Taxes in retirement

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toddanderson
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Joined: Wed Oct 22, 2014 2:47 pm

Taxes in retirement

Post by toddanderson »

Does anyone know of a good tax calculator? I am 62 and plan on retiring.
Calculator for retirement income, I just have my 401k 4% withdraw and social security
And I am trying to find out how much tax I will have to pay
In Wisconsin state tax and federal.
In retirement do people just pay tax at the end of the year or make some type of quarterly payments?
livesoft
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Re: Taxes in retirement

Post by livesoft »

I just use the tax-prep software that I have on my laptop to fill out a "What if?" tax return for any income scenario that I want.

How did you prepare your 2019 tax return?
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Raybo
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Re: Taxes in retirement

Post by Raybo »

I do what livesoft does. But, there is also Turbo Tax's Taxcaster that does estimates: https://turbotax.intuit.com/tax-tools/c ... taxcaster/
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sailaway
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Re: Taxes in retirement

Post by sailaway »

Once you have determined how much tax you owe, you have a couple of ways of paying. You can have it withheld from SS and/or you can make quarterly payments.

It is probably not wise to wait until you file taxes the following year, as that may result in a penalty for underpayment, especially the first year (when presumably you owed much more in taxes your last year working).
Golf maniac
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Re: Taxes in retirement

Post by Golf maniac »

I have a pension and 401k for income. The taxes come out monthly on the pension. For the 401k I take out monthly taxes at my marginal rate after my pension income. At least do quarterly, I would not wait until the end of the year.
02nz
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Re: Taxes in retirement

Post by 02nz »

It may make sense to defer Social Security (up to age 70), so that you have as much space as possible before then to do Roth conversions (beyond the withdrawals needed for living expenses) at low tax rates.

This way you 1) take advantage of lower tax brackets every year, especially before tax rates are scheduled to go back up in 2026; 2) draw down your balance to reduce RMDs; 3) help reduce the amount of SS benefits subject to income tax; 4) if married, mitigate the likelihood one of you passes (most likely your husband) and the other faces higher tax rates filing single; and 5) maximize Social Security as "old age insurance," since by deferring you'll collect a much larger monthly benefit for the rest of your life.

You'll get better and more specific advice if you provide info in this format: https://www.bogleheads.org/wiki/Asking_ ... _questions. I know you only came to ask a tax calculation question, but there are some things you could do that could easily net you thousands, or tens of thousands (or even 6 figures) in extra spendable money.
terran
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Re: Taxes in retirement

Post by terran »

The best tax calculator is to just use the most recent version of a quality tax software and fill it out with your planned/expected information for the year you're interested in.
retiredjg
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Re: Taxes in retirement

Post by retiredjg »

toddanderson wrote: Wed Aug 05, 2020 5:18 pm In retirement do people just pay tax at the end of the year or make some type of quarterly payments?
Just like when you are working, you need to pay taxes all along, not at the end of the year. You can do quarterly payments if you want. Or you can do withholding on each of your 401k distributions and on your SS when you start that.

I use withholding and like it.
mtmingus
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Joined: Sun Jan 07, 2018 4:15 pm

Re: Taxes in retirement

Post by mtmingus »

I use this for my estimated tax payments before filing tax returns:

https://www.mortgagecalculator.org/calc ... ulator.php
rgs92
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Re: Taxes in retirement

Post by rgs92 »

falconsfan
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Re: Taxes in retirement

Post by falconsfan »

Check out smartasset.com Very simple entry and calculations by state.
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FiveK
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Re: Taxes in retirement

Post by FiveK »

As long as we're throwing out options, see US and state income tax calculator - Bogleheads.org for more.
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