Standard Tax Deduction
Posted: Sun Mar 17, 2019 10:30 am
How do I enter the standard tax deduction?
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Yes. That's correct.rcbrown04 wrote: ↑Sat Jul 13, 2019 1:03 pm If I understand the tax mechanics of FRP correctly, the input for income tax rate should be the effective tax rate paid on income, not the marginal tax rate. In instances where retirees may have very little taxable income, the marginal rate and the effective rate can be substantially different.
Taxcaster does seem like it could be useful for this. Another approach is to use last year's version of whatever tax program you use to model what-if scenarios. Whether this is necessary depends a lot on how complicated your tax situation might be.There is a very useful tool available to assist users in determining their proforma effective tax rate: a simplified tax forecasting tool from Intuit called TaxCaster (https://turbotax.intuit.com/tax-tools/c ... /taxcaster). Working with the detailed output from FRP, TaxCaster can help approximate the effective tax rate based on income flows of the plan. With that knowledge, you build a custom effective tax rate profile for various periods of the plan. A typical profile might show that the effective tax rate is low prior to taking RMDs, and then rises with mandatory RMDs as the annual income stream increases, or is stepped up in a year where there is substantial income from a one-time event