Learning, Sharing, and Teaching > Taxes

Taxes in Early Retirement (GoCurryCracker Links)

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arebelspy:
A common question when planning for ER is "What will my taxes look like?"

Well, if you've done it right, you can make your tax liability close to $0 in ER.

The blog GoCurryCracker has some great posts on taxes, which I've gathered here for your enjoyment/edification.

First, the concept/theory on how to "Never Pay Taxes Again":
http://www.gocurrycracker.com/never-pay-taxes-again/

Then the "7 minute taxes" on the exact steps to take to calculate what you need to do at the end of the calendar year:
http://www.gocurrycracker.com/7-minute-taxes/

There's information on the "Social Security Tax Torpedo" about how your social security can be taxed if you have other income, and ways to mitigate that:
http://www.gocurrycracker.com/social-security-tax-torpedo/

And finally, the proof is in the pudding.

They have posted their actual 1040 tax returns from 2013:

--- Quote ---All together, our adjusted gross income was $91,752.  How much tax did we pay on such a high figure?  You guessed it… $0
--- End quote ---
http://www.gocurrycracker.com/the-go-curry-cracker-2013-taxes/

And 2014:

--- Quote ---Oops, I did it again.  Another year of nearly $100k [Ed. Note: $95,644] in investment income, but with a very budget friendly income tax bill of $0
--- End quote ---
http://www.gocurrycracker.com/go-curry-cracker-2014-taxes/

EDIT: Some of GCC's other tax-related posts, per a suggestion:

--- Quote ---Separately, I just realized that the "Roth Sucks" post isn't included in the Go Curry Cracker sticky, so I would also suggest adding it there:

http://www.gocurrycracker.com/roth-sucks/

...and maybe also his overview on the impact of utilizing tax-advantaged accounts:

http://www.gocurrycracker.com/turbocharge-savings/
--- End quote ---

Jeremy:
I have a feeling I'm going to like this new category ;)

arebelspy:

--- Quote from: Jeremy on June 30, 2015, 08:38:47 AM ---I have a feeling I'm going to like this new category ;)

--- End quote ---



When you hit a lot of home runs like those blog posts, you can expect a lot of links to them--saves us the trouble of trying to be as clever and eloquent as you.

Gone Fishing:
Good stuff, certainly worthy of a sticky!

EricP:
A few questions regarding these strategies.

1.  Are the gains on a Conversion Roth able to be withdrawn penalty free?

2.  How are Conversions taxed?  Marginal Rate?  IE: should I be doing only a certain amount every year?

My thinking is, sure I could set it up so I can pay no taxes, but is that really ideal, aren't you just frontloading your tax payments and potentially taking an overall hit?

A Conversion Ladder is something I see thrown around a lot, and that leads me to believe that Conversions are taxed at the marginal rate and that the gains are not able to be withdrawn penalty free, so I should be converting over money every year (to be used 5 years later) and paying taxes on it every year, instead of front loading my tax liability.

Is my thinking wrong?  How so? Help me out here.

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