Money & Economics
- Thread starter bigredfish
- Start date
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THIS IS ACTUALLY WHAT I NEEDED GUYS. THANK YOU!!! It was the SS that I did not plant in my head, well and the IRA is taxed at income level. Pretty sure we are being taxed at the 85% on our SS, Combined/Jointly...now if they are individually taxed then both of us are at the 50% SS tax bracket...but we do file Jointly...
THIS IS ACTUALLY WHAT I NEEDED GUYS. THANK YOU!!! It was the SS that I did not plant in my head, well and the IRA is taxed at income level. Pretty sure we are being taxed at the 85% on our SS, Combined/Jointly...now if they are individually taxed then both of us are at the 50% SS tax bracket...but we do file Jointly...
So this may now make some sense to me since in TurboTax I see a lower Effective Tax Rate than 12% unless I don't understand what that means...
Oh I see, this is an average rate for the year...
Effective Tax Rate Confusion
So, from previous posts, it seem TT"s "Effective Tax Rate" is meaningless. Unfortunate. So, what is it that I look at to determine the tax bracket I'm in. I see brackets that say for 2024, Single 11K-47K is 12% 47K-100K is 22%. 100-191K is 24% So which line item in TT do I look at to...
There are many interactions in the tax code that can lead you to bad decisions. Deduction phaseouts are another example in addition to the pretty well hidden social security taxation rate. Oregon income tax is horrible with these:
Credit for contribution to a 529 plan begins to phase out at AGI 30k (All #s for joint returns)
A senior medical subtraction begins to phase out at $50k AGI.
Personal exemption credit disappears at AGI $200k.
Credit for federal tax paid begins to phase out at AGI $250k
None of these thresholds are indexed.
Then at the federal level, if you're on Medicare, there's IRMAA. If you have a good year with AGI in the $200k ballpark or above, you'll get socked with a big increase in the Medicare premium. This one is indexed, but the amount of the threshold isn't announced until a year or two after the tax year ends, so even if you're able to control your AGI (like with IRA withdrawals or Roth conversions), you don't know the AGI to stay under until after the year ends and it's too late.
Credit for contribution to a 529 plan begins to phase out at AGI 30k (All #s for joint returns)
A senior medical subtraction begins to phase out at $50k AGI.
Personal exemption credit disappears at AGI $200k.
Credit for federal tax paid begins to phase out at AGI $250k
None of these thresholds are indexed.
Then at the federal level, if you're on Medicare, there's IRMAA. If you have a good year with AGI in the $200k ballpark or above, you'll get socked with a big increase in the Medicare premium. This one is indexed, but the amount of the threshold isn't announced until a year or two after the tax year ends, so even if you're able to control your AGI (like with IRA withdrawals or Roth conversions), you don't know the AGI to stay under until after the year ends and it's too late.