FROM THE HIP Tax Estimate help please!

[soccerluvof4]

So to keep it brief the DW and I found a house we wanted to buy and retire in that we could afford and to get on a lake anywhere near us your offer pretty much needs to be cash and so on. Having said that this obviously means I had to take a lump sum out of my Vanguard Accounts so I am just looking at what peeps on MMM with any tax knowledge would think just roughly my taxes would look like come April since I am Fire'd and live off my investments (other than some side gigs) but the DW still works. Once my present house sells I plan on putting the proceeds right back in but I couldnt go into the offer subject to a bridge load. But again I dont want to get into all that just looking for a guestimate if you might on taxes in WI. I appreciate in advance. I did post on Bogleheads and got some forms and stuff but I in being honest just dont get this stuff that well and am not going to hold anyone to there guestimate.

Here are the particulars- MARRIED FILING JOINTLY


So on Vanguard it is showing if I dont take out anymore Money which I am not for this year 88k In Capital Gains ( I assume long Term as over a year)
Additional 34k In Dividends and Advisor said figure another 6k till end of year so 40k
Gross Wages 55k earned by DW
4 kids to deduct one is 20 in college, 19 in college, 15 home 14 home
4k Donation to High School ( said 100% deductible whatever that really means)
6.5k in 529s contribution
Max out HSA of 6900
16k Contributed to DW's 401k

No mortgage or interest to deduct house is paid for.
Any Income I have earned on side gigs is cash.

Thanks in advance.

[terran]

Are you planning to pay taxes on your side gigs even though you were paid in cash? Legally you're required to.

I'm pretty sure @MDM's case study spreadsheet will do rough federal and state tax calculations: https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2478805/#new

[soccerluvof4]

Are you planning to pay taxes on your side gigs even though you were paid in cash? Legally you're required to.

I'm pretty sure @MDM's case study spreadsheet will do rough federal and state tax calculations: https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2478805/#new

Yea in the big scheme of things its minimal compared to the penalty if avoiding.

[MDM]

Are you planning to pay taxes on your side gigs even though you were paid in cash? Legally you're required to.

I'm pretty sure @MDM's case study spreadsheet will do rough federal and state tax calculations: https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2478805/#new

Ignoring the side gigs - but as terran notes, you shouldn't ;) - state tax appears to be $8.1K (but I don't know if WI allows a 529 deduction).  Federal tax will depend on how much of the dividends are qualified vs. non-qualified, ranging from $8.9K if all are unqualified down to $4.3K if all are qualified.

You can confirm those numbers (and estimate Self-Employment tax by entering your expected Sched. C net profit in cell B30) by downloading the spreadsheet linked in the quote.  You could skip to the 'Calculations' tab and try to figure it out on the fly, or start by reading at least the first dozen lines of the 'Instructions' tab.

Any questions, let me know.  Suggestions to make it easier for a first time user also appreciated.  Good luck!

[chasesfish]

Have you checked out HR Block's Tax Caster?  I like using that for estimating my income taxes and what-ifs.

My quick guess is that you're within the 12% tax bracket, which would means qualified dividends and capital gains are tax free.  Look into Capital Gain harvesting if this is true.

https://www.madfientist.com/tax-gain-harvesting/

[terran]

Federal tax will depend on how much of the dividends are qualified vs. non-qualified, ranging from $8.9K if all are unqualified down to $4.3K if all are qualified.

If you want to refine @MDM's estimates, the "Table 1. Hypothetical tax costs (when taxable funds are held)" table found here https://www.bogleheads.org/wiki/Tax-efficient_fund_placement#Appendix:_comparison_of_hypothetical_tax_costs offers estimates of qualified vs non-qualified dividend estimates for various investment types since that tends not be be accurately reported until February.

[soccerluvof4]

Have you checked out HR Block's Tax Caster?  I like using that for estimating my income taxes and what-ifs.

My quick guess is that you're within the 12% tax bracket, which would means qualified dividends and capital gains are tax free.  Look into Capital Gain harvesting if this is true.

https://www.madfientist.com/tax-gain-harvesting/

Federal tax will depend on how much of the dividends are qualified vs. non-qualified, ranging from $8.9K if all are unqualified down to $4.3K if all are qualified.

If you want to refine @MDM's estimates, the "Table 1. Hypothetical tax costs (when taxable funds are held)" table found here https://www.bogleheads.org/wiki/Tax-efficient_fund_placement#Appendix:_comparison_of_hypothetical_tax_costs offers estimates of qualified vs non-qualified dividend estimates for various investment types since that tends not be be accurately reported until February.

Are you planning to pay taxes on your side gigs even though you were paid in cash? Legally you're required to.

I'm pretty sure @MDM's case study spreadsheet will do rough federal and state tax calculations: https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/msg2478805/#new

Ignoring the side gigs - but as terran notes, you shouldn't ;) - state tax appears to be $8.1K (but I don't know if WI allows a 529 deduction).  Federal tax will depend on how much of the dividends are qualified vs. non-qualified, ranging from $8.9K if all are unqualified down to $4.3K if all are qualified.

You can confirm those numbers (and estimate Self-Employment tax by entering your expected Sched. C net profit in cell B30) by downloading the spreadsheet linked in the quote.  You could skip to the 'Calculations' tab and try to figure it out on the fly, or start by reading at least the first dozen lines of the 'Instructions' tab.

Any questions, let me know.  Suggestions to make it easier for a first time user also appreciated.  Good luck!

I found this tool on Bogleheads and it has for 2019. Yes WI is tax deductable for 529s @MDM  @chasesfish @terran


Paycheck frequency:   Annual   Annual                     
Paycheck Items   Earner #1   Earner #2   Annual      Filing Status   2   1=S, 2=MFJ, 3=HOH      
Gross Salary/Wages   $52,000       $52,000       # Dependents   4         
Pretax Health/Dental/Vision Ins.         $0       # Children <17   2   Child Tax Credit      
Healthcare FSA         $0       # Children <13   0   Child/Dep. Care credit      
Daycare FSA         $0       # Children for EIC   4         
Employer-sponsored HSA   $6,900       $6,900          Adult #1   Adult #2      
Pretax Commuter costs         $0       Age   51   55      
FICA base salary/wages   $45,100    $0    $45,100       Full-time student?            
                           
401(k) / 403(b) / TSP / etc.   $16,000       $16,000       AGI   $157,100          
457 plans            $0       Std. Deduct.   $24,400    $12,200       
Pre-tax pension contribution         $0       Act. Deduct.   $24,400          
W-2 Box 1   $29,100    $0    $29,100       QBI deduct.   $0          
                           
Roth 401k/403b         $0       Taxable   $132,700          
ESPP/After-tax 401k         $0       1040 Tax   $18,111          
After-tax pension contribution         $0       AMT adder   $0    Force Item?   0   
Employer Match         $0       Excess APTC tax   $0          
Net paycheck before tax   $29,100    $0    $29,100       Foreign tax credit            
               Dep. Care credit   $0          
Non-paycheck income   Annual   Annual   Annual      Education credit   $0          
Taxable Interest, non-qual. dividends, etc.   $0             Saver's credit   $0          
Tax-exempt interest   $0             Non-refund. CTC   $5,000          
Qualified dividends   $40,000       $40,000       Tax after n-r credit   $13,111          
Short term capital gains   $88,000       $88,000       Add'l Medicare tax   $0          
Long term capital gains (LTCG)   $0             NIIT   $0          
Form 1040 Sched. 1 Line 13         $88,000       EIC   $0          
Alimony received   $0             Refundable CTC   $0          
Schedule C net profit         $0       Education Credit   $0    No AOTC?   0   
tIRA distribution   $0             Net PTC   $0          
Pension income         $0       Net Tax   $13,111          
Rental income         $0                   
Rental real expenses         $0       Mtg. Int. (approx.)   $0    $1,000,000       
Rental depreciation expense   $0             State tax   $7,903    WI      
Rental taxable income   $0       $0       Local tax   $0          
               Prop tax   $0          
Social Security Income (combined)         $0       Charity   $0          
Social Security Taxable Income   $0    0%   $0       Medical   $0          
Other taxable income   $0             Item. Deduct.   $7,903          
Foreign Earned Income Exclusion   $0                         
1040 Total Income   $157,100    $0    $157,100       tIRA phaseout: S   $64,000    $74,000       
               tIRA phaseout: MFJ   $103,000    $123,000    0   
Subtractions for AGI   Annual   Annual   Annual               $0    
Personal HSA         $0       Roth phaseout: S   $122,000    $137,000       
Deductible SE tax   $0    $0    $0       Roth phaseout: MFJ   $193,000    $203,000    1   
Self-employed SEP, SIMPLE, etc.         $0                $14,000    
Self-employed health insurance premiums         $0             <50   >=50   
Alimony paid         $0       IRA      $6,000    $7,000    
Traditional IRA         $0       401k #1   $25,000    $19,000    $25,000    
SL int. (estim'd from entries in rows 133-137)         $0       401k #2   $0    $19,000    $25,000    
1040 AGI         $157,100                   
                           
Other Specific Investment Types   Annual   Annual   Annual      SS salary max   $132,900    S   MFJ/HOH   
Roth IRA         $0       HSA   $8,000    $3,500    $7,000    
Rental mortgage principal payments   $0                         
529 plan/ other college   $542       $6,500          Federal withholding      $4,200    
                  Earner #1   Earner #2      
Payroll Taxes   Annual   Annual   Annual      W-2 Box 1   $29,100    $0       
Social Security   $2,796    $0    $2,796       Withhold S or M?   S   M      
Medicare   $654    $0    $654       No. of allowances   2   3      
Income Taxes               Wages used   $20,700    $0    Totals   
Federal tax   $13,111    2019, MFJ, std., 4 dep   $13,111    8.35%   Withholding   $1,834    $0    $1,834    
State+local tax   $7,903    WI state calc'n   $7,903    5.03%   Federal income tax plus self-employment tax         $13,111    
Medicare premium   $0    $0    $0             Amount already withheld      
Self-employment Tax   $0    $0    $0             Fraction of paychecks remaining in the year   17%   
Total income taxes   $24,464       $24,464    15.57%         Expected federal refund when filing   ($12,805)   




It doesnt post the way it shows up in Excel but if you see the Expected Federal refund is in Parentheses and actually is in Red and shows (12,805) where the state show in black 7903 and says owe. I did not see a place to put the 4,000 High School donation. What do you guys think. Here is the Link and tool I used. I am still going through my side gig jobs from this summer.
Here is the tool I used-

https://www.bogleheads.org/wiki/Tools_and_calculators#Personal_finance_toolbox

and clicked on the 2019 tool bar.

Thanks all!

[MDM]

See below for somewhat nicer formatting.  Click on the 'Posting' tab then (without clicking on any cell within that tab - because the appropriate cells are already selected) do Ctrl-C to copy and then come to a "Post Reply" window here and do Ctrl-V to paste.

But that's just window dressing - back to more pertinent issues...:
- You had mentioned the capital gains would be long term (so that's where I entered them) but your post shows $88K in short term.
- The "Federal withholding" box (cells F57:I67) won't have a sensible answer in cell I67 unless cells G60:H61 and I65:I66 have correct (if needed) entries.  At this time of year, perhaps only the December paycheck can be affected so that's why 8% (actually 8 1/3%) is suggested in I66.  Spreadsheet doesn't know what has already been withheld unless that is entered in I65.

When Bogleheads starting using this it got called the "personal finance toolbox."  Here where it originated it's called the Case Study Spreadsheet.  For better or worse, it's the same thing....

It's currently not set up to handle state deductions for 529 plans, so you'll have to do that as a side calculation.  If someone knows of a state-by-state description of applicable 529 laws, posting something in State Income Tax calculations - Crowdsourcing request might get some traction....

The $4K donation to the high school is a laudable act, but unlikely to have any affect on taxes unless you have another $20.4K of itemized deductions.  The "monthly charitable contributions" in row 87 would seem appropriate if you want to enter $333.33 there.

Anything I missed?  Is it making sense?

Paycheck frequency:	Annual	Annual
Paycheck Items	Earner #1	Earner #2	Annual
Gross Salary/Wages	$0	$52,000	$52,000
Employer-sponsored HSA	$0	$6,900	$6,900
FICA base salary/wages	$0	$45,100	$45,100
401(k) / 403(b) / TSP / etc.	$0	$16,000	$16,000
W-2 Box 1	$0	$29,100	$29,100
Non-paycheck income	Annual	Annual	Annual
Qualified dividends	$40,000		$40,000
Long term capital gains (LTCG)	$88,000		$88,000
1040 Total Income	$128,000	$29,100	$157,100
1040 AGI			$157,100
Payroll Taxes	Annual	Annual	Annual
Income Taxes
Federal tax	$3,563	2019, MFJ, std., 4 dep	$3,563
State+local tax	$7,903	WI state calc'n	$7,903
Total income taxes	$14,915		$14,915
	Monthly
Income before other expenses	$11,849		$142,185
Monthly Average Expenses		Comments
Total to invest	$11,849		$142,185
Summary:
"Gross" income	$15,000		$180,000
Income taxes	$1,243		$14,915
After-tax income	$13,757		$165,085

Filing Status	2	1=S, 2=MFJ, 3=HOH
# Dependents	4
# Children <17	2
# Children for EIC	4
	Adult #1	Adult #2
Age	51	55
Full-time student?	0	0
AGI	$157,100
Std. Deduct.	$24,400
Act. Deduct.	$24,400
QBI deduct.	$0
Taxable	$132,700
1040 Tax	$8,563
Non-refund. CTC	$5,000
Tax after n-r credit	$3,563
Net Tax	$3,563
State tax	$7,903	WI
Item. Deduct.	$7,903
Version	V12.09

[soccerluvof4]

See below for somewhat nicer formatting.  Click on the 'Posting' tab then (without clicking on any cell within that tab - because the appropriate cells are already selected) do Ctrl-C to copy and then come to a "Post Reply" window here and do Ctrl-V to paste.

But that's just window dressing - back to more pertinent issues...:
- You had mentioned the capital gains would be long term (so that's where I entered them) but your post shows $88K in short term.
- The "Federal withholding" box (cells F57:I67) won't have a sensible answer in cell I67 unless cells G60:H61 and I65:I66 have correct (if needed) entries.  At this time of year, perhaps only the December paycheck can be affected so that's why 8% (actually 8 1/3%) is suggested in I66.  Spreadsheet doesn't know what has already been withheld unless that is entered in I65.

When Bogleheads starting using this it got called the "personal finance toolbox."  Here where it originated it's called the Case Study Spreadsheet.  For better or worse, it's the same thing....

It's currently not set up to handle state deductions for 529 plans, so you'll have to do that as a side calculation.  If someone knows of a state-by-state description of applicable 529 laws, posting something in State Income Tax calculations - Crowdsourcing request might get some traction....

The $4K donation to the high school is a laudable act, but unlikely to have any affect on taxes unless you have another $20.4K of itemized deductions.  The "monthly charitable contributions" in row 87 would seem appropriate if you want to enter $333.33 there.

Anything I missed?  Is it making sense?

Paycheck frequency:	Annual	Annual
Paycheck Items	Earner #1	Earner #2	Annual
Gross Salary/Wages	$0	$52,000	$52,000
Employer-sponsored HSA	$0	$6,900	$6,900
FICA base salary/wages	$0	$45,100	$45,100
401(k) / 403(b) / TSP / etc.	$0	$16,000	$16,000
W-2 Box 1	$0	$29,100	$29,100
Non-paycheck income	Annual	Annual	Annual
Qualified dividends	$40,000		$40,000
Long term capital gains (LTCG)	$88,000		$88,000
1040 Total Income	$128,000	$29,100	$157,100
1040 AGI			$157,100
Payroll Taxes	Annual	Annual	Annual
Income Taxes
Federal tax	$3,563	2019, MFJ, std., 4 dep	$3,563
State+local tax	$7,903	WI state calc'n	$7,903
Total income taxes	$14,915		$14,915
	Monthly
Income before other expenses	$11,849		$142,185
Monthly Average Expenses		Comments
Total to invest	$11,849		$142,185
Summary:
"Gross" income	$15,000		$180,000
Income taxes	$1,243		$14,915
After-tax income	$13,757		$165,085

Filing Status	2	1=S, 2=MFJ, 3=HOH
# Dependents	4
# Children <17	2
# Children for EIC	4
	Adult #1	Adult #2
Age	51	55
Full-time student?	0	0
AGI	$157,100
Std. Deduct.	$24,400
Act. Deduct.	$24,400
QBI deduct.	$0
Taxable	$132,700
1040 Tax	$8,563
Non-refund. CTC	$5,000
Tax after n-r credit	$3,563
Net Tax	$3,563
State tax	$7,903	WI
Item. Deduct.	$7,903
Version	V12.09

I have exact #s through 10/31

As  I mentioned the last two months so 4 bi weekly checks wont have the 401k, HSA Dedictions.

YTD Pay Gross is 37,508.00 So that divided by 20 pay periods is $1875.40 x 24 = 45k not 52 but with some overtime thinking 46k

YTD 401k Contribution is 15,048.00
Employer match is $1415.67 again neither one of these will be contributed to for the rest of the year

HSA YTD and again no more contributions is 5833.20

And I thought I put the 88k in LTCG need to change that.

Gotta refigure. @MDM  I will see if i can figure out and do what you said. Also I though it did have place for WI 529s which as I said is 6500 but in end of day just trying to get a close estimate. Thanks for your help as well! I will see if I can do too what you said.

[soccerluvof4]

@MDM

Best I could figure out was to snip it. Click on snip let me know if this looks/is a better guestimate excluding 529s

[chasesfish]

That looks correct - If you're capital gain harvesting with income below $100,000, your state taxes may very well end up higher than your federal.

[soccerluvof4]

That looks correct - If you're capital gain harvesting with income below $100,000, your state taxes may very well end up higher than your federal.

Gotcha!

[MDM]

Best I could figure out was to snip it. Click on snip let me know if this looks/is a better guestimate excluding 529s

Shows you owing WI $7,653 (the actual amount will be less due to the 529 contribution, but for example purposes I'll assume this amount) and the IRS $2,567.

The amount you will have to pay or receive as a refund when you file next year depends on how much you have withheld for state and federal income tax this year.  E.g., if you withhold $7500 state and $3000 federal you would owe $153 to WI and get a $443 refund from the IRS.

[MDM]

...excluding 529s

terran's link in State Income Tax calculations - Crowdsourcing request was enough to allow adding 529 deductions/credits, at least for "straightforward" situations.  Haven't uploaded that version yet, but it does calculate the $408 lower WI tax one would expect from a $6500 529 contribution when one is in the 6.27% WI bracket.

[soccerluvof4]

...excluding 529s

terran's link in State Income Tax calculations - Crowdsourcing request was enough to allow adding 529 deductions/credits, at least for "straightforward" situations.  Haven't uploaded that version yet, but it does calculate the $408 lower WI tax one would expect from a $6500 529 contribution when one is in the 6.27% WI bracket.

Best I could figure out was to snip it. Click on snip let me know if this looks/is a better guestimate excluding 529s

Awesome and thank you both @chasesfish and @MDM . To be safe I will save/plan around owing between the two 15k which is still alot less than I was thinking/Worried about closer to 25k. We bought a house in which only way I could get it was cash offer and just in case my house doesnt sell before tax season which it should sell in a week or two I want to make sure I have enough set aside taking so much cash out of my portfolio. Normal withdrawal is 80k a year not 500 something plus the over 200 I have in VMMXX so I learned alot through this process appreciate it !
Shows you owing WI $7,653 (the actual amount will be less due to the 529 contribution, but for example purposes I'll assume this amount) and the IRS $2,567.

The amount you will have to pay or receive as a refund when you file next year depends on how much you have withheld for state and federal income tax this year.  E.g., if you withhold $7500 state and $3000 federal you would owe $153 to WI and get a $443 refund from the IRS.

That looks correct - If you're capital gain harvesting with income below $100,000, your state taxes may very well end up higher than your federal.

[terran]

One thing to note is that (unless I missed it) you never posted how much business income you've earned. Since you'll need to pay self employment tax on that at the rate of ~14.1% in addition to income tax it can add up pretty fast, so just keep that in mind (or plug the numbers back in to the spreadsheet with the business income).

[MDM]

One thing to note is that (unless I missed it) you never posted how much business income you've earned. Since you'll need to pay self employment tax on that at the rate of ~14.1% in addition to income tax it can add up pretty fast, so just keep that in mind (or plug the numbers back in to the spreadsheet with the business income).

Good point.

If the Schedule C net income gets much above $400, the marginal tax rate (federal + state + Self-Employment) on that income will be about 38.5% up to $25K and 40% up to $100K or so (didn't bother to look past that, based on the assumption it will be a "relatively small" number...).

[soccerluvof4]

One thing to note is that (unless I missed it) you never posted how much business income you've earned. Since you'll need to pay self employment tax on that at the rate of ~14.1% in addition to income tax it can add up pretty fast, so just keep that in mind (or plug the numbers back in to the spreadsheet with the business income).

Good point.

If the Schedule C net income gets much above $400, the marginal tax rate (federal + state + Self-Employment) on that income will be about 38.5% up to $25K and 40% up to $100K or so (didn't bother to look past that, based on the assumption it will be a "relatively small" number...).

One thing to note is that (unless I missed it) you never posted how much business income you've earned. Since you'll need to pay self employment tax on that at the rate of ~14.1% in addition to income tax it can add up pretty fast, so just keep that in mind (or plug the numbers back in to the spreadsheet with the business income).

I figured it out this weekend and its about 8900$ was in cash so gotta figure out how to do that yet. It was just something I started helping out with this spring. Being fire'd 4.5 years was looking for something to do and this opportunity came up to work 20-25 hours a week as I wanted.