Thank you, mlipps! That is exactly the information I was looking for. I read and read and read on these topics, but sometimes it's hard to understand how they actually apply to my particular situation.
One more question, then. Say our income level stays the same (minus the IRA withdrawal) next year, and we've paid off our student loans in the first half of the year. We've got the cash in hand to fund IRAs--at that point we should choose ROTHs because on a traditional we're basically paying taxes at both ends?
Sorry, thanks for catching my mistake there Cheddar Stacker! I skipped my morning coffee today, shouldn't have done that!!
Category | Monthly | Comments | Annual |
Salary/Wages | $10,000 | $120,000 | |
401(k) / 403(b) / TSP / etc. | $3,000 | At maximum | $36,000 |
Income subject to IRS tax | $7,000 | $84,000 | |
Other ordinary income | $2,167 | $26,000 | |
Federal Total Inc. | $9,167 | $110,000 | |
Federal tax | $1,134 | 2015 rates, MFJ, stand. ded., 2 exempt. | $13,611 |
Soc. Sec. | $620 | Assumes 2 earners paying | $7,440 |
Medicare | $145 | $1,740 | |
Total income taxes | $1,899 | $22,791 | |
Income before other expenses | $7,267 | $87,209 |
Filing Status | 2 | 1=S, 2=MFJ | |
# of earners | 2 | ||
Total Income | $110,000 | ||
Std. Deduct. | $12,600 | ||
Act. Deduct. | $12,600 | ||
# Exempt. | 2 | ||
Exemption | $8,000 | ||
SL int. (guess) | $1,307 | ||
AGI | $108,693 | ||
Taxable | $88,093 | ||
Tax | $13,611 |
If I'm reading your final numbers correctly, I can take off $2,000 for the 10% penalty on the IRA deductions and assume my final tax bill next April would be about $13,600?