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Old 07-12-2014, 01:47 PM
 
2,429 posts, read 3,227,603 times
Reputation: 3330

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Mathjack's points about taxation are something I'm really going to to add to my list of considerations.

I know that being fortunate enough to have income to pay taxes on in the first place -- is a good thing. But there's no need to give up taxes if I don't have to, either.

I have plenty of time and rules could change before I retire. But taxes will be much more of a factor in the decision that it might have been without learning about them here. THANKS MATHJACK! I also didn't know there's a Medicare up charge if you make over a certain amount...any more info on that?

I have plenty of time to figure out how comfortable I might be with the thought of drawing down MY savings/investments first to make up for delaying SS. For example, take my pension, but work VERY part time! In my mind ANY work means your not retired, but I could see taking a pension and working part time as a possibility. Especially if it's a regular, seasonal job where they only want me 4-6 months a year. That might be perfect. I might not have to touch any savings/investments. And even if I did, I'd try to limit it to MAX 1,000 a month or so.
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Old 07-12-2014, 01:56 PM
 
71,767 posts, read 71,875,234 times
Reputation: 49311
your welcome. sorry i can't take credit. these thoughts and ideas come from people a whole lot smarter then me.

there now is a " 3.8% medicare surcharge on investment income.
For purposes of this tax investment income is defined to include taxable interest and dividends, long and short term capital gains, annuity income, passive rental income and royalties.
Distributions from pensions and other retirement accounts are not considered investment income.
The 3.8% tax is assessed on the smaller of taxpayer’s net investment income or the amount of Modified adjustment gross income in excess of a threshold amount. The threshold modified AGI amount is $200,000 for single filers and $250,000 for married joint filers."


what is not included :
Interest income from municipal
bonds is exempt from the 3.8%
surtax as well as distributions from
retirement accounts like IRAs and
401(k)s. However, income from
retirement distributions may cause
a taxpayer to exceed the income
threshold and expose other investment
income to the surtax.



this tax is very very tricky and can be pretty hard to dodge if you are in that bracket.

Last edited by mathjak107; 07-12-2014 at 02:07 PM..
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Old 07-12-2014, 02:03 PM
 
Location: SoCal desert
8,093 posts, read 13,244,051 times
Reputation: 14870
Quote:
Originally Posted by LookingatFL View Post
This was a timely read:

Missed Chances on Creators.com
Good link - I'm part of the 'taking it early and I don't care' crowd
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Old 07-12-2014, 02:07 PM
 
2,429 posts, read 3,227,603 times
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So that's only an issue if INVESTMENT income is for a single 200K. OK, so that's just for VERY high income people....not just 'ordinary' folks. Sorry to say I won't have to worry about that. Good to know about, though.

Quote:
Good link - I'm part of the 'taking it early and I don't care' crowd
I was, until mathjack (yes, I'm blaming him) got me thinking about taxes. I just can't give up taxes like that, without at least CONSIDERING another way.
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Old 07-12-2014, 02:07 PM
 
Location: SoCal desert
8,093 posts, read 13,244,051 times
Reputation: 14870
Quote:
Originally Posted by lenora View Post
I'm going to have to find out if this ridiculously complicated tax strategizing applies to single retirees living on the median income of about $25-26 thousand/year. On one hand, my gut reaction is no. OTOH, the single retiree as described above would not want to throw away any extra bucks. On the third hand, the tax laws change frequently, so why bother? I hate this stuff.
LOL, this is why I stopped reading up on Medicare. I'm more than 3 years away and finally figured out it was futile.
As for tax laws, I know of a few I wish they would change!
Oooh. I just thought of a new thread.
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Old 07-12-2014, 02:08 PM
 
71,767 posts, read 71,875,234 times
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same here , at 61 i will not even read anything about medicare at this stage. i am a complete medicare idiot.
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Old 07-12-2014, 02:14 PM
 
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How can you say you're a medicare idiot. You knew about the Medicare surcharge. I bet most people don't know about that.
Granted it won't affect most people. But still you seem to be VERY up on things. (Then again, what do I know)
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Old 07-12-2014, 02:26 PM
 
71,767 posts, read 71,875,234 times
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i know zero about plans at this point . but like everything else i will learn when the time comes.

i know about the tax because i sold a property this year and will get stung by it.
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Old 07-12-2014, 02:32 PM
 
Location: SoCal desert
8,093 posts, read 13,244,051 times
Reputation: 14870
Quote:
Granted it won't affect most people.
I can honestly say I don't personally know one person it would affect

If I had $200K in investment income alone, a paid employee would be thinking about my taxes, not me.
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Old 07-12-2014, 02:35 PM
 
71,767 posts, read 71,875,234 times
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it does not have to be an all the time income. it can be one shot deals like in our case.all you need to do is sell off an investment property and bingo ,you are there.

taxes can be insane. this one sale has us hit with federal tax , ny state tax ,ny city tax , the amt penalty and the medicare surcharge and a broker fee with closing costs..

the sad part is the itself was subject to long term capital gains taxes of 20% but the effect it had on everything else drove all the other taxes way way higher.
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