Thanks!
That looks good to me! Thanks again for your work on this great tool.
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Version 22.11 (2021/2022/2023)
- Updates to self-employment items: tax display and retirement plan contribution
- Updated IRMAA tier estimates
Thanks to mjb and droidmix for the self-employment items - see discussion in posts between this and the version 22.10 release.
Updates to 2024 IRMAA tier estimates (that will apply to 2022 earnings) are based on the 0% inflation numbers in 2023 2024 2025 Medicare Part B IRMAA Premium MAGI Brackets (https://thefinancebuff.com/medicare-irmaa-income-brackets.html). The 2025 IRMAA tier estimates (that will apply to 2023 earnings) in the CSS are a simple linear projection of the change from 2023 to 2024. This puts the 2025 CSS estimates somewhere between the 0% and 5% inflation estimates in that article. No idea what will end up being correct. ;)
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021/2022/2023 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
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Just loaded up the new version, I see that G35 is still including Self-Employment tax in Net Tax, which adds SE tax to the "Federal Tax" amount in D63.
While on the subject, I'll mention I make a couple of modifications I make to A59:G67 (the "Payroll Taxes" block):
- for cell D66 (Self-employment Tax), I add "=B66+C66" to add up the SE tax for both partners
- for cell D67 (Total Income Taxes), I change the equation to =SUM(D60:D66), which adds back in the correct total SE Tax, giving an accurate calculation of the total taxes owed.
-- I think this may also help the user who initially led you to add SE taxes to the "Net Tax" cell G35?
In our case, I have both W2 and self-employed income (column B). My partner (column C) is self-employed only. Screenshot attached so you can see the result.
Thanks!
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Just loaded up the new version, I see that G35 is still including Self-Employment tax in Net Tax, which adds SE tax to the "Federal Tax" amount in D63.
As I thought you had agreed that makes sense (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg3138815/#msg3138815).
If there is something clearly wrong, by all means let's get it fixed. It's not clear to me whether that is the case or whether this is a semantic discussion. Thanks!
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Just loaded up the new version, I see that G35 is still including Self-Employment tax in Net Tax, which adds SE tax to the "Federal Tax" amount in D63.
As I thought you had agreed that makes sense (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg3138815/#msg3138815).
If there is something clearly wrong, by all means let's get it fixed. It's not clear to me whether that is the case or whether this is a semantic discussion. Thanks!
Ahh, my apologies for the lack of clarity in my response. In the quoted post I was just saying I could see the reasoning, but I don't personally agree with the choice because it creates an inconsistency between the 1040 and the spreadsheet.
Not a big deal, I'm happy to make my own modifications as necessary for the sheet to make sense to me. Thanks!
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Just downloaded the new version, and it is not behaving as I would expect. From the default settings, all I did was change the age to 67 and input $43,500 in annual Social Security income. I was expecting to see the familiar 0%, 18.5% (=10%*1.85), 22.2% (=12%*1.85), and 40.7% (=22%*1.85) marginal brackets on the "total tax rate vs. tIRA withdrawal" plot, but instead there is something else: 0%, 22%, 26.4%, 48.4%, 52.8%, etc. Did something change in the way the tool gets used? Am I using it incorrectly? Have there been recent chances in tax law I missed? Thanks very much.
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Just downloaded the new version, and it is not behaving as I would expect. From the default settings, all I did was change the age to 67 and input $43,500 in annual Social Security income. I was expecting to see the familiar 0%, 18.5% (=10%*1.85), 22.2% (=12%*1.85), and 40.7% (=22%*1.85) marginal brackets on the "total tax rate vs. tIRA withdrawal" plot, but instead there is something else: 0%, 22%, 26.4%, 48.4%, 52.8%, etc. Did something change in the way the tool gets used? Am I using it incorrectly? Have there been recent chances in tax law I missed? Thanks very much.
Appears that something in the way Google Drive stores or downloads or ? has changed. It is not faithfully downloading what was uploaded. Stay tuned....
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Version 22.12 (2021/2022/2023)
- Overwrite previous version that had become corrupted (or something?)
Thanks to fyre4ce for noticing that something was amiss. Somehow - despite there not being a .xlsm (special Excel macro-enabled file-type) file in the folder from which I upload - the file on Google Drive had type .xlsm, and that (or maybe other issues) caused strange (and incorrect) behavior.
Rather than do a deep dive on the strange behavior, I uploaded the version in progress (that has no significant changes from the previous one). It appears to download with the same appearance and functionality that was uploaded, except now Microsoft's macro warning seems more stringent: it wouldn't let me enable macros within the workbook until I had checked a box on the file Properties menu in Windows. Maybe Microsoft's macro handling "upgrade" had other consequences...?
Anyway, if fyre4ce (or anyone) could try downloading from the link below and confirm (or deny) that things are working well (enough), that would be appreciated.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021/2022/2023 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
-
Version 22.12 (2021/2022/2023)
- Overwrite previous version that had become corrupted (or something?)
Thanks to fyre4ce for noticing that something was amiss. Somehow - despite there not being a .xlsm (special Excel macro-enabled file-type) file in the folder from which I upload - the file on Google Drive had type .xlsm, and that (or maybe other issues) caused strange (and incorrect) behavior.
Rather than do a deep dive on the strange behavior, I uploaded the version in progress (that has no significant changes from the previous one). It appears to download with the same appearance and functionality that was uploaded, except now Microsoft's macro warning seems more stringent: it wouldn't let me enable macros within the workbook until I had checked a box on the file Properties menu in Windows. Maybe Microsoft's macro handling "upgrade" had other consequences...?
Anyway, if fyre4ce (or anyone) could try downloading from the link below and confirm (or deny) that things are working well (enough), that would be appreciated.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021/2022/2023 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Note:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
The behavior looks better, thanks!
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I don't have any menu when I click into the sheet - to save as an excel.
I had tried to use this previously and just click click click, I had an excel. But it seemed too complicated to me. Wanted to try again and get the updated file, but can't find anyway to save it, outside of control save, but that only saves it as a webpage.
Anyone can point me to ssaving as excel?
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I don't have any menu when I click into the sheet - to save as an excel.
I had tried to use this previously and just click click click, I had an excel. But it seemed too complicated to me. Wanted to try again and get the updated file, but can't find anyway to save it, outside of control save, but that only saves it as a webpage.
Anyone can point me to ssaving as excel?
Does "File>Download>Microsoft Excel (xls)" work (after opening the file using the Google Drive link: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing))?
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got it! thank you!
swear there wasn't anything there before :)
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As mentioned a few posts back, Microsoft has added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the first link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
If anyone knows a better approach, please advise.
Thanks,
MDM
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Tis the season to do an assessment of 2023 taxes, see if I need to withhold a little extra for safe harbor, get a sense of which side of the Roth IRA contributions limit I will fall into...
I just saw that the IRS released new tax brackets for 2023, should I wait for an update to this sheet? I think there is a way to carry info from an older version to a new one but I have never tried it, I always re-enter data in the new version.
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Tis the season to do an assessment of 2023 taxes, see if I need to withhold a little extra for safe harbor, get a sense of which side of the Roth IRA contributions limit I will fall into...
I just saw that the IRS released new tax brackets for 2023, should I wait for an update to this sheet? I think there is a way to carry info from an older version to a new one but I have never tried it, I always re-enter data in the new version.
About this time of year is when the IRS releases bracket and other adjustments for next year's taxes. I haven't looked to see what 2024 adjustments have been published, but the 2023 information has been there all this year. ;)
The only 2023 amounts not already known for sure are the IRMAA tiers that will apply to 2025 Medicare recipients, based on their 2023 income.
No automated copy/paste macros exist for moving inputs from one version to another, but manual copy/paste (or typing in new estimates) works. :)
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That's what I thought but I saw this article from a few days ago: https://news.yahoo.com/irs-releases-income-tax-brackets-232359416.html which says "The income thresholds have increased for each bracket, which will apply for tax year 2023 and returns filed in 2024".
After your comment I checked and the reference it cites is indeed from October last year, another example of the press trying to make copy out of nothing.
I'll use the existing spreadsheet :)
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does the sheet automatically calculate the phased-out amount for Roth/tIRA contribution based on MAGI? Is L40/M40 the phased-out percentage can I contribute $7500 times that percentage, if I'm over 50 of course)
Also, L42 and L43 say "Increase?" what does that mean?
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does the sheet automatically calculate the phased-out amount for Roth/tIRA contribution based on MAGI? Is L40/M40 the phased-out percentage can I contribute $7500 times that percentage, if I'm over 50 of course)
Yes.
Also, L42 and L43 say "Increase?" what does that mean?
It means you haven't shown that you are contributing the amount calculated above, so you might consider increasing your contribution up to that amount. Or not. ;)
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Version 22.13 (2021/2022/2023)
- Update the Social Security benefit estimation tab to reflect the Cost-of-Living Adjustment (COLA) Information for 2024 (https://www.ssa.gov/cola/)
- Add MN's new state tax SS benefit deduction
- Use the "3%" estimate numbers for 2025 IRMAA Brackets (https://thefinancebuff.com/medicare-irmaa-income-brackets.html) (that will use 2023 income).
Another year, another few percent increases in the SS benefit Cost Of Living Adjustment, Average Wage Index, and the maximum amount of earnings subject to Social Security payroll tax.
If there are other simple state tax changes that you perceive as worthwhile to implement, such as MN's SS benefit deduction, post in State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/msg1697962/#msg1697962) and that may happen. :)
See the linked article about 2025 IRMAA brackets and draw your own conclusions about how closely you want to approach any of them....
Tax year 2024 numbers will be added (and tax year 2021 numbers and logic removed) after the IRS releases the 2023 version of https://www.irs.gov/pub/irs-drop/rp-22-38.pdf.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2021/2022/2023 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Notes:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
- In early 2023, Microsoft added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the "Details can be found at..." link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
-
Hopefully the IRS releases/finalizes 2024 numbers soon!
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Version 22.14 (2022/2023/2024)
- Out with 2021 and in with 2024 tax year calculations!
- Provided separate entries for each spouse's pension and IRA/401k/403b/etc. withdrawals
- Small documentation changes on the 'Instructions' tab
- Increased default medical expense range on the 'HDHP Analysis' tab
Although I haven't seen a few 2024 numbers, either from an IRS source or the same numbers from multiple non-IRS sources (e.g., QBI thresholds and Pub. 15-T's withholding), the vast majority are available, so no time like the present to roll this out. Most are from https://www.irs.gov/pub/irs-drop/n-23-75.pdf, with others from various probably-good-but-not-official-IRS sources. As these become known, yellow cell colors on the 'Tax Code' tab will change to brown in future versions.
The default remains tax year 2023, but for early planners changing cell Calculations!R2 to 2024 will use those values.
The sharp-eyed might notice that 2026 is also an option, but while those might get you in the ballpark, it would likely be an obstructed view in the upper bleachers. In other words, don't rely on those at all for now.
Another set of numbers that won't be available any time soon are the IRMAA tiers that will apply in 2025 and 2026 but be based on 2023 and 2024 income. Harry Sit's https://thefinancebuff.com/medicare-irmaa-income-brackets.html is a good place to get educated guesses about those as time goes by. Current values in the CSS are "not unreasonable".
Some states exempt retirement income from pensions, IRAs, etc., from tax. In some of those states, the exemption may be limited for the total MFJ income, but in other states limits are imposed per person. Allowing per person inputs allows the per person exemption limits to be used correctly where applicable.
The per person inputs for IRA withdrawals means the default for the marginal rate chart x-axis changed from D31 (total amount) to B31 (one person's amount). If you aren't dealing with per person state tax exemptions, whether the amount comes from one person or two doesn't matter.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2022/2023/2024 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Notes:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
- In early 2023, Microsoft added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the "Details can be found at..." link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
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Thanks for your hard work MDM!
I've been a bit confused for a while about how to enter HSA contributions--specifically, how to differentiate my pretax contributions out of my salary from my employer contributions that are separate from my salary. I've been adding the employer contributions to my gross income and putting the combined HSA contribution into B7. Is there a better way to do this?
You're welcome!
There may be a better way, but that way works and is how I'd do it: you get the correct FICA and W-2 box 1 results, and those are what matter most.
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Version 22.15 (2022/2023/2024)
- Implement https://www.irs.gov/pub/irs-drop/rp-23-34.pdf
- Fix typos
The slightly more comprehensive IRS update now available made some $50-$100 differences vs. what some non-IRS sources had estimated. The remaining unknowns for 2024 are for withholding (Pub. 15-T is still for 2023 in Draft Tax Forms | Internal Revenue Service (https://www.irs.gov/draft-tax-forms)), and the IRMAA tiers covered in the previous update.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2022/2023/2024 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Notes:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
- In early 2023, Microsoft added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the "Details can be found at..." link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
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Thanks for getting this out so quickly with the new brackets.
Getting this:
"Enter filing status in cell G2" when setting R2 to 2026. All filing statuses in G2 fail with this error.
This worked fine on other releases and works fine with any other year set.
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Thanks for getting this out so quickly with the new brackets.
Getting this:
"Enter filing status in cell G2" when setting R2 to 2026. All filing statuses in G2 fail with this error.
This worked fine on other releases and works fine with any other year set.
That message (in cell C63 - correct?) is a bit of a catch-all. One thing that can cause it is using the space bar to delete a cell entry somewhere, instead of the Delete key. Any chance that is the cause here?
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That message (in cell C63 - correct?) is a bit of a catch-all. One thing that can cause it is using the space bar to delete a cell entry somewhere, instead of the Delete key. Any chance that is the cause here?
OK, good to know. Re-downloaded and re-entered data and no longer seeing the error, so I'm guessing there was a space somewhere.
Thanks for the quick response.
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That message (in cell C63 - correct?) is a bit of a catch-all. One thing that can cause it is using the space bar to delete a cell entry somewhere, instead of the Delete key. Any chance that is the cause here?
I spoke too soon, it looks like the error happens when:
R2 = 2026
G9 is a number greater than 64
Doing this in XLSM or XLS file.
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That message (in cell C63 - correct?) is a bit of a catch-all. One thing that can cause it is using the space bar to delete a cell entry somewhere, instead of the Delete key. Any chance that is the cause here?
I spoke too soon, it looks like the error happens when:
R2 = 2026
G9 is a number greater than 64
Doing this in XLSM or XLS file.
Ahh, must have been a Freudian slip to prevent at least some people from trying to use 2026 numbers. ;)
As stated in the 7-Nov update, "The sharp-eyed might notice that 2026 is also an option, but while those might get you in the ballpark, it would likely be an obstructed view in the upper bleachers. In other words, don't rely on those at all for now."
But if you insist, :)
Put 2026 into cell 'Tax Code'!E241, and whatever number you choose into cell 'Tax Code'!E242. I might use the formula =D242+(D242-C242) or something like that when a new release comes out.
Kidding aside, thanks for note!
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@MDM, any suggestions for how to figure out the rationale for the tax rate graph around Calculations!F83?
I've put in all my numbers already. I'm trying to dial in my Roth conversion amount for 2023. I'm sure they are correct, but there are some blips in the graph I'd like to understand.
The best I've come up with so far is fiddling with the Roth conversion amount in Calculations!B31, then scrolling over to look at the tax results and see which numbers change, and then dive down from there. That's probably the way you expect people to do it, but I'm asking in case there's something I'm missing.
As a side note, Idaho only applies the 5.8% flat tax above $2500 (single) and $5,000 (MFJ). The $2,500/$5,000 acts like an additional Idaho-only standard deduction. You probably only have a handful of Idaho filers, but I think it's an easy fix. Maybe in State Tax!H34 and State Tax!I34?
Thanks for the awesome tool!
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Ahh, must have been a Freudian slip to prevent at least some people from trying to use 2026 numbers. ;)
As stated in the 7-Nov update, "The sharp-eyed might notice that 2026 is also an option, but while those might get you in the ballpark, it would likely be an obstructed view in the upper bleachers. In other words, don't rely on those at all for now."
But if you insist, :)
Put 2026 into cell 'Tax Code'!E241, and whatever number you choose into cell 'Tax Code'!E242. I might use the formula =D242+(D242-C242) or something like that when a new release comes out.
Kidding aside, thanks for note!
OK, missed that comment from you. I'm using this for Roth Conversion comparison modeling, so I really need a 2042 year, not 2026. :)
So, I am definitely just looking for a very high level view and figure that 2026 rates and results are probably closer than current 2024, but who knows.
Your workaround worked for me, but I'll take the results with a grain of salt.
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I'm using this for Roth Conversion comparison modeling, so I really need a 2042 year, not 2026. :)
So, I am definitely just looking for a very high level view and figure that 2026 rates and results are probably closer than current 2024, but who knows.
Projections ~20 years out are really anyone's guess, but regardless of the 2024 election results the betting odds might favor "no change for those earning <$400K/yr" in the next few years because that's a more or less common theme between both Democrats and Republicans.
If that holds true, the method for back-of-the-envelope calculations (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg3118968/#msg3118968) described in that post is probably your best bet. Good luck!
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@MDM, any suggestions for how to figure out the rationale for the tax rate graph around Calculations!F83?
I've put in all my numbers already. I'm trying to dial in my Roth conversion amount for 2023. I'm sure they are correct, but there are some blips in the graph I'd like to understand.
The best I've come up with so far is fiddling with the Roth conversion amount in Calculations!B31, then scrolling over to look at the tax results and see which numbers change, and then dive down from there. That's probably the way you expect people to do it, but I'm asking in case there's something I'm missing.
I wish there were some AI tool that would do this (and generate a really nice annotated chart (https://www.bogleheads.org/forum/viewtopic.php?p=6960716#p6960716) like someone at Bogleheads did ), because I often have the same problem ;) and yours is the same approach I use. :)
As a side note, Idaho only applies the 5.8% flat tax above $2500 (single) and $5,000 (MFJ). The $2,500/$5,000 acts like an additional Idaho-only standard deduction. You probably only have a handful of Idaho filers, but I think it's an easy fix. Maybe in State Tax!H34 and State Tax!I34?
Thanks for the feedback and I'll take a look!
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@MDM, any suggestions for how to figure out the rationale for the tax rate graph around Calculations!F83?
I've put in all my numbers already. I'm trying to dial in my Roth conversion amount for 2023. I'm sure they are correct, but there are some blips in the graph I'd like to understand.
The best I've come up with so far is fiddling with the Roth conversion amount in Calculations!B31, then scrolling over to look at the tax results and see which numbers change, and then dive down from there. That's probably the way you expect people to do it, but I'm asking in case there's something I'm missing.
I wish there were some AI tool that would do this (and generate a really nice annotated chart (https://www.bogleheads.org/forum/viewtopic.php?p=6960716#p6960716) like someone at Bogleheads did ), because I often have the same problem ;) and yours is the same approach I use. :)
As a side note, Idaho only applies the 5.8% flat tax above $2500 (single) and $5,000 (MFJ). The $2,500/$5,000 acts like an additional Idaho-only standard deduction. You probably only have a handful of Idaho filers, but I think it's an easy fix. Maybe in State Tax!H34 and State Tax!I34?
Thanks for the feedback and I'll take a look!
Thanks x 2!
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Roth Conversion and ACA Premium Tax Credit hack/modification
Sorry if this topic has been discussed before, if so please point me to a link. Thank you.
Goal: I would like to see the marginal "tax" effect of the ACA premium phase out due to Roth conversion using the CSS. There was a discussion on the effect here https://forum.mrmoneymustache.com/post-fire/aca-killing-traditional-to-roth-conversion-ladder/msg2466197/#msg2466197 (https://forum.mrmoneymustache.com/post-fire/aca-killing-traditional-to-roth-conversion-ladder/msg2466197/#msg2466197) by @seattlecyclone and in his/her blog here https://seattlecyclone.com/aca-premium-tax-credits-2021-edition/ (https://seattlecyclone.com/aca-premium-tax-credits-2021-edition/).
CSS Hack/Modification Steps:
- Determine the Second lowest cost Silver plan (SLCSP) in your area.
- In cell B114, enter the monthly enrollment premium.
- In cell B115, enter the negative number of cell B114. For example, if B114 = $1500 then B115 = -$1500.
- In cell AD107, change MAX(0,MIN(AD105,AD106)) to MAX(0,MAX(AD105,AD106))
- In cell AE100, enter value shown in AD100. For example, if AD100 = $18000 then AE100 = $18000.
These modifications seem to yield the marginal "tax" effect caused by ACA PTC Phase out as shown in figures of the above links. I only test this hack/modification on a clean Cashflow-2021-2022-2023.xls.
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Roth Conversion and ACA Premium Tax Credit hack/modification
Sorry if this topic has been discussed before, if so please point me to a link. Thank you.
Goal: I would like to see the marginal "tax" effect of the ACA premium phase out due to Roth conversion using the CSS. There was a discussion on the effect here https://forum.mrmoneymustache.com/post-fire/aca-killing-traditional-to-roth-conversion-ladder/msg2466197/#msg2466197 (https://forum.mrmoneymustache.com/post-fire/aca-killing-traditional-to-roth-conversion-ladder/msg2466197/#msg2466197) by @seattlecyclone and in his/her blog here https://seattlecyclone.com/aca-premium-tax-credits-2021-edition/ (https://seattlecyclone.com/aca-premium-tax-credits-2021-edition/).
mmm999, thanks for asking. Perhaps the best write-up on this is Roth Conversion and Capital Gains On ACA Health Insurance (https://thefinancebuff.com/tax-calculator-aca-obamacare-subsidy.html).
CSS Hack/Modification Steps:
- Determine the Second lowest cost Silver plan (SLCSP) in your area.
- In cell B114, enter the monthly enrollment premium.
- In cell B115, enter the negative number of cell B114. For example, if B114 = $1500 then B115 = -$1500.
- In cell AD107, change MAX(0,MIN(AD105,AD106)) to MAX(0,MAX(AD105,AD106))
- In cell AE100, enter value shown in AD100. For example, if AD100 = $18000 then AE100 = $18000.
Yes for B114.
B115 should be the negative of the Advance Premium Tax Credit (APTC). The APTC may or may not be the same as the enrollment premium.
AD107 looks correct as is: if you owe more than the limit, you are liable only for the limit.
AE100 should be whatever your SLCSP is. That may or may not be the same as the enrollment premium.
Does following Harry Sit's "how to" (the write-up linked above) work for you?
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Roth Conversion and ACA Premium Tax Credit hack/modification
Sorry if this topic has been discussed before, if so please point me to a link. Thank you.
Goal: I would like to see the marginal "tax" effect of the ACA premium phase out due to Roth conversion using the CSS. There was a discussion on the effect here https://forum.mrmoneymustache.com/post-fire/aca-killing-traditional-to-roth-conversion-ladder/msg2466197/#msg2466197 (https://forum.mrmoneymustache.com/post-fire/aca-killing-traditional-to-roth-conversion-ladder/msg2466197/#msg2466197) by @seattlecyclone and in his/her blog here https://seattlecyclone.com/aca-premium-tax-credits-2021-edition/ (https://seattlecyclone.com/aca-premium-tax-credits-2021-edition/).
CSS Hack/Modification Steps:
- Determine the Second lowest cost Silver plan (SLCSP) in your area.
- In cell B114, enter the monthly enrollment premium.
- In cell B115, enter the negative number of cell B114. For example, if B114 = $1500 then B115 = -$1500.
- In cell AD107, change MAX(0,MIN(AD105,AD106)) to MAX(0,MAX(AD105,AD106))
- In cell AE100, enter value shown in AD100. For example, if AD100 = $18000 then AE100 = $18000.
These modifications seem to yield the marginal "tax" effect caused by ACA PTC Phase out as shown in figures of the above links. I only test this hack/modification on a clean Cashflow-2021-2022-2023.xls.
I'm not sure why you feel this hack is necessary. (I also don't follow your hack, but @MDM probably will.)
The post you linked back to talks about Roth conversions and the ACA subsidies and the SEHI deduction, all of which can be modeled in the CSS already by using it in the expected / normal fashion.
The CSS includes the effect of the ACA subsidies and SEHI deduction layered on top of any other tax effects that you have going on. What I (and I would think most people) are interested in is the overall net effect of a Roth conversion with the entire tax picture entered into the CSS. Said differently, I'm mostly interested in the fact that a $1000 additional Roth conversion increases my federal taxes by, say, 20.17%. Whether that 20.17% is comprised of ACA subsidy loss, additional ordinary income tax, additional capital gains tax, more SS being taxed, or whatever is of secondary concern.
I am interested in the shape of my graph in the CSS mostly to understand why the various breakpoints (amounts of a Roth conversion which seem optimal) are where they are, that I've entered the data correctly, and that the spreadsheet is working properly. I don't see a need to recreate the graph in the post you quoted in order to just show the ACA subsidy loss effect by itself (partly because I've already worked through that math and believe and understand it, I guess).
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First, thanks for your comments @MDM and @secondcor521. I think I need to explain a bit more about my reason for modifying the CSS. I would like to include ACA premium (that I need to pay) as a tax item so that I could see its effect on the marginal tax plot and allow me to identify optimal Roth conversion amounts (e.g. low marginal tax plateaus). This is similar seeing the IRMAA spikes when decide on what amount to convert for people with Medicare. Please correct me but I don't think the current spreadsheet has that feature for people with ACA insurance.
My modification is an attempt to force CSS to report my ACA premium (Enrollment premium - APTC) as an "Excess APTC tax" in cell G19. This should increase my Net tax (G35) and most importantly the values in cells Q85:Q584 by the correct amounts based on conversion amounts in cells O85:O584. The marginal tax vs tIRA plot should now include the effect of my ACA premium which btw add roughly 6-18% additional marginal tax according to the links in my original posts. It is the plot which shows the additional tax I'm interested in. Hope I make it clearer on what I would like to accomplish.
@MDM, yes I know about Harry Sit's "how to" and have used it to estimate my taxes. BTW, Federal Poverty Level table (AC110:AF119) in your latest CSS needs 2023 numbers. I think it currently has 2022 numbers. Thank you.
Update: I would like to generate a plot like this https://www.bogleheads.org/forum/viewtopic.php?p=6960716#p6960716 (https://www.bogleheads.org/forum/viewtopic.php?p=6960716#p6960716). However, I don't think adding 8.5% to the plot like what was done here is correct. The additional tax should vary from 6% to 18% depending on the conversion amounts.
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First, thanks for your comments @MDM and @secondcor521. I think I need to explain a bit more about my reason for modifying the CSS. I would like to include ACA premium (that I need to pay) as a tax item so that I could see its effect on the marginal tax plot and allow me to identify optimal Roth conversion amounts (e.g. low marginal tax plateaus). This is similar seeing the IRMAA spikes when decide on what amount to convert for people with Medicare. Please correct me but I don't think the current spreadsheet has that feature for people with ACA insurance.
The developer of any software is often blind to mistakes that others see easily, so that could be the case here, but I think the current spreadsheet already does exactly what you want. If you have a set of inputs that shows otherwise I'd be happy to consider that case. Please let me know the inputs and desired vs. observed output you see.
My modification is an attempt to force CSS to report my ACA premium (Enrollment premium - APTC) as an "Excess APTC tax" in cell G19. This should increase my Net tax (G35) and most importantly the values in cells Q85:Q584 by the correct amounts based on conversion amounts in cells O85:O584. The marginal tax vs tIRA plot should now include the effect of my ACA premium which btw add roughly 6-18% additional marginal tax according to the links in my original posts. It is the plot which shows the additional tax I'm interested in. Hope I make it clearer on what I would like to accomplish.
If you want to treat the difference between Gold, Silver, and Bronze plan premiums as a tax, I guess you can do that. The intent of the CSS is this area is to reproduce Form 8962 (https://www.irs.gov/forms-pubs/about-form-8962) calculations so it provides accurate numbers for Line 2 of https://www.irs.gov/pub/irs-pdf/f1040s2.pdf or Line 9 of https://www.irs.gov/pub/irs-pdf/f1040s3.pdf.
yes I know about Harry Sit's "how to" and have used it to estimate my taxes. BTW, Federal Poverty Level table (AC110:AF119) in your latest CSS needs 2023 numbers. I think it currently has 2022 numbers. Thank you.
Harry's article discusses exactly how ACA effects get included in the tax calculation, so I'm not following....
The ACA uses the previous year's poverty level numbers, so using 2022 poverty levels when doing 2023 taxes is correct. E.g., see For 2022, the 2021 federal poverty lines are used for this purpose and are shown below (https://www.irs.gov/instructions/i8962#en_US_2022_publink1000305183).
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Please correct me but I don't think the current spreadsheet has that feature for people with ACA insurance.
I believe you're wrong (ETA: MDM seems to agree with me that you're wrong - see above - but he is saying it less bluntly) and it does have that feature and therefore your modifications are not required.
What you may be missing - conceptually, at least - is that the ACA subsidy loss effect is happening at the same time that the ordinary tax brackets are happening, and as the capital gains tax brackets are happening, and any tax credits are happening. So the graph that you see in the CSS is combining all of those effects at once. You won't get a graph like in seattlecyclone's blog because that separates out the ACA subsidy loss from all of the other effects.
If you put in your tax items and use the spreadsheet as designed, the ACA subsidy loss effect will be embedded in the graph that you see. You may just not be able to see it if your other tax items overwhelm or obscure it.
But that should be what you want. You shouldn't make a Roth conversion target *just* based on the ACA subsidy loss alone; if you do you might be ignoring some other factor that makes a larger or smaller Roth conversion more optimal. You should make it based on the totality of your income tax picture, which is what the CSS and the graph do for you.
Also, whatever graph you get, it probably won't look like others you see. The "+8.5%" for that BH graph may have been appropriate for that user's tax situation - I didn't really check it that closely - but the shape of your graph will be different because your tax situation is likely different.
HTH.
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Update: I would like to generate a plot like this https://www.bogleheads.org/forum/viewtopic.php?p=6960716#p6960716 (https://www.bogleheads.org/forum/viewtopic.php?p=6960716#p6960716). However, I don't think adding 8.5% to the plot like what was done here is correct. The additional tax should vary from 6% to 18% depending on the conversion amounts.
It appears that plot was generated using the CSS (Bogleheads call it Personal finance toolbox (https://www.bogleheads.org/wiki/Tools_and_calculators#Personal_finance_toolbox)) as is, except for the annotations in red, green, and purple.
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Thanks again for your comments. Since you are the CSS experts (I'm not) and both of you are telling me that I'm wrong then I need to go back and study the spreadsheet more closely. However, I truly appreciate your time trying to explain things to me.
The ACA uses the previous year's poverty level numbers, so using 2022 poverty levels when doing 2023 taxes is correct. E.g., see For 2022, the 2021 federal poverty lines are used for this purpose and are shown below.
Oh, I did not know that, thanks. I clicked the link https://aspe.hhs.gov/poverty-guidelines (https://aspe.hhs.gov/poverty-guidelines) provided in the spreadsheet, saw the 2023 numbers, and thought they should be used for 2023 tax.
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The ACA uses the previous year's poverty level numbers, so using 2022 poverty levels when doing 2023 taxes is correct. E.g., see For 2022, the 2021 federal poverty lines are used for this purpose and are shown below.
Oh, I did not know that, thanks. I clicked the link https://aspe.hhs.gov/poverty-guidelines (https://aspe.hhs.gov/poverty-guidelines) provided in the spreadsheet, saw the 2023 numbers, and thought they should be used for 2023 tax.
Good point. Now that inflation-affected tax code numbers are updated on the 'Tax Code' tab, removing at least some of those links from the 'Calculations' tab is probably a good idea. E.g., see 2023 2024 Federal Poverty Levels (FPL) for ACA Health Insurance (https://thefinancebuff.com/federal-poverty-levels-for-obamacare.html) that is linked from cell 'Tax Code'!D200.
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Thanks again for your comments. Since you are the CSS experts (I'm not) and both of you are telling me that I'm wrong then I need to go back and study the spreadsheet more closely. However, I truly appreciate your time trying to explain things to me.
I'm not a CSS expert. @MDM authored it so definitely an expert there.
Maybe the simplest and most direct way to articulate it to you is below. I don't have Excel on my PC so I'm basing the following on a Google sheets view of the CSS, but I think it's right (@MDM can confirm or correct):
The Y axis on the graph is, by default, D67.
Cell D67 is total tax, which includes D63.
D63 is federal tax, which is the same as G34.
...
And now we take a diversion, because I more carefully read what you wrote earlier:
My modification is an attempt to force CSS to report my ACA premium (Enrollment premium - APTC) as an "Excess APTC tax" in cell G19. This should increase my Net tax (G35) and most importantly the values in cells Q85:Q584 by the correct amounts based on conversion amounts in cells O85:O584. The marginal tax vs tIRA plot should now include the effect of my ACA premium which btw add roughly 6-18% additional marginal tax according to the links in my original posts. It is the plot which shows the additional tax I'm interested in. Hope I make it clearer on what I would like to accomplish.
The above is conceptually inaccurate. From a taxation point of view, what varies by the 6-18% that you allude to is not your subsidized premium (Health premium minus PTC), but the subsidy itself (PTC). Your subsidized premium (Health premium minus PTC) is not a tax. It's what you're paying for your health insurance.
Note I wrote "PTC" in the previous sentences, not APTC. Because your income estimate is used to calculate APTC and your actual income is used to calculate PTC, when they differ, the adjustment is either an additional amount you owe or an additional refund to you. The additional amount you owe is listed in the spreadsheet as "Excess APTC tax" in F19:G19. The additional refund to you is listed in the spreadsheet as "Net PTC" in F33:G33.
...
Now back to the original train of thought.
Both G19 and G33 should be incorporated into G34.
So the adjustment to get from APTC to PTC in G19/G33 goes to G34, which goes to D63, which goes to D67, which goes to the graph.
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@MDM and @secondcor521
I might understand the reason why I didn't see the marginal "tax" profile shown in https://seattlecyclone.com/aca-premium-tax-credits-2021-edition/ (https://seattlecyclone.com/aca-premium-tax-credits-2021-edition/), the red line in the 2nd plot ACA PTC Phase Out. It was because I put in a value for the APTC cell B115. Doing so will mask out the profile because the excess APTC tax, G19, is capped by values in cells AH92:AH94.
In other words, to see it, I must leave the APTC cell, B115, empty and only fill in values the enrollment premium (B114) and the SLCSP (AE100). I was able to see the profile I need without the hack in my original post.
Thank you for your comments. They made me examine the CSS more closely.
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This is what I get with APTC left empty. Red arrow indicates the profile I have looked for
(https://i.postimg.cc/65jX3mJF/Capture.jpg)
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This is what I get with APTC left empty. Red arrow indicates the profile I have looked for
...
The large negative marginal rate spike (increased income leading to lower tax) is due to crossing the 100% FPL amount and having zero APTC. See Household income below 100% of the federal poverty line (https://www.irs.gov/instructions/i8962#en_US_2022_publink100077021): if you have APTC then you can get PTC even if MAGI<FPL (sorry for the acronym salad...) but without APTC then you get no PTC if MAGI<FPL.
Probably best to enter your real situation if you want to use the results for real purposes. :)
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I was able to see the profile I need without the hack in my original post.
After all this back and forth, can you explain why you see the need for this?
As I have been trying to say, it's pretty much useless for any Roth conversion (or any tax planning) decisions. (By "it", I'm referring to "the profile [you] need", not the CSS.)
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After all this back and forth, can you explain why you see the need for this?
As I have been trying to say, it's pretty much useless for any Roth conversion (or any tax planning) decisions. (By "it", I'm referring to "the profile [you] need", not the CSS.)
You and @MDM are absolutely right about the usefulness of the profile in real life. It was just for me to learn more about the CSS capabilities. After reading the blog in my original post, I tried to create the profile in the CSS. It should be a simple exercise (right?) but I failed to see it. I was surprised and began to trace cell by cell trying to understand the "problem". I found that if I removed the caps on excess APTC tax I could see the profile (step 4 in my hack). Thinking that I "discovered something new" I posted my modifications here and you saw the rest.
When I learn something new, I like to start with something simple first and slowly add in more complexity. In this case of course, it was Roth conversion vs ACA Premium. CSS examples I could find online had too many things together (pension, capital gain, dividends etc..) which effectively compressed the profile to the point that it could not be easily seen. So my simple unrealistic case had nothing but roth conversion and still I fumbled. Thanks to your comments I finally realized what was going on. In any case, I did learn something new with this "useless" profile and have even more appreciation of the tool and its creator.
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I am new to your Case Study Spreadsheet and am having trouble "unlockingit" for data enty. I keep getting this message when I try to enter data "The cell or cells you're trying to change is in a protected spreadsheet. To make achane, unprotect the sheet. You might be requested for a password."
How do I work with this?
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I am new to your Case Study Spreadsheet and am having trouble "unlockingit" for data enty. I keep getting this message when I try to enter data "The cell or cells you're trying to change is in a protected spreadsheet. To make achane, unprotect the sheet. You might be requested for a password."
How do I work with this?
See rows 1-36 on the 'Instructions' tab. Does that help?
What cell are you trying to change (and why? if it might not be obvious)?
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Version 22.16 (2022/2023/2024)
- 2024 Federal Withholding Tables
- Format tax section to match IRS forms better
Implemented the "Standard Withholding Rate Schedules" from the spreadsheet attached to https://www.irs.gov/pub/irs-dft/p15t--dft.pdf. That's the last of the 2024 IRS updates that apply to this spreadsheet.
Cosmetic labeling and reordering of the tax numbers, mostly in Calculations!E2:I43. Makes it easier to compare with actual Form 1040 and Schedules 2&3 numbers.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2022/2023/2024 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Notes:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
- In early 2023, Microsoft added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the "Details can be found at..." link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
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Hello,
I appreciate all the work maintaining and updating this spreadsheet over the years. It has been a great help to me. I have 2 questions:
1. For child tax credits, if I choose 1 qualifying child the non-refundable and refundable amounts add to $2500. If I choose 2 children they add to $4000. Is this right? If yes, what's going on here that 1 child is $2500 and 2 are $2000 per child?
2. Is there anywhere to account for the Energy Efficient Home Improvement Credit?
Thank you,
Jeff
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Hello,
I appreciate all the work maintaining and updating this spreadsheet over the years. It has been a great help to me. I have 2 questions:
1. For child tax credits, if I choose 1 qualifying child the non-refundable and refundable amounts add to $2500. If I choose 2 children they add to $4000. Is this right? If yes, what's going on here that 1 child is $2500 and 2 are $2000 per child?
A qualifying child gets $2000 (with a $1600 refundable limit), an "other dependent" gets $500 non-refundable. If you have two dependents, but only one under age 17, that's the $2500. Two dependents both under age 17 gets $4000 (but limited to $3200 refundable).
2. Is there anywhere to account for the Energy Efficient Home Improvement Credit?
Cell Calculations!G25. You'll have to do the "multiply by 30%", etc., calculations shown on https://www.irs.gov/pub/irs-dft/f5695--dft.pdf and enter the bottom line.
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Thanks MDM for the quick response and explanation. I appreciate it.
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MDM thanks again for keeping this updated. I've pulled the new version for the last three years and use it monthly to help with my taxes. I appreciate your contribution to the forum by keeping this active!
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I agree with all the above, I only use this once or twice a year to track my tax situation, but it is insanely helpful and right on the nose every time. Thank you so much for this!
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I used the sheet back in 2018, I'm looking to do an updated one. I downloaded the latest version and don't see where I put the deduction from pay for life insurance?
Also, how do I account for non-taxable income? My husband is military and a large chunk of his pay is not taxable.
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I used the sheet back in 2018, I'm looking to do an updated one. I downloaded the latest version and don't see where I put the deduction from pay for life insurance?
Also, how do I account for non-taxable income? My husband is military and a large chunk of his pay is not taxable.
If the life insurance is pre-FICA, you could use "Pretax Commuter costs". If it is post-FICA but pre-W2, "Pre-tax pension contribution" could work.
B72 is for "Other Untaxed Income" - note that it takes a monthly amount.
Hope it works for you - feel free to PM or post back with questions.
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I used the sheet back in 2018, I'm looking to do an updated one. I downloaded the latest version and don't see where I put the deduction from pay for life insurance?
Also, how do I account for non-taxable income? My husband is military and a large chunk of his pay is not taxable.
If the life insurance is pre-FICA, you could use "Pretax Commuter costs". If it is post-FICA but pre-W2, "Pre-tax pension contribution" could work.
B72 is for "Other Untaxed Income" - note that it takes a monthly amount.
Hope it works for you - feel free to PM or post back with questions.
Thanks! I was able to manipulate it a bit for the untaxed income, I found his federal taxable income and put that in the gross box, then took the non-taxable amount and divided it by 12 for the untaxed income box. I had to make a tweak in the state tax sheet since none of his income is taxed by state I just edited the AGI box to include only the value from my income. And I have both types of life insurance (company pays some that I have to pay taxes on, plus I purchase additional) so I put them in the respective boxes you recommended.
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First of all, thanks very much for a wonderful tool! I’ve only begun to scratch the surface on everything this provides!
I’ve uncovered a slight error on the Personal Finance Toolbox under the “Misc. calcs” tab, cell B165, Marginal tax rate of conversion when funds from a taxable account are used to pay for taxes due to conversion.
I posted on the Bogleheads forum regarding this topic: https://www.bogleheads.org/forum/viewtopic.php?p=7664389#p7664389
I’ll provide a short description:
To calculate the marginal tax rate, you divide the (change in tax) by (change in income). The formula in B165 correctly calculates the change in tax when selling funds in a taxable account to pay for the taxes resulting from the tIRA transfer, but it does not account for the additional income resulting from the sale of taxable funds.
I’ll provide a quick example:
In my case, I pay any expenses not covered with interest and dividends by selling funds in my taxable account. Here's my assumptions:
- 24% federal only tax bracket
- NIIT of 3.8% and 50% cost basis/current value in the taxable account so the marginal tax becomes (15% + 3.8%)*50% = 9.4% on any additional fund sales,
- No other income, no SS, no pension, etc.
- $10k tIRA to Roth conversion
If I pay for the conversion with simple withholding, the marginal rate is a simple 24% or 2400/10000.
If I choose to pay the taxes by liquidating a taxable asset with 50% cost basis, I need to sell $2649 of the asset resulting in $2649 additional income and $249 in taxes.
Cell B165 currently calculates the marginal rate at 26.49% using the numbers above when the actual marginal rate should be (2400+249)/(10000+2649) = 20.94%
A formula that yields the correct marginal rate calculation is:
=B162/(1-B163*(1-B164))/(1+B162/(1-B163*(1-B164)))
(note, I didn’t take time to algebraically simplify the formula)
Thanks again for the spreadsheet and attention to this error.
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Cell B165 currently calculates the marginal rate at 26.49% using the numbers above....
Welcome to the forum and thank you for your interest!
That calculation, however, is correct. If you are paying extra tax to pay the conversion tax, the tax rate on your conversion must be higher than if you aren't paying extra tax.
You can't make the conversion better by paying extra tax. That would be a neat trick if you could, but you can't.
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Cell B165 currently calculates the marginal rate at 26.49% using the numbers above....
Welcome to the forum and thank you for your interest!
That calculation, however, is correct. If you are paying extra tax to pay the conversion tax, the tax rate on your conversion must be higher than if you aren't paying extra tax.
You can't make the conversion better by paying extra tax. That would be a neat trick if you could, but you can't.
No disrespect, but I have to disagree. You're paying additional tax, but you're also incurring additional income...at least the IRS tells me I am! And you're making the conversion better by depositing an extra $2400 into the Roth at a relatively small additional cost of $249. $10k in the Roth is clearly better than $7600.
Consider two independent events:
1) A simple tIRA to Roth conversion per my example above. $10k converted, $2400 withheld for taxes, $7600 goes into the Roth. 24% marginal tax rate.
2) Let's assume that a new tax law allows retirees to deposit up to $2400 of unearned income into a Roth. I liquidate $2649 of a 50% cost basis investment, pay $249 in taxes and $2400 goes into the Roth. Marginal tax rate = 249/2649 = 9.4%.
Please explain to me how combining these two events nets a marginal tax rate of 26.49%?
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Cell B165 currently calculates the marginal rate at 26.49% using the numbers above....
Welcome to the forum and thank you for your interest!
That calculation, however, is correct. If you are paying extra tax to pay the conversion tax, the tax rate on your conversion must be higher than if you aren't paying extra tax.
You can't make the conversion better by paying extra tax. That would be a neat trick if you could, but you can't.
No disrespect, but I have to disagree. You're paying additional tax, but you're also incurring additional income...at least the IRS tells me I am! And you're making the conversion better by depositing an extra $2400 into the Roth at a relatively small additional cost of $249. $10k in the Roth is clearly better than $7600.
Sure, but you can put $10K into the Roth by not withholding anything. You can then pay $2400 tax or, in your example, $2649 tax. Paying $2400 tax is better.
2) Let's assume that a new tax law allows retirees to deposit up to $2400 of unearned income into a Roth. I liquidate $2649 of a 50% cost basis investment, pay $249 in taxes and $2400 goes into the Roth. Marginal tax rate = 249/2649 = 9.4%.
I think I get what you are trying to do, but see above. Paying $2400 is better than paying $2649, so it makes sense that the marginal rate comparison, 24% vs. 26.49%, is consistent with that.
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Sure, but you can put $10K into the Roth by not withholding anything. You can then pay $2400 tax or, in your example, $2649 tax. Paying $2400 tax is better.
Of course, $2400 is better than $2649, but now you've added another $2400 to the denominator of the marginal tax calculation. In that case, the marginal tax rate should be 2400/(10000+2400) = 19.35% 19.35% is indeed better than 20.94%
2) Let's assume that a new tax law allows retirees to deposit up to $2400 of unearned income into a Roth. I liquidate $2649 of a 50% cost basis investment, pay $249 in taxes and $2400 goes into the Roth. Marginal tax rate = 249/2649 = 9.4%.
I think I get what you are trying to do, but see above. Paying $2400 is better than paying $2649, so it makes sense that the marginal rate comparison, 24% vs. 26.49%, is consistent with that.
See above. What is not consistent is paying the $2400 tax bill from another tax free source doesn't appear any better than withholding the tax from the conversion amount.
Consider this article from Vanguard regarding Breakeven Tax Rate:
How to lower the BETR
Even better: The BETR is not a static number. There are investor choices that can lower the rate, and this, in effect, expands the pool of those who could ultimately benefit from the long-term tax advantages of a Roth conversion. Investors can:
Pay conversion taxes from a taxable account. Tapping into a separate cache of cash allows the full value of the IRA to move to a tax-advantaged account. The more tax-inefficient the account used to pay the conversion tax, the lower the BETR (and the greater the benefit of converting).
If I enter a 0% cost basis, the BETR (cell B166) goes above 24% 20 years later even with a "tax drag" from taxes on dividends.
Could you explain this? I don't see how a higher future withdrawl tax rate could make a Roth conversion a bad idea when paying taxes from a taxable source which has the same tax rates in the future, or am I misunderstanding the BETR terminology?
(https://www.dropbox.com/scl/fi/79phe1kbi34ib1dhel32m/Screenshot-2024-01-22-at-10.50.15-PM.png?rlkey=jyswe3mhaufpa54r5j83fckfr&raw=1)
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Of course, $2400 is better than $2649, but now you've added another $2400 to the denominator of the marginal tax calculation.
I think you are getting hung up on the definition of the denominator in the marginal tax rate calculation. Yes, the IRS will count the sale of appreciated securities as income. No, in this case you shouldn't add that to the denominator. To evaluate the marginal tax rate of the conversion, you want the tax divided by the amount of the conversion. Period.
Whether you pay the $2400 from the conversion amount or from another tax-free source, the marginal tax rate is the same: 24%. Nothing inconsistent about that.
Selling a 0% cost basis investment is a pretty terrible way to pay the conversion tax. In the example you show, it makes the marginal tax rate of the conversion 29.56%, much worse than 24%. Given 20 years and the conditions you chose, the BETR does drop from 29.56% to 24.77%.
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I want to thank you again for addressing this topic! This is very important to me since we are retired early and have no income sources to pay conversion taxes other than liquidating taxable assets.
Of course, $2400 is better than $2649, but now you've added another $2400 to the denominator of the marginal tax calculation.
I think you are getting hung up on the definition of the denominator in the marginal tax rate calculation. Yes, the IRS will count the sale of appreciated securities as income. No, in this case you shouldn't add that to the denominator. To evaluate the marginal tax rate of the conversion, you want the tax divided by the amount of the conversion. Period.
I agree, all taxes generated from the conversion event need to be considered.
Whether you pay the $2400 from the conversion amount or from another tax-free source, the marginal tax rate is the same: 24%. Nothing inconsistent about that.
The inconsistency I see is that your marginal tax calculation tells me that a $7600 Roth balance from a $2400 tax payment is equivalent to a $10k Roth balance from the same $2400 tax payment and somehow better than a $10k Roth balance from a $2649 combined tax payment.
Selling a 0% cost basis investment is a pretty terrible way to pay the conversion tax. In the example you show, it makes the marginal tax rate of the conversion 29.56%, much worse than 24%. Given 20 years and the conditions you chose, the BETR does drop from 29.56% to 24.77%.
I don't disagree, selling a 0% cost basis wouldn't be my preferred option, but it is still preferable to paying the taxes using tIRA withholding assuming current/future tax rates are the same and there is a dividend tax owed at the end of every year. Allow me to demonstrate:
Using the conditions in the screen shot above, consider 3 options for a $10k tIRA to Roth conversion:
a) Pay the tax using a 0% basis investment ($2,956 total change in taxes) resulting in $10k in the Roth, nothing in the tIRA and nothing in the taxable account.
b) Don't do the conversion, keep $2,956 (0% cost basis) in the taxable account leaving a Roth balance of $0.
c) Pay the conversion tax using tIRA withholding resulting in $7600 in the Roth, $2,956 in the taxable account and nothing in the tIRA.
Assuming 18.8% tax is paid on the 2% dividends every year, here are the results I came up with:
(https://www.dropbox.com/scl/fi/du5x9yxgcjtrsudmihar1/Screenshot-2024-01-23-at-11.26.07-AM.png?rlkey=mpt3ybw8chduvtgkl2vdrygtw&raw=1)
Source: Sheet 4 on https://www.dropbox.com/scl/fi/ioeu1rw0jcm8zmbt0froy/Roth-Conversion-Example.xlsx?rlkey=2wjid1lwc0pki4y70c1hp0bpz&dl=0
This shows me that paying the conversion tax from the 0% basis investment is better than no conversion and using tIRA withholding due to the tax on dividends not being reinvested which is contrary to your marginal rate/BETR calculations.
I believe this goes back to my earlier comment on looking at the tax payment as a separate event from the conversion:
- Given the same present/future ordinary tax rates, there is no accounting advantage to converting a $10k tIRA to a $7600 Roth, though there are other benefits.
- The question becomes, is there a benefit from using the opportunity to move taxable funds into the Roth even when it generates additional taxes? Unlike the tIRA/Roth benefits, moving the taxable funds into a Roth benefits from the tax drag on dividend payments plus any existing cost basis providing tax free growth even when the present/future tax rates remain the same.
Thanks again for your attention to this. I look forward to your response!
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Whether you pay the $2400 from the conversion amount or from another tax-free source, the marginal tax rate is the same: 24%. Nothing inconsistent about that.
The inconsistency I see is that your marginal tax calculation tells me that a $7600 Roth balance from a $2400 tax payment is equivalent to a $10k Roth balance from the same $2400 tax payment and somehow better than a $10k Roth balance from a $2649 combined tax payment.
There is quantity and there is quality. For quantity, no argument that making a larger conversion at the same favorable marginal rate is better than making a smaller conversion at that rate. For quality, converting an amount for a lower tax cost is better than converting the same amount for a higher tax cost.
When you mix quantity and quality then it's not immediately clear and some calculations are needed. For example, for people in the 0% federal bracket for qualified dividends and long term capital gains, there may be no tax drag at all in their taxable accounts. In that case, taxable and Roth holdings may (or may not) be of equal value. If there is a tax drag, then moving money from taxable to Roth can overcome the extra initial cost, as your spreadsheet shows.
On a Roth conversion, you may have tax withheld and then send a "rollover contribution" of that amount to get the same amount into the Roth as was distributed from the traditional. If you want the tax withheld to equal your total tax cost for the conversion itself plus raising the funds to pay that tax, the withholding (i.e., the marginal tax rate on the distribution) will differ depending on how you raise those funds.
- Given the same present/future ordinary tax rates, there is no accounting advantage to converting a $10k tIRA to a $7600 Roth, though there are other benefits.
- The question becomes, is there a benefit from using the opportunity to move taxable funds into the Roth even when it generates additional taxes? Unlike the tIRA/Roth benefits, moving the taxable funds into a Roth benefits from the tax drag on dividend payments plus any existing cost basis providing tax free growth even when the present/future tax rates remain the same.
Yes to all that, if a tax drag exists. You mentioned Bogleheads: the Bogleheads Traditional versus Roth (https://www.bogleheads.org/wiki/Traditional_versus_Roth) wiki article discusses those two points in its Calculations section.
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There is quantity and there is quality. For quantity, no argument that making a larger conversion at the same favorable marginal rate is better than making a smaller conversion at that rate. For quality, converting an amount for a lower tax cost is better than converting the same amount for a higher tax cost.
When you mix quantity and quality then it's not immediately clear and some calculations are needed. For example, for people in the 0% federal bracket for qualified dividends and long term capital gains, there may be no tax drag at all in their taxable accounts. In that case, taxable and Roth holdings may (or may not) be of equal value. If there is a tax drag, then moving money from taxable to Roth can overcome the extra initial cost, as your spreadsheet shows.
We are (almost) in complete agreement, but I'm still "hung up" on your BETR calculation because it's telling me that using taxable funds with some capital gains to pay the conversion tax is less beneficial than withholding without sufficient time. What exactly should I be comparing BETR to? From the Vanguard site on this, "BETR is that future tax rate at which the after-tax withdrawal value for an investor would be the same in both the no-conversion and conversion scenarios." http://https://investor.vanguard.com/investor-resources-education/news/a-betr-calculation-for-the-traditional-to-roth-ira-conversion-equation
Per your BETR calculation, it takes 25 years to "overcome the extra initial cost" (BETR reaches 24%) of using a 0% basis investment to pay the taxes, yet my spreadsheet shows an after tax benefit to converting from year 1 due to tax drag. Based on this, shouldn't the BETR start at 24% and drop slightly each year so that the after tax value of the tIRA & taxable account equals the converted Roth value? That's what Vanguard is telling me.
See the new columns on the right for my estimate of BETR based on the Vanguard definition:
(https://www.dropbox.com/scl/fi/751ks1r5x6mvlvson3o2t/Screenshot-2024-01-23-at-2.15.22-PM.png?rlkey=qtvu1el8vuub9y8z7upds73cr&raw=1)
Source: Sheet 5 https://www.dropbox.com/scl/fi/ioeu1rw0jcm8zmbt0froy/Roth-Conversion-Example.xlsx?rlkey=2wjid1lwc0pki4y70c1hp0bpz&dl=0
Edited to quote actual Vanguard information
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...using taxable funds with some capital gains to pay the conversion tax is less beneficial than withholding without sufficient time.
Assuming a 24% ordinary tax rate and an 18.8% QD and LTCG rate, start with $13157.89 in traditional and $3889.03 in taxable.
What do you get for Roth and taxable balances after paying the conversion tax
- from the conversion amount?
- by selling a 0% basis stock?
- by selling a 40% basis stock?
- by selling a 100% basis stock? (this one is the same as using available cash)
What do those results tell you?
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...using taxable funds with some capital gains to pay the conversion tax is less beneficial than withholding without sufficient time.
Assuming a 24% ordinary tax rate and an 18.8% QD and LTCG rate, start with $13157.89 in traditional and $3889.03 in taxable.
What do you get for Roth and taxable balances after paying the conversion tax
- from the conversion amount?
- by selling a 0% basis stock?
- by selling a 40% basis stock?
- by selling a 100% basis stock? (this one is the same as using available cash)
What do those results tell you?
Here you go, see attached file. Note, the amount in the taxable account is the total amount liquidated necessary to cover all taxes including CG so this changes with the basis. If you want to keep the taxable account balance the same, I'll need to add more columns for "Taxable balance left over after conversion".
This tells me that 100% basis is the best option followed in order by 40%, 0% and withholding, pretty much what we've been saying all along.
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Note, the amount in the taxable account is the total amount liquidated necessary to cover all taxes including CG so this changes with the basis. If you want to keep the taxable account balance the same, I'll need to add more columns for "Taxable balance left over after conversion".
You have to use the same starting point if you are comparing different options.
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Note, the amount in the taxable account is the total amount liquidated necessary to cover all taxes including CG so this changes with the basis. If you want to keep the taxable account balance the same, I'll need to add more columns for "Taxable balance left over after conversion".
You have to use the same starting point if you are comparing different options.
Of course, but the question is "how much do you have to invest if the conversion event doesn't happen". Regardless, here's the spreadsheet, same results. Note, you could start with $10k or $1M in the taxable account, the conversion advantage and BETR columns remain the same. You can check my math in the spreadsheet if you'd like, Sheet 4: https://www.dropbox.com/scl/fi/ioeu1rw0jcm8zmbt0froy/Roth-Conversion-Example.xlsx?rlkey=2wjid1lwc0pki4y70c1hp0bpz&dl=0
I have a question, given "BETR is that future tax rate at which the after-tax withdrawal value for an investor would be the same in both the no-conversion and conversion scenarios", why would BETR at year 0 be higher than 24% if all the same conditions apply as your calculation indicates when the basis is less than 100%? Shouldn't the straight withdrawal form the tIRA and taxable account yield the exact same after tax value as the Roth per the definition?
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You can check my math in the spreadsheet if you'd like, Sheet 4: https://www.dropbox.com/scl/fi/ioeu1rw0jcm8zmbt0froy/Roth-Conversion-Example.xlsx?rlkey=2wjid1lwc0pki4y70c1hp0bpz&dl=0
I've tried a few times without success to access that. In any case, it can be difficult to check someone else's spreadsheet quickly....
I have a question, given "BETR is that future tax rate at which the after-tax withdrawal value for an investor would be the same in both the no-conversion and conversion scenarios", why would BETR at year 0 be higher than 24% if all the same conditions apply as your calculation indicates when the basis is less than 100%? Shouldn't the straight withdrawal form the tIRA and taxable account yield the exact same after tax value as the Roth per the definition?
If you pay only the marginal rate (24% here) on the conversion amount, then if the tax has been paid from the conversion amount it's just the commutative property of multiplication and the BETR remains 24%.
If you pay the tax from a 100% basis taxable investment, then yes, at the time of conversion the BETR is the same 24% and then decreases with time if there would be tax drag in the taxable account.
If you pay the tax from a <100% basis taxable investment, you have incurred extra tax. Therefore the BETR is immediately higher than 24% because the tax rate on a traditional withdrawal alone would have to be higher to match the extra tax.
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I've tried a few times without success to access that. In any case, it can be difficult to check someone else's spreadsheet quickly....
Interesting, I just accessed the link from a different browser without a dropbox account and it allowed me to download it without issue. I've attached the spreadsheet below.
Regardless, my screenshots continue to show that converting has a benefit over withholding when doing a Roth conversion regardless of the basis. What could I be doing wrong?
I have a question, given "BETR is that future tax rate at which the after-tax withdrawal value for an investor would be the same in both the no-conversion and conversion scenarios", why would BETR at year 0 be higher than 24% if all the same conditions apply as your calculation indicates when the basis is less than 100%? Shouldn't the straight withdrawal form the tIRA and taxable account yield the exact same after tax value as the Roth per the definition?
If you pay only the marginal rate (24% here) on the conversion amount, then if the tax has been paid from the conversion amount it's just the commutative property of multiplication and the BETR remains 24%.
If you pay the tax from a 100% basis taxable investment, then yes, at the time of conversion the BETR is the same 24% and then decreases with time if there would be tax drag in the taxable account.
If you pay the tax from a <100% basis taxable investment, you have incurred extra tax. Therefore the BETR is immediately higher than 24% because the tax rate on a traditional withdrawal alone would have to be higher to match the extra tax.
I disagree, you're ignoring the value and basis of the taxable account if you withdraw from the tIRA. Why would you have to pay the CG tax from the proceeds of a straight withdrawal when you still have the money in a taxable account which you can choose to sell or not?
Per my original example, I have $10k in tIRA. If I convert it and sell a 0% basis taxable fund to pay the $2400, ($2956 total sale), I have $10k in the Roth.
If I withdraw $10k from the tIRA and pay the taxes, I have $7600 & $2956 (more) in my taxable account. If I sell $2956, pay the $556 CG tax, I'm left with the exact same $10k in cash. My screenshots and spreadsheet show this very clearly.
Put another way, withdrawing the tIRA doesn't reduce the tax liability of the funds you planned to liquidate when converting.
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Not enough to analyze in depth now but you may be on to something.
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Not enough to analyze in depth now but you may be on to something.
I'll admit, I've been opening responses for a couple days hoping an acknowledgment like this.
Thanks again for your attention and let me know if you have any additional questions or any more that I can help.
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Not enough to analyze in depth now but you may be on to something.
I'll admit, I've been opening responses for a couple days hoping an acknowledgment like this.
Thanks again for your attention and let me know if you have any additional questions or any more that I can help.
Turns out my lack of time will likely extend longer than I thought. Seems you have the bit between your teeth so have at it!
As noted, the formula used when paying the conversion tax by selling investments came from the Bogleheads topic Roth 401(k) vs. 401(k) Spreadsheet Attempt - Critique Please - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?t=150516). It is (I think) also included in Retirement plan analysis (math) - Bogleheads (https://www.bogleheads.org/wiki/Retirement_plan_analysis_(math)). If you can reach consensus with those folks that would be great. When I looked at the formula, it seemed directionally correct, correct at 0% tax or 100% basis, etc., but if appearances are deceiving and something better is available, great!
I suppose you'd have to consider tax payment methods both "now" and "in the future" to ensure "amount available after all taxes" is accurately used as the deciding metric.
The CSS is a crowd-sourced tool so I'm happy to include/revise whatever is needed. For the most part, folks who participate in forums like this, Bogleheads, Early-Retirement.org, etc., are also interested only in what is correct, not personal glory or proving someone else wrong (https://xkcd.com/386/). I read the Boglehead thread you mentioned early on, and hope you do take to heart that it shouldn't be a personal thing, and avoid snarky comments. One of the first Roth vs Traditional threads at Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?f=10&t=14166) didn't set a very good example....
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Turns out my lack of time will likely extend longer than I thought. Seems you have the bit between your teeth so have at it!
As noted, the formula used when paying the conversion tax by selling investments came from the Bogleheads topic Roth 401(k) vs. 401(k) Spreadsheet Attempt - Critique Please - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?t=150516). It is (I think) also included in Retirement plan analysis (math) - Bogleheads (https://www.bogleheads.org/wiki/Retirement_plan_analysis_(math)). If you can reach consensus with those folks that would be great. When I looked at the formula, it seemed directionally correct, correct at 0% tax or 100% basis, etc., but if appearances are deceiving and something better is available, great!
I suppose you'd have to consider tax payment methods both "now" and "in the future" to ensure "amount available after all taxes" is accurately used as the deciding metric.
The CSS is a crowd-sourced tool so I'm happy to include/revise whatever is needed. For the most part, folks who participate in forums like this, Bogleheads, Early-Retirement.org, etc., are also interested only in what is correct, not personal glory or proving someone else wrong (https://xkcd.com/386/). I read the Boglehead thread you mentioned early on, and hope you do take to heart that it shouldn't be a personal thing, and avoid snarky comments. One of the first Roth vs Traditional threads at Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?f=10&t=14166) didn't set a very good example....
I hope you’re at least doing something enjoyable! Thanks for the vote of confidence and the links. I’m about 80% closer to a useable formula, but the change to basis from dividends compounding can’t be solved by a simple formula, but we should be able to get it close enough to not affect the BETR by more than a few 10ths of a percent. Ironically, the marginal rate calculation that set me on this path doesn’t appear to be relevant to the BETR value!
I think I’ll start a new thread rather than reply to the one you linked since it appears to be 10 years old.
I’ll admit, there is some satisfaction in “winning” a debate, I’m more interested in correcting what I believe to be an error in a widely used and respected spreadsheet. I’ve certainly learned a great deal while framing my discussion with you and on Bogleheads.
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Turns out my lack of time will likely extend longer than I thought. Seems you have the bit between your teeth so have at it!
As noted, the formula used when paying the conversion tax by selling investments came from the Bogleheads topic Roth 401(k) vs. 401(k) Spreadsheet Attempt - Critique Please - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?t=150516). It is (I think) also included in Retirement plan analysis (math) - Bogleheads (https://www.bogleheads.org/wiki/Retirement_plan_analysis_(math)). If you can reach consensus with those folks that would be great. When I looked at the formula, it seemed directionally correct, correct at 0% tax or 100% basis, etc., but if appearances are deceiving and something better is available, great!
FYI, I started this thread which has a detailed summary of my logic: https://www.bogleheads.org/forum/viewtopic.php?t=422766 I got some input as you can see to help make some improvements.
Here's a link to the Excel sheet via dropbox: https://www.dropbox.com/scl/fi/ioeu1rw0jcm8zmbt0froy/Roth-Conversion-Example.xlsx?rlkey=2wjid1lwc0pki4y70c1hp0bpz&dl=0
And a Googlesheets version that should work, though I haven't fully analyzed it: https://docs.google.com/spreadsheets/d/1eId77CKaBKAknLBsNt16UH4P7OEuGl7OKHHvt_fVdaI/edit?usp=sharing
Have a look when you get a chance and we can discuss how to incorporate it into the current CSS.
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Based on that thread, it seems "...the assumption that cash flow will be available "in the future" and the math above is why the BETR would be higher than the current conversion tax rate" is the main point.
In other words, in that case we should change the wording "Current capital gain tax rate" to "Current tax rate on the funds used to pay for the conversion" (or something like that) and note that in the case of paying the tax from the conversion itself, "Basis fraction of funds used to pay tax" should be set to 0%.
As also noted there, "different assumptions can lead to different conclusions." If someone would never have cash flow to pay the tax, and would always pay the tax out of the conversion, then we're back to the "commutative property" analysis.
Having cash flow available (e.g., SS, RMDs, etc.) seems the more plausible assumption. What do you think?
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Based on that thread, it seems "...the assumption that cash flow will be available "in the future" and the math above is why the BETR would be higher than the current conversion tax rate" is the main point.
In other words, in that case we should change the wording "Current capital gain tax rate" to "Current tax rate on the funds used to pay for the conversion" (or something like that) and note that in the case of paying the tax from the conversion itself, "Basis fraction of funds used to pay tax" should be set to 0%.
As also noted there, "different assumptions can lead to different conclusions." If someone would never have cash flow to pay the tax, and would always pay the tax out of the conversion, then we're back to the "commutative property" analysis.
Having cash flow available (e.g., SS, RMDs, etc.) seems the more plausible assumption. What do you think?
I don't think that assumption is valid based on this part of the Vanguard definition of BETR: "...after-tax withdrawal value for an investor would be the same in both the no-conversion and conversion scenarios."
With any assumption of growth, the taxable account funds in the no-conversion scenario will have value and likely some level of tax due regardless of other funds being available. In other words, it doesn't matter if the taxable account funds are used to pay for future tIRA withdrawals or not, the question is what is the after tax value of those funds after X number of years with the given assumptions.
It is possible, probably likely in my personal case, those funds would be held until after death and the basis is stepped up, but that's an option the user can choose. And yes, that does increase the time 0 BETR to match the current CSS calculation.
And yes, using simple withholding reverts back to the commutative property as you noted and is summarized in columns S-Y, though I'm not sure that needs to be included in the final product.
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FYI, I put together a synopsis of different takes on calculating marginal tax rates under the various scenarios used for paying the taxes. Have a look if you're interested: https://www.bogleheads.org/forum/viewtopic.php?p=7702290#p7702290
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FYI, I put together a synopsis of different takes on calculating marginal tax rates under the various scenarios used for paying the taxes. Have a look if you're interested: https://www.bogleheads.org/forum/viewtopic.php?p=7702290#p7702290
Appears the discussion there is ongoing with no consensus. ;)
At this point, some new wording and/or cell notes as previously proposed is likely all that will change in the "Roth vs. Traditional when contributing the maximum allowed" section of the 'Misc. calcs' tab when the next version is released. That will most likely happen when the Tax Foundation (https://taxfoundation.org/data/all/state/state-income-tax-rates-2023/) releases its 2024 state tax post.
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Appears the discussion there is ongoing with no consensus. ;)
Indeed! It's a bit like the Monty Hall question :)
At this point, some new wording and/or cell notes as previously proposed is likely all that will change in the "Roth vs. Traditional when contributing the maximum allowed" section of the 'Misc. calcs' tab when the next version is released. That will most likely happen when the Tax Foundation (https://taxfoundation.org/data/all/state/state-income-tax-rates-2023/) releases its 2024 state tax post.
One more point about the assumption of funds being available to cover tIRA withdrawal taxes in the future, why does that assumption seem to only apply to LTCG tax liability present at the time of conversion?
For example, there's a "Tax rate on capital gains at withdrawal" input on the current spreadsheet and shouldn't that rate apply to the tax liability of funds in the taxable account at the time of conversion for cases where basis < 100%? Put another way, shouldn't the future funds available assumption make that tax rate equal to 0 for all future taxable account LTCG tax liability or, more appropriately, the "Tax rate on capital gains at withdrawal" apply to all untaxed LTCGs, not just the gains after the time of conversion?
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I got pulled into this discussion on Bogleheads, and I think there is a mistake in the way the CSS "Roth vs. Traditional when contributing the maximum allowed" on the Misc Calcs handles cases when the basis fraction is not 100%.
For d=2%, g=5%, T1=19.7%, T2=18.8%, n=40, T=24%, B163=18.8%, and B164=50% the tool is calculating a BETR of 19.855% and I am getting a value of 19.689%. I think it has to do with the way the "ratio of equal outcomes" (cell B161) gets calculated. When I built a quick spreadsheet I'm getting the same R/T value when basis = 100% bit different values and different BETRs when it's <100%; the R/T value seems to be where the two calculations diverge.
I derived the formula on Bogleheads and mine was a little more complicated, calculating balance growth and basis growth separately. It may be possible to simplify that down a bit, but it looks like a change of some kind with the CSS calculation is probably needed.
On a related topic, a couple years ago I built a tool (https://www.bogleheads.org/forum/viewtopic.php?t=352921) that combines a bunch of related functions: calculating the performance of different kinds of accounts (taxable, non-deductible, pre-tax, Roth, tax-free), estimating future tax rates, and calculating TvsR comparisons. Most of these are already done in the CSS, but not pulled together in a cohesive way. I suggested you consider merging it into the CSS and you declined. Since then I've developed and polished it quite a bit. It might be worth a second look.
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I got pulled into this discussion on Bogleheads, and I think there is a mistake in the way the CSS "Roth vs. Traditional when contributing the maximum allowed" on the Misc Calcs handles cases when the basis fraction is not 100%.
For d=2%, g=5%, T1=19.7%, T2=18.8%, n=40, T=24%, B163=18.8%, and B164=50% the tool is calculating a BETR of 19.855% and I am getting a value of 19.689%. I think it has to do with the way the "ratio of equal outcomes" (cell B161) gets calculated. When I built a quick spreadsheet I'm getting the same R/T value when basis = 100% bit different values and different BETRs when it's <100%; the R/T value seems to be where the two calculations diverge.
I think I copied the formula for the 100% basis fraction from this post (https://www.bogleheads.org/forum/viewtopic.php?f=10&t=150516#p2773840) because it gave the same result as Harry Sit's Traditional or Roth 401k - Zoho Sheet (https://sheet.zohopublic.com/sheet/published/hd3vbee16c938134d45b1bd758e37d6fddfc7?sheetid=0&range=E14) (don't know what formula Harry uses), relying on the odds of two separate(?) approaches that give the same erroneous answer being low. Of course, low is not the same as zero.
Both the CSS and Harry's tool give 17.989% for the 100% basis case. What do you get when all the above is the same, except basis fraction = 100%?
I think the formula in B165 for a <100% basis case also came from that same BH thread, although Harry's tool doesn't have that option. If you have to pay tax on the funds sold to pay the conversion tax, that's worse than not having to do so. Seems reasonable at first glance to lump the worseness into "marginal tax rate of conversion" while keeping the same "ratio for equal outcomes" but maybe not?
If the difference is <0.2% after 40 years, at the least what's in the CSS now is a decent approximation, and leaving that as a single cell formula may be preferable to a multi-row/multi-column spreadsheet section. But if there is a better single cell formula, that would be great.
On a related topic, a couple years ago I built a tool (https://www.bogleheads.org/forum/viewtopic.php?t=352921) that combines a bunch of related functions: calculating the performance of different kinds of accounts (taxable, non-deductible, pre-tax, Roth, tax-free), estimating future tax rates, and calculating TvsR comparisons. Most of these are already done in the CSS, but not pulled together in a cohesive way. I suggested you consider merging it into the CSS and you declined. Since then I've developed and polished it quite a bit. It might be worth a second look.
Won't hurt to take a second look. :)
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I got pulled into this discussion on Bogleheads, and I think there is a mistake in the way the CSS "Roth vs. Traditional when contributing the maximum allowed" on the Misc Calcs handles cases when the basis fraction is not 100%.
For d=2%, g=5%, T1=19.7%, T2=18.8%, n=40, T=24%, B163=18.8%, and B164=50% the tool is calculating a BETR of 19.855% and I am getting a value of 19.689%. I think it has to do with the way the "ratio of equal outcomes" (cell B161) gets calculated. When I built a quick spreadsheet I'm getting the same R/T value when basis = 100% bit different values and different BETRs when it's <100%; the R/T value seems to be where the two calculations diverge.
I think I copied the formula for the 100% basis fraction from this post (https://www.bogleheads.org/forum/viewtopic.php?f=10&t=150516#p2773840) because it gave the same result as Harry Sit's Traditional or Roth 401k - Zoho Sheet (https://sheet.zohopublic.com/sheet/published/hd3vbee16c938134d45b1bd758e37d6fddfc7?sheetid=0&range=E14) (don't know what formula Harry uses), relying on the odds of two separate(?) approaches that give the same erroneous answer being low. Of course, low is not the same as zero.
Both the CSS and Harry's tool give 17.989% for the 100% basis case. What do you get when all the above is the same, except basis fraction = 100%?
I think the formula in B165 for a <100% basis case also came from that same BH thread, although Harry's tool doesn't have that option. If you have to pay tax on the funds sold to pay the conversion tax, that's worse than not having to do so. Seems reasonable at first glance to lump the worseness into "marginal tax rate of conversion" while keeping the same "ratio for equal outcomes" but maybe not?
If the difference is <0.2% after 40 years, at the least what's in the CSS now is a decent approximation, and leaving that as a single cell formula may be preferable to a multi-row/multi-column spreadsheet section. But if there is a better single cell formula, that would be great.
On a related topic, a couple years ago I built a tool (https://www.bogleheads.org/forum/viewtopic.php?t=352921) that combines a bunch of related functions: calculating the performance of different kinds of accounts (taxable, non-deductible, pre-tax, Roth, tax-free), estimating future tax rates, and calculating TvsR comparisons. Most of these are already done in the CSS, but not pulled together in a cohesive way. I suggested you consider merging it into the CSS and you declined. Since then I've developed and polished it quite a bit. It might be worth a second look.
Won't hurt to take a second look. :)
As a check, I ran out the taxable account values year-by-year. For the example I gave with basis fraction = 50% and a $10,000 contribution (or conversion), the taxable value that must be sold today is $2,649.01 (=$2,400/(1 - 18.8%*[1-50%])) with a basis of $1,324.50 (=$2,649.01 * 50%). As a check, $2,649.01 - ($2,649.01 - $1,324.50)*18.8% = $2,400.00.
The future pre-tax value of the taxable account will be $34,225.44 and the future basis will be $9,001.12 (by spreadsheet), giving a future after-tax value of $29,483.26 (=$34,225.44 - ($34,225.44 - $9,001.12)*18.8%). The future Roth value (and pre-tax value before taxes) will be $149,744.58 (=$10,000 * 1.07^40), so the BETR will be 19.689% (=$29,483.26 / $149,744.58).
Using closed-form formulas for the value and basis ratios gives the same answers:
v = V_Tx(40)/V_Tx(0) = (1 + 7% - [2%*19.7%])^40 = 12.920102
b = 0.5 + (2% * [1-19.7%])/(7% - [2%*19.7%])*(v-1) = 3.397924
V_Tx(40) = $2,649.01 * (v - (v-b)*18.8%) = $29,483.26
I think the issue is that using an "effective capital gains tax rate" doesn't account for the basis fraction being something other than 1 at the start.
Simplicity is a good goal, but you actually have the calculation done in four cells (B157, B159, B161, and B165). I think if you use those four cells to explicitly track the basis ratio, you'll get the right answer and it will be clear to the user. If it were me, I'd do it in these three steps: v (taxable balance ratio), b (taxable basis ratio), G_Tx (taxable after-tax growth ratio), and then the BETR is:
BETR = [current ordinary income marginal tax rate] / (1 - [current capital gains tax rate] * (1 - [basis fraction])) * G_Tx / (1 + [total return in tax advantaged])^n
I'm sure there's more than one way to do it, though.
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I derived the formula on Bogleheads and mine was a little more complicated, calculating balance growth and basis growth separately. It may be possible to simplify that down a bit, but it looks like a change of some kind with the CSS calculation is probably needed.
If the difference is <0.2% after 40 years, at the least what's in the CSS now is a decent approximation, and leaving that as a single cell formula may be preferable to a multi-row/multi-column spreadsheet section. But if there is a better single cell formula, that would be great.
Thanks again for your input @fyre4ce.
FYI, I've reduced the BETR formula down to a few cells and could make it one cell if desired. It's in the "Calculated Totals" row here: https://docs.google.com/spreadsheets/d/1eId77CKaBKAknLBsNt16UH4P7OEuGl7OKHHvt_fVdaI/edit?usp=sharing
The table above that is for more easily visualizing the values and confirming the more complicated formulas.
Per this post, https://www.bogleheads.org/forum/viewtopic.php?p=7707499#p7707499, @fyre4ce and I came up with the same BETR values to .01% out to 40 years so we are definitely on the same page.
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Version 22.16 (2022/2023/2024)
- 2024 Federal Withholding Tables
- Format tax section to match IRS forms better
Implemented the "Standard Withholding Rate Schedules" from the spreadsheet attached to https://www.irs.gov/pub/irs-dft/p15t--dft.pdf. That's the last of the 2024 IRS updates that apply to this spreadsheet.
Cosmetic labeling and reordering of the tax numbers, mostly in Calculations!E2:I43. Makes it easier to compare with actual Form 1040 and Schedules 2&3 numbers.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2022/2023/2024 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Notes:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
- In early 2023, Microsoft added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the "Details can be found at..." link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
Just double checking - is this the most recent version? Not usually so far upthread, so I thought I'd ask.
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If it were me, I'd do it in these three steps: v (taxable balance ratio), b (taxable basis ratio), G_Tx (taxable after-tax growth ratio), and then the BETR is:
BETR = [current ordinary income marginal tax rate] / (1 - [current capital gains tax rate] * (1 - [basis fraction])) * G_Tx / (1 + [total return in tax advantaged])^n
I'm sure there's more than one way to do it, though.
For example, should a+a*b+b be written as a*(1+b)+b or a+b*(1+a)? But back to the problem at hand.
Looking at the formulas shown in Maxing out your retirement accounts (https://www.bogleheads.org/wiki/Traditional_versus_Roth#Maxing_out_your_retirement_accounts), they appear algebraically identical to what is in the CSS (see "Algebraic comparison" below).
If G_Tx in your post is given by (using the nomenclature in that BH wiki):
v - (v - 1) * MTRcg*
then for basis fraction = 1 we have
BETR / [current ordinary income marginal tax rate] = G_Tx / (1 + [total return in tax advantaged])^n
and that is also what is in the CSS's cell B161.
For a basis fraction < 1, dividing by (1 - [current capital gains tax rate] * (1 - [basis fraction])) is also what the CSS does.
So it seems we are agreeing on all counts (and, at least for basis fraction = 1, also agreeing with Harry Sit's results) - except are you saying the year-by-year calculation gives something different? Or did I miss something in the algebraic comparison?
Algebraic comparison
v = (1+r-y*MTRdiv)^t
r = B154+B153
y = B153
MTRdiv = B156
t = B160
v = (1+B154+B153-B153*B156)^B160
= (1+B154+B153*(1-B156))^B160
= (1+B157)^B160
so r-y*MTRdiv = B157
MTRcg* = MTRcg * (r-y)/(r-y*MTRdiv)
MTRcg = B158
r-y = B154
MTRcg* = B158*B154/B157 = B159
MTRw/MTRn = (v-(v-1)*MTRcg*)/(1+r)^t
= (v*(1-MTRcg*)+MTRcg*)/(1+r)^t
= ((1+B157)^B160 * (1-B159) + B159)/(1+B155)^B160
= B161
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Version 22.16 (2022/2023/2024)
- 2024 Federal Withholding Tables
- Format tax section to match IRS forms better
Implemented the "Standard Withholding Rate Schedules" from the spreadsheet attached to https://www.irs.gov/pub/irs-dft/p15t--dft.pdf. That's the last of the 2024 IRS updates that apply to this spreadsheet.
Cosmetic labeling and reordering of the tax numbers, mostly in Calculations!E2:I43. Makes it easier to compare with actual Form 1040 and Schedules 2&3 numbers.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2022/2023/2024 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Notes:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
- In early 2023, Microsoft added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the "Details can be found at..." link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
Just double checking - is this the most recent version? Not usually so far upthread, so I thought I'd ask.
Yes. I suppose it would have been better to have this lengthy side discussion about a couple of cells on the 'Misc. calcs' tab in a separate thread....
The next planned release will be after the Tax Foundation releases its compilation of 2024 state tax rates.
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The challenge I had was calculating the cost basis since the after tax dividends add to the basis in dollars each year. This is easy in a table, but took some time to resolve into a single cell.
I don't have the basis expressed as an algebraic formula, though I'm sure I could come up with it if needed, but I have it calculated in a single cell in H29 here: https://docs.google.com/spreadsheets/d/1eId77CKaBKAknLBsNt16UH4P7OEuGl7OKHHvt_fVdaI/edit?usp=sharing
ETA: My formulas are far more complex than needed, @Fivek came up with a simple change to one formula in the CSS: https://www.bogleheads.org/forum/viewtopic.php?p=7710544#p7710544
Here's the formula for cell B161 in the CSS as I understand the post which comes up with the same BETR in a variety of cases I tried:
=(((1 + B157)^B160 * (1 - B159) + B159)-(1-B164)*B158) / (1 + B155)^B160
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...a simple change to one formula in the CSS: https://www.bogleheads.org/forum/viewtopic.php?p=7710544#p7710544
Here's the formula for cell B161 in the CSS as I understand the post which comes up with the same BETR in a variety of cases I tried:
=(((1 + B157)^B160 * (1 - B159) + B159)-(1-B164)*B158) / (1 + B155)^B160
Looks great!
That kind of update is, shall we say, very doable! Thanks!
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...a simple change to one formula in the CSS: https://www.bogleheads.org/forum/viewtopic.php?p=7710544#p7710544
Here's the formula for cell B161 in the CSS as I understand the post which comes up with the same BETR in a variety of cases I tried:
=(((1 + B157)^B160 * (1 - B159) + B159)-(1-B164)*B158) / (1 + B155)^B160
Looks great!
That kind of update is, shall we say, very doable! Thanks!
When I read the post, I doubted it could be that simple since I did more of a brute force formula without refining the algebra.
Thank you for listening and remaining patient. I’ve definitely learned more about BETR than anyone ever needs to know :D
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If it were me, I'd do it in these three steps: v (taxable balance ratio), b (taxable basis ratio), G_Tx (taxable after-tax growth ratio), and then the BETR is:
BETR = [current ordinary income marginal tax rate] / (1 - [current capital gains tax rate] * (1 - [basis fraction])) * G_Tx / (1 + [total return in tax advantaged])^n
I'm sure there's more than one way to do it, though.
For example, should a+a*b+b be written as a*(1+b)+b or a+b*(1+a)? But back to the problem at hand.
Looking at the formulas shown in Maxing out your retirement accounts (https://www.bogleheads.org/wiki/Traditional_versus_Roth#Maxing_out_your_retirement_accounts), they appear algebraically identical to what is in the CSS (see "Algebraic comparison" below).
If G_Tx in your post is given by (using the nomenclature in that BH wiki):
v - (v - 1) * MTRcg*
then for basis fraction = 1 we have
BETR / [current ordinary income marginal tax rate] = G_Tx / (1 + [total return in tax advantaged])^n
and that is also what is in the CSS's cell B161.
For a basis fraction < 1, dividing by (1 - [current capital gains tax rate] * (1 - [basis fraction])) is also what the CSS does.
So it seems we are agreeing on all counts (and, at least for basis fraction = 1, also agreeing with Harry Sit's results) - except are you saying the year-by-year calculation gives something different? Or did I miss something in the algebraic comparison?
Algebraic comparison
v = (1+r-y*MTRdiv)^t
r = B154+B153
y = B153
MTRdiv = B156
t = B160
v = (1+B154+B153-B153*B156)^B160
= (1+B154+B153*(1-B156))^B160
= (1+B157)^B160
so r-y*MTRdiv = B157
MTRcg* = MTRcg * (r-y)/(r-y*MTRdiv)
MTRcg = B158
r-y = B154
MTRcg* = B158*B154/B157 = B159
MTRw/MTRn = (v-(v-1)*MTRcg*)/(1+r)^t
= (v*(1-MTRcg*)+MTRcg*)/(1+r)^t
= ((1+B157)^B160 * (1-B159) + B159)/(1+B155)^B160
= B161
I think I see the problem, highlighted in red above. The formula V_at = V - (V - 1) x MTR_cg* is a simplification of the more general formula, which is:
V_at = V - (V - B) x MTR_cg
The derivation of the general formula, and the simplification with the MTR_cg* calculation for when the initial value equals the initial basis, are here:
https://www.bogleheads.org/wiki/Tax_analysis_(math)#Taxable_account_performance
When the basis fraction is <1, you have to adjust both the nominal dollars to track in the taxable side account (which goes up), and also the growth rate on the taxable (which goes down, because the basis is lower). It looks like your formula only did the first one but not the second.
The challenge I had was calculating the cost basis since the after tax dividends add to the basis in dollars each year. This is easy in a table, but took some time to resolve into a single cell.
I don't have the basis expressed as an algebraic formula, though I'm sure I could come up with it if needed, but I have it calculated in a single cell in H29 here: https://docs.google.com/spreadsheets/d/1eId77CKaBKAknLBsNt16UH4P7OEuGl7OKHHvt_fVdaI/edit?usp=sharing
ETA: My formulas are far more complex than needed, @Fivek came up with a simple change to one formula in the CSS: https://www.bogleheads.org/forum/viewtopic.php?p=7710544#p7710544
Here's the formula for cell B161 in the CSS as I understand the post which comes up with the same BETR in a variety of cases I tried:
=(((1 + B157)^B160 * (1 - B159) + B159)-(1-B164)*B158) / (1 + B155)^B160
I tried your formula in my spreadsheet and it gives the same results for all cases I checked. It's less intuitive to me than the way I derived it, but if it works, then go for it!
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Where do you enter dependents? I get a $500 credit for my 21 year old student, not sure where to account for that.
I ended over-withdrawing this year, so going through an effort to do better next year. I don;t want to give Uncle Sam a a loan, but I also don't want to undershoot and run afoul of Safe Harbor.
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Where do you enter dependents? I get a $500 credit for my 21 year old student, not sure where to account for that.
I ended over-withdrawing this year, so going through an effort to do better next year. I don;t want to give Uncle Sam a a loan, but I also don't want to undershoot and run afoul of Safe Harbor.
I'm not sure if the version I have is the latest, but it should be around Calculations!G3 or so.
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Where do you enter dependents? I get a $500 credit for my 21 year old student, not sure where to account for that.
I ended over-withdrawing this year, so going through an effort to do better next year. I don;t want to give Uncle Sam a a loan, but I also don't want to undershoot and run afoul of Safe Harbor.
I'm not sure if the version I have is the latest, but it should be around Calculations!G3 or so.
Doh! CTC line 30 is autogenerated, but Line G2 is where you enter dependents. You can also enter full-time student status in G10
I can't believe I missed it! Thanks!
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Version 22.17 (2022/2023/2024)
Thanks once again to the Tax Foundation folks who compile 2024 State Income Tax Rates and Brackets (https://taxfoundation.org/data/all/state/state-income-tax-rates-2024/), the values in that publication are now included.
The state tax numbers are taken on faith from the Tax Foundation spreadsheet. I leave it to you residents of the various states to check for typos or describe simple calculations that would make the results more accurate. State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/) is the preferred place for those responses.
For those who live in states with tax codes rivaling the federal system (e.g., California et al.), well, what's in here should at least be approximately correct....
The tweak to the ratio calculation for Roth conversion analysis on the Misc. calcs tab is also included.
As always, comments/suggestions/bug identifications/etc. are appreciated. Either PM me or drop a note here.
2022/2023/2024 taxes version: Case Study Spreadsheet (https://docs.google.com/spreadsheets/d/19trTvaOPryFWiaup24dasbjJP6jl2SLB/edit?usp=sharing)
Notes:
- Rather than "Request Edit Access" to the file on Google Drive - which, if granted, would allow one to edit the same file that everyone else sees, so it will not be granted ;)
- After opening the file on Google Drive (link above), click File>Download>Microsoft Excel (xls)
Then, either open in Excel immediately, edit, and later save from Excel to your computer, or save immediately to your computer and later open and edit that file with Excel.
- See
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2138684/#msg2138684 and
https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg1879496/#msg1879496
regarding warnings one might see, and why those are spurious warnings for these files.
- In early 2023, Microsoft added a protection/roadblock to using downloaded Excel files containing macros. Details can be found at A potentially dangerous macro has been blocked - Microsoft Support (https://support.microsoft.com/en-us/topic/a-potentially-dangerous-macro-has-been-blocked-0952faa0-37e7-4316-b61d-5b5ed6024216).
Most of the CSS can be used just fine without having macros enabled. If you want to change the x-axis or y-axis variable for the marginal rate chart, however, you either need to know how Excel data tables (https://support.microsoft.com/en-gb/office/calculate-multiple-results-by-using-a-data-table-e95e2487-6ca6-4413-ad12-77542a5ea50b) work and edit the formulas directly, or enable macros and use the Calculations!G107 or L107 cells along with clicking the "Update chart" button near cell L114.
It appears the simplest way to get around Microsoft's "helpful" macro block is described in the "Details can be found at..." link above (see that for a screen shot of step #3 below):
1. Open Windows File Explorer and go to the folder where you saved the file.
2. Right-click the file and choose Properties from the context menu.
3. At the bottom of the General tab, select the Unblock checkbox and select OK.
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I'm trying to use the spreadsheet to work out tax savings for doing Roth conversions early in retirement, and have not found a way to see long term cumulative tax expenses. Am I missing something?
Also, plugging different values into cell B31, tIRA distribution (converted to Roth or not), does not seem to change the graph in cell F82, am I missing something there?
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I'm trying to use the spreadsheet to work out tax savings for doing Roth conversions early in retirement, and have not found a way to see long term cumulative tax expenses. Am I missing something?
Also, plugging different values into cell B31, tIRA distribution (converted to Roth or not), does not seem to change the graph in cell F82, am I missing something there?
The CSS appears to be intended to be used to calculate the current year federal (and to some extent state) income tax situation. Roth conversions usually save taxes over a multiple year time frame, and are thus beyond what the CSS tool does. There are other tools that help with the Roth conversion question: Pralana Gold ($), RPM over at Bogleheads, and (when it is working and up to date) i-orp.com.
In order for the graph to work properly, you need to be using genuine Excel (not any of the Excel knockoffs like Google sheets or Libre Office).
Also, you may be misunderstanding the graph. The X-axis represents different possible values of tIRA distributions from $0 up to about $120,000, and the Y-axis represents the resulting tax liability. So changing the value in B31 just changes the current tax situation to a different point on the graph; the graph represents a wide range of options.
Said another way, you're probably changing B31 to different values to see the impact on your taxes. Instead, you can just look at the graph and see the impact on your taxes for all possible (well, a wide range of) values of tIRA distribution.
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I'm trying to use the spreadsheet to work out tax savings for doing Roth conversions early in retirement, and have not found a way to see long term cumulative tax expenses. Am I missing something?
Also, plugging different values into cell B31, tIRA distribution (converted to Roth or not), does not seem to change the graph in cell F82, am I missing something there?
The CSS appears to be intended to be used to calculate the current year federal (and to some extent state) income tax situation. Roth conversions usually save taxes over a multiple year time frame, and are thus beyond what the CSS tool does. There are other tools that help with the Roth conversion question: Pralana Gold ($), RPM over at Bogleheads, and (when it is working and up to date) i-orp.com.
In order for the graph to work properly, you need to be using genuine Excel (not any of the Excel knockoffs like Google sheets or Libre Office).
Also, you may be misunderstanding the graph. The X-axis represents different possible values of tIRA distributions from $0 up to about $120,000, and the Y-axis represents the resulting tax liability. So changing the value in B31 just changes the current tax situation to a different point on the graph; the graph represents a wide range of options.
Said another way, you're probably changing B31 to different values to see the impact on your taxes. Instead, you can just look at the graph and see the impact on your taxes for all possible (well, a wide range of) values of tIRA distribution.
Thanks, that was essentially what I had started typing, then noticed you had already covered it! :)
The "how much of a Roth conversion (https://www.bogleheads.org/wiki/Roth_conversion) should I do this year?" question comes down to evaluating your marginal tax rate for the conversion now, vs. the marginal tax rate you predict to incur for withdrawing/converting in the future.
As has been said, It’s Difficult to Make Predictions, Especially About the Future (https://quoteinvestigator.com/2013/10/20/no-predict/). For example, if one is concerned about the higher tax rates a survivor will face when going from MFJ to single filing, that leads to larger conversion amounts now. But if one is concerned about large nursing home expenses in the future, the itemized medical deduction for those expenses will lead to lower tax rates and thus smaller conversion amounts now.
There is also the difference between charitable heirs who will pay 0% on inheritance, vs. heirs (your children, perhaps) who might still be working and subject to high marginal rates when the forced distributions are added to their W-2 income.
See this post (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg3118968/#msg3118968) for how the CSS can give an estimate for future marginal rates. Given all the uncertainty in market returns, personal situations, tax law, etc., it's not clear how much a multi-year model provides in terms of actionable information for "what to do this year?" over a "what do I expect for a marginal rate after SS and RMDs are present?"
A multi-year model could be more useful if the amount of Roth conversions from year to year will significantly affect future RMDs and thus future marginal tax rates. But the spread in results the even more Simple method (https://www.bogleheads.org/wiki/Traditional_versus_Roth#Simple_method) (compared with the post linked above) can provide lends support to the suggestion "take a reasonable guess with minimal effort at your future situation and decide what to do this year; repeat the process next year with updated guesses."
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I'm trying to use the spreadsheet to work out tax savings for doing Roth conversions early in retirement, and have not found a way to see long term cumulative tax expenses. Am I missing something?
Also, plugging different values into cell B31, tIRA distribution (converted to Roth or not), does not seem to change the graph in cell F82, am I missing something there?
The CSS appears to be intended to be used to calculate the current year federal (and to some extent state) income tax situation. Roth conversions usually save taxes over a multiple year time frame, and are thus beyond what the CSS tool does. There are other tools that help with the Roth conversion question: Pralana Gold ($), RPM over at Bogleheads, and (when it is working and up to date) i-orp.com.
Also, you may be misunderstanding the graph. The X-axis represents different possible values of tIRA distributions from $0 up to about $120,000, and the Y-axis represents the resulting tax liability. So changing the value in B31 just changes the current tax situation to a different point on the graph; the graph represents a wide range of options.
Said another way, you're probably changing B31 to different values to see the impact on your taxes. Instead, you can just look at the graph and see the impact on your taxes for all possible (well, a wide range of) values of tIRA distribution.
Thank you for the explanation, you are correct, I misunderstood what the graph was showing. I wanted to look over an even wider range of tIRA distributions, and I was hoping for something like I had seen from a couple of financial advisors that allowed (obviously estimated) tax savings over a projected lifetime versus tax hit now for converting some amount of a tIRA to a Roth. Most of those tools didn't seem to account at all for ACA subsidy loss (which we will be using shortly when COBRA runs out) and this spreadsheet did, so I was hoping it would do future projections as well and solve ALL my financial questions for all time. :)
I'll look for the tools you and MDM mention for that purpose, then. Thanks also MDM for replying, I realize that predicting future tax law whims of Congress is difficult, but I see a much higher likelihood of higher tax rates in my future than lower ones. If I'm wrong and rates go down, I'll be pretty happy actually. :)
The other thing I noticed that puzzled me a bit is that regardless of the amount that I put in cell B31, the federal tax changes but the NJ state tax does not. State tax just seems to be based on my other income, not the tIRA distribution. NJ, at least, does tax these distributions like ordinary income. I'm not sure where to change this though in the spreadsheet?
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The other thing I noticed that puzzled me a bit is that regardless of the amount that I put in cell B31, the federal tax changes but the NJ state tax does not. State tax just seems to be based on my other income, not the tIRA distribution. NJ, at least, does tax these distributions like ordinary income. I'm not sure where to change this though in the spreadsheet?
Take a look at the cell B19 in the State Tax worksheet.
The CSS is primarily focused on federal taxes and it does a very good job at that. It does somewhat work for state income taxes as well, but the fidelity there is less because there are 50 different state income tax rulesets and maintaining those for free is more than one should expect.
If you make improvements to the NJ state tax calculations, you can share them here or with @MDM and they might be included in the next revision.
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I wanted to look over an even wider range of tIRA distributions
Just change cell P83 to a larger number, either directly or by editing the formula there and changing "110000" to whatever upper limit you want. If you want the graph to start with an amount >0, make cell P84 that amount.
and I was hoping for something like I had seen from a couple of financial advisors that allowed (obviously estimated) tax savings over a projected lifetime versus tax hit now for converting some amount of a tIRA to a Roth. Most of those tools didn't seem to account at all for ACA subsidy loss (which we will be using shortly when COBRA runs out) and this spreadsheet did, so I was hoping it would do future projections as well and solve ALL my financial questions for all time. :)
Careful not to use "minimum tax paid" as your goal. It should be "maximum amount left after tax". Those will be the same for a single year, but not necessarily when adding multiple years.
I'll look for the tools you and MDM mention for that purpose, then. Thanks also MDM for replying, I realize that predicting future tax law whims of Congress is difficult, but I see a much higher likelihood of higher tax rates in my future than lower ones. If I'm wrong and rates go down, I'll be pretty happy actually. :)
If you have an idea of the marginal rate you'll be paying in the future, then converting through that rate now is likely to be as good a strategy as any tool will provide.
The other thing I noticed that puzzled me a bit is that regardless of the amount that I put in cell B31, the federal tax changes but the NJ state tax does not. State tax just seems to be based on my other income, not the tIRA distribution. NJ, at least, does tax these distributions like ordinary income. I'm not sure where to change this though in the spreadsheet?
Based on NJ Income Tax – IRA Distributions (https://www.nj.gov/treasury/taxation/njit8.shtml) it appears NJ taxes a variable portion of an IRA distribution. One could change the formula in cell 'State Tax"!O52 to multiply B11 by the non-taxable fraction.... I'm open to other suggestions, preferably made in the State Income Tax calculations - Crowdsourcing request (https://forum.mrmoneymustache.com/taxes/state-income-tax-calculations-crowdsourcing-request/) thread, but I won't ignore them if made here. ;)
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Posting a bit late but thank you again for the best tax estimator out there - once again matched the commercial software exactly for 2023 (even with my mods for my specific self-employed situation). And already know the range is likely $7500 to $16000 for 2024 for federal income tax.