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General Discussion => Post-FIRE => Topic started by: Monkey Uncle on February 17, 2019, 04:29:30 AM

Title: Filed my first post-FIRE tax return
Post by: Monkey Uncle on February 17, 2019, 04:29:30 AM
A couple of days ago I filed my first post-FIRE tax return. 

My total federal income tax liability for 2018: $0. 

Of course, after absorbing MMM and other FIRE websites for a few years, I knew that this was the likely outcome.  But it's still a bit surreal to see it on paper.  I guess I'm now part of Mitt Romney's 47% of Americans who are freeloaders. ;)

And this was a year in which I had some lingering income from my former job (mostly a lump sum annual leave payout).  I had to make sure I used that income to max out mine and my wife's IRA contributions to achieve zero tax.  It should be even easier to pay nothing this year.

I have to admit to feeling a little ambivalent about this "achievement."  I am in no way poor, so I do feel a bit guilty about not chipping in.  But not guilty enough to make a charitable donation to the IRS.  I guess I'll rationalize it as my reward for not being a conspicuous consumer.
Title: Re: Filed my first post-FIRE tax return
Post by: jim555 on February 17, 2019, 11:45:21 AM
Just did my 1040, Federal taxes $0 for 2018. 
Title: Re: Filed my first post-FIRE tax return
Post by: flyingaway on February 17, 2019, 11:58:41 AM
Did you guys do Roth conversion? or favor the ACA subsidy?
Title: Re: Filed my first post-FIRE tax return
Post by: Mr. Green on February 17, 2019, 12:04:11 PM
It was the first year for us too! Technically my wife had some income, since she FIREd in July, but we maxed out her 401k so our total income was low enough that it looks just like future years. We're actually getting back all the federal income tax she paid while working. We still pay state tax though. Can't say that I feel bad about it. We paid high taxes for years so what's the difference between that and paying no taxes now or if we had lower paying jobs and had them for longer periods of time. If anything I bet we paid more in cumulative taxes this way than if we earned less because there were so many tax breaks we'd phase out of with our high incomes and no kids.
Title: Re: Filed my first post-FIRE tax return
Post by: Monkey Uncle on February 17, 2019, 12:48:22 PM
Did you guys do Roth conversion? or favor the ACA subsidy?

With the lump sump leave payout, I didn't have any space for a Roth conversion in 2018.  Starting this year, I'm planning to convert a little each year.  But I can't convert very much without screwing up my ACA premium tax credit.  The cliff on the PTC is so steep that its better to max the PTC than to use up the entire standard deduction on Roth conversions.

Factoring in the PTC, I guess my total federal income tax liability for 2018 was something like $-21,000.
Title: Re: Filed my first post-FIRE tax return
Post by: Monkey Uncle on February 17, 2019, 12:57:11 PM
Welcome to the freeloader bum club! I haven't paid state or fed taxes since I retired. I feel a bit guilty about that, and as a formerly lowish income earner who maxed out every tax deferred vehicle I had available, I never really paid much in income tax while working. But not THAT guilty as I'm a pretty low income retiree too. Not going to go earn a taxable income just to pay taxes. If you haven't read Go Curry Crackers blog about taxes you should.

Unfortunately I will still have to pay a small amount of state income tax every year.  My state taxes capital gains and dividends the same as ordinary income. 
Title: Re: Filed my first post-FIRE tax return
Post by: markbike528CBX on February 17, 2019, 01:02:17 PM
PTF
WA state, zero income tax, so I could get down to having only property ( real estate) tax.
Mostly to say I did it
Title: Re: Filed my first post-FIRE tax return
Post by: sol on February 17, 2019, 01:10:09 PM
WA state, zero income tax, so I could get down to having only property ( real estate) tax.

Well, and sales tax.  And gas tax.  And a variety of utility taxes. 
Title: Re: Filed my first post-FIRE tax return
Post by: markbike528CBX on February 17, 2019, 02:16:54 PM
WA state, zero income tax, so I could get down to having only property ( real estate) tax.

Well, and sales tax.  And gas tax.  And a variety of utility taxes.

How dare you libel my Mustachianism!  :-)  Sales taxes are only for those plebeian consumerist Anti-Mustachians, harrumph!
I'll just buy groceries including soda pop (I'm outside Seattle), as I walk/ bicycle to the store.
I typically retain clothes for 20+ years.

Actually, we could get close if we could give up intoxicants. :-). :-(
Title: Re: Filed my first post-FIRE tax return
Post by: Mr. Green on February 17, 2019, 03:09:35 PM
I typically retain clothes for 20+ years.
I'm pretty impressed by that. The longest I've been able to make something last before it's wearing through from being threadbare is a t-shirt and that was a little over 10 years. I think my clothing longevity will decrease now that we're FIRE because I have the tendency to wear the same half dozen or so articles religiously because it makes life easier having less clothes.
Title: Re: Filed my first post-FIRE tax return
Post by: secondcor521 on February 18, 2019, 12:23:29 PM
I paid $3 in federal income tax this year, mostly because I wanted to use up all of my other-dependent-tax-credits, and the tax table allowed me to choose either $1003 or $998.  I'll also get some APTC back because my income ended up lower than I estimated.  At the state level I'll get back $98.

I did Roth convert some.  Basically what I do is sell taxable to live on, which generates some capital gains.  Then I Roth convert whatever additional amount I need to get to the tax level I wanted to get to.
Title: Re: Filed my first post-FIRE tax return
Post by: londonbanker on February 18, 2019, 04:00:44 PM
I cannot imagine the shock of getting no income from a job... and just living off dividends and interest... I know this day will come and my tax bill be almost null; I just can’t imaagine the feeling of “this is it”
Title: Re: Filed my first post-FIRE tax return
Post by: markbike528CBX on February 18, 2019, 06:48:52 PM
I typically retain clothes for 20+ years.
I'm pretty impressed by that. The longest I've been able to make something last before it's wearing through from being threadbare is a t-shirt and that was a little over 10 years. I think my clothing longevity will decrease now that we're FIRE because I have the tendency to wear the same half dozen or so articles religiously because it makes life easier having less clothes.

Not so amazing when you know that I did use work shirts/t-shirts and blue jeans/slacks (~150/yr Company subsidy).  Also, I have a 15 T-shirt (band logo etc) stash, and another 15 shirt stash of  long/ more formal short-sleeve shirts that I rotate consistently.

Of course I have a shirt from a Taiwanese laundromat from 19 years ago in the cellophane/plastic wrap. 
My longest term shirt is a high school track shirt (too small for me, given to my wife to wear at reunions) from 36 years ago. It is getting thin.

I retain my old motorcycle jacket 35yrs old (can't zip it up, too fat) and a special Black Happy T-shirt (26years old) for concerts.

Black Happy T-shirt--- large letters on front AND THE GEEK SHALL INHERIT THE EARTH.
Title: Re: Filed my first post-FIRE tax return
Post by: Mr. Green on February 19, 2019, 01:29:58 PM
I cannot imagine the shock of getting no income from a job... and just living off dividends and interest... I know this day will come and my tax bill be almost null; I just can’t imaagine the feeling of “this is it”
It was actually kinda fun to see a concept that we understood in theory become a practice. Like "Ooh, I've read about all these blog posts about $0 federal income taxes and here it is!"
Title: Re: Filed my first post-FIRE tax return
Post by: Monkey Uncle on February 19, 2019, 05:40:27 PM
I cannot imagine the shock of getting no income from a job... and just living off dividends and interest... I know this day will come and my tax bill be almost null; I just can’t imaagine the feeling of “this is it”
It was actually kinda fun to see a concept that we understood in theory become a practice. Like "Ooh, I've read about all these blog posts about $0 federal income taxes and here it is!"

Yeah, I have to say I felt a bit of relief - hey, I did it right!
Title: Re: Filed my first post-FIRE tax return
Post by: geekette on February 19, 2019, 06:00:01 PM
I still feel very odd "paying" negative federal tax (subsidies), but NC always gets a cut.  What's weirder to me is that later this year I can start withdrawing from my IRA since I turn 59 soon <gack>.  I know there are other ways of getting it out, but allow me to feel old...
Title: Re: Filed my first post-FIRE tax return
Post by: jim555 on February 20, 2019, 06:27:04 AM
I still feel very odd "paying" negative federal tax (subsidies), but NC always gets a cut.  What's weirder to me is that later this year I can start withdrawing from my IRA since I turn 59 soon <gack>.  I know there are other ways of getting it out, but allow me to feel old...
Senior discounts are just around the corner for you, I am jealous.
Title: Re: Filed my first post-FIRE tax return
Post by: dude on February 20, 2019, 08:32:59 AM
First world problem, but I'll never know the sweet feeling of paying zero federal income tax. Because I have a pension (and eventually a max Social Security benefit) and a reasonably hefty retirement account (@$800k). I won't pay state income taxes on either my pension or SS, but I'll get taxed at ordinary income rates federally on pension and TSP withdrawals, and 85% of my SS benefit. Oh well. Will be looking at Roth conversions for some of my TSP money if it makes sense at the time, but will have to wait and see.
Title: Re: Filed my first post-FIRE tax return
Post by: jim555 on February 20, 2019, 06:15:46 PM
^Once I'm older and start taking tax deferred things like TSP, 457K, plus a small gov pension combined I'll be out of the zero tax bracket. Oh well...it's great while it lasts. Did most of my Roth conversions back when I had pretty close to zero taxable income (first 8 years of FIRE) so at least those tIRAs are gone.
Lucky you.  I'm waiting until >64 so I don't kill my ACA.
Title: Re: Filed my first post-FIRE tax return
Post by: Mississippi Mudstache on February 21, 2019, 11:24:58 AM
My total federal income tax liability for 2018: $0. 

I have to admit to feeling a little ambivalent about this "achievement."  I am in no way poor, so I do feel a bit guilty about not chipping in.  But not guilty enough to make a charitable donation to the IRS.  I guess I'll rationalize it as my reward for not being a conspicuous consumer.

My federal tax liability this year was -$2500 on $113,000 in gross wages. It's shocking to me that that's even possible. It's possible that I'll retire from a 20-year working career having paid negative total income tax.
Title: Re: Filed my first post-FIRE tax return
Post by: Monkey Uncle on February 21, 2019, 05:53:26 PM
Oh, and I forgot one other minor detail.  This year I got to file my tax return for free because of my low income.  Saved 60 bucks.
Title: Re: Filed my first post-FIRE tax return
Post by: davisgang90 on February 22, 2019, 04:47:56 AM
I don't have a cool story like some of you.

My FIRE is fat with a military pension (taxed fed and state) and VA disability (not taxed). 

I'm doing the Roth ladder, so that adds to my tax burden and I'm done investing, so no help there!