understanding income taxes
Posted: Sun Jan 05, 2020 2:35 pm
Jim,
I'm unclear on how taxes are being applied by the planner. In the setup page I have "Income Tax Rate" set as 15%. (Though I am not sure, I would assume this is used as an average rate applied to the withdrawal, and does not take into account progressive taxation.)
I have Annual Retirement Spending set to $140,000, flexible.
Under additional inputs, I have a pension payment set to $48,960 (with no COLA). Under this entry I have Taxable Percent set to 50%. This is because I am making the assumption that $24k would be taken up by the standard deduction, which would leave $24, 440. I would then assume that this amount would be subject to the 15% income tax specified as above.
Here is the result in year 1 of retirement:
Planned expenses: $144, 805
After tax income: $45,288 (
Median Total Withdrawal: $103,475
Here's what's reported on the more details page:
After tax income: $45,288 (this appears to be: $48,960-$24,000 (standard deduction) = $24,960 x .15 = 3744, so a total after tax of 45,216?)
Addl withdrawal: $98,797
Taxes on withdrawal: $4678 (this is not 15% taxation...so perhaps the 15% IS progressive, ie. it's 15% marginal?)
Add'l withdrawal with taxes: $103,475 (matches what's above)
Are you able to help me understand what's happening? Happy to provide more data!
I'm unclear on how taxes are being applied by the planner. In the setup page I have "Income Tax Rate" set as 15%. (Though I am not sure, I would assume this is used as an average rate applied to the withdrawal, and does not take into account progressive taxation.)
I have Annual Retirement Spending set to $140,000, flexible.
Under additional inputs, I have a pension payment set to $48,960 (with no COLA). Under this entry I have Taxable Percent set to 50%. This is because I am making the assumption that $24k would be taken up by the standard deduction, which would leave $24, 440. I would then assume that this amount would be subject to the 15% income tax specified as above.
Here is the result in year 1 of retirement:
Planned expenses: $144, 805
After tax income: $45,288 (
Median Total Withdrawal: $103,475
Here's what's reported on the more details page:
After tax income: $45,288 (this appears to be: $48,960-$24,000 (standard deduction) = $24,960 x .15 = 3744, so a total after tax of 45,216?)
Addl withdrawal: $98,797
Taxes on withdrawal: $4678 (this is not 15% taxation...so perhaps the 15% IS progressive, ie. it's 15% marginal?)
Add'l withdrawal with taxes: $103,475 (matches what's above)
Are you able to help me understand what's happening? Happy to provide more data!