Best way to figure this stuff out is to get out a tax software program and plug in some example numbers.+1
Best way to figure this stuff out is to get out a tax software program and plug in some example numbers.+1
For example, the four entries circled in red, and changing cell R2 to 2025, in the Calculations tab of the Case Study Spreadsheet (CSS) (https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/) are all you need for it to calculate the federal tax (based on tax year 2025 law) circled in green:
(https://lh3.googleusercontent.com/d/1_VP3qMfag7UDWD0GO-ByvRHT62SGWDjT)
If you don't use Excel, web tools such as Dinkytown's 1040 Tax Calculator (https://www.dinkytown.net/java/1040-tax-calculator.html) will do good estimates (although that one doesn't seem to be updated for TY 2025 yet - and none of them will show you a chart like the one below from the CSS, that highlights you are past the SS "phantom bracket rates" secondcor521 mentioned, and might be very close to hitting the first IRMAA tier):
(https://lh3.googleusercontent.com/d/1Lx4mWSYWL71hj1np9xyCv4cddG7Ppnje)
Of course, much will change between now and when you hit 70 so don't sweat the details yet. :)
Even if it costs a thousand for a consult, they will easily be able to save you more than that a year in taxes if they are knowledgeable.Do you have some examples in mind that common tax software (TT, H&RB, etc.) wouldn't catch?
Even if it costs a thousand for a consult, they will easily be able to save you more than that a year in taxes if they are knowledgeable.Do you have some examples in mind that common tax software (TT, H&RB, etc.) wouldn't catch?
For an individual return (i.e., not a business return), there are usually no "weird tricks" and "#4 is genius!" doesn't apply either. ;)
Just wanted to add that the tax laws are set to change at the end of 2025. So I wouldn't plan anything tax wise until then.
I think it would be worth talking a knowledgeable financial planner and/or cpa. Even if it costs a thousand for a consult, they will easily be able to save you more than that a year in taxes if they are knowledgeable.
Also, $100k spend for a single person? That seems very high. Is that just temporary to pay off debts?
I thought it was either 0, 50, or 85% of ss taxed but seems all different levels are possible.Yes, because it's "50% (or 85%) of the amount above [some number]".
I thought it was either 0, 50, or 85% of ss taxed but seems all different levels are possible.Yes, because it's "50% (or 85%) of the amount above [some number]".
Secondcor521 already mentioned this, but I want to ensure that you don't miss it. Delaying SS beyond 62 means more years that you can do larger Roth conversions without SS taking any of the "space" of a particular tax bracket.
Even if it costs a thousand for a consult, they will easily be able to save you more than that a year in taxes if they are knowledgeable.Do you have some examples in mind that common tax software (TT, H&RB, etc.) wouldn't catch?
For an individual return (i.e., not a business return), there are usually no "weird tricks" and "#4 is genius!" doesn't apply either. ;)
Even if it costs a thousand for a consult, they will easily be able to save you more than that a year in taxes if they are knowledgeable.Do you have some examples in mind that common tax software (TT, H&RB, etc.) wouldn't catch?
For an individual return (i.e., not a business return), there are usually no "weird tricks" and "#4 is genius!" doesn't apply either. ;)
I'm not talking about having a cpa do your tax return every year. I'm talking about strategizing one time with a certified financial planner who has a strong background in tax in order to come up with the most efficient financial plan for withdrawals and investments considering tax implications and bend points of Healthcare subsidies, capital gains, roth conversions, Medicare, social security taxation and timing, foreign tax credits, bond interest, etc.
So the "some number" is figured with social and non social income and lands at a lot of different places, and then whatever is over that number is either taxed at 50% of 85%? So lots of different configurations?Yes, it seems you get it!
So the "some number" is figured with social and non social income and lands at a lot of different places, and then whatever is over that number is either taxed at 50% of 85%? So lots of different configurations?Yes, it seems you get it!
Without getting into all the details for Taxation of Social Security benefits (https://www.bogleheads.org/wiki/Taxation_of_Social_Security_benefits), maybe these made-up numbers will help:
- You have $30K SS benefits
- 50% of the amount above $25K is taxable: 50% * ($30K - $25K) = $2500
- That makes $2500/$30K = 8.3% of your SS taxable
Walking through Worksheet 1 in Pub 915 may also help clarify. It steps through the process of calculating taxable SS.
Although there are a lot of lines on that worksheet, and as usual it helps if you already know how it's supposed to work ;)
You could ask your CPA if they do multi-year tax planning and if they'd be willing to consult on that. When I did a little bit of that, we paid the CPA $250 / hour. It's a bit of a different (and more involved) thing than optimizing the current year. Most tax folks will do the latter, but few will do the former.