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Old 08-09-2017, 03:02 PM
 
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If I leave my current job (74K gross) and go to a much lower income (none actually) then how long before I get into a lower tax bracket? I ask this question because I want to minimize my taxes on withdrawing my 401K.
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Old 08-09-2017, 03:10 PM
 
Location: Sierra Nevada Land, CA
8,392 posts, read 9,136,940 times
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Quote:
Originally Posted by sunbelt57 View Post
If I leave my current job (74K gross) and go to a much lower income (none actually) then how long before I get into a lower tax bracket? I ask this question because I want to minimize my taxes on withdrawing my 401K.
Immediatly.
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Old 08-09-2017, 03:14 PM
 
66 posts, read 35,720 times
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Ok I guess then if I quit in June, the next time I file it my income will only be 74K/2 - I will be in that tax bracket. The following year, if I still don't work then...
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Old 08-09-2017, 03:19 PM
 
Location: Straddling two worlds
2,517 posts, read 800,175 times
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Quote:
Originally Posted by Mr5150 View Post
Immediatly.
Right but she will still owe taxes on the $74K for 2017, right? I'm asking because I'm delaying retirement to Jan 2018, so my ss doesn't get included and taxed on my $80k 2017 salary.
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Old 08-09-2017, 03:31 PM
 
Location: Middle of the ocean
31,613 posts, read 19,947,296 times
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Quote:
Originally Posted by sunbelt57 View Post
Ok I guess then if I quit in June, the next time I file it my income will only be 74K/2 - I will be in that tax bracket. The following year, if I still don't work then...

The following year if you don't work, and have no other income then you owe nothing in taxes

Whatever you make for the year determines your tax bracket......
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Old 08-09-2017, 03:31 PM
 
Location: Middle of the ocean
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Quote:
Originally Posted by Hannah5555 View Post
Right but she will still owe taxes on the $74K for 2017, right? I'm asking because I'm delaying retirement to Jan 2018, so my ss doesn't get included and taxed on my $80k 2017 salary.

They quit work in June, so they would owe taxes on 37K.
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Old 08-09-2017, 03:51 PM
 
Location: NYC
2,903 posts, read 1,583,756 times
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Quote:
Originally Posted by Mikala43 View Post
They quit work in June, so they would owe taxes on 37K.
Plus whatever she draws out of her IRA & Social Security too.
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Old 08-09-2017, 03:55 PM
 
Location: Florida
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What ever the total of your income is for the year will determine your tax bracket. The bracket is based on income not when you stop working.

Remember you are taxed at different rates as your income goes up. You are not taxed at only one tax rate.
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Old 08-09-2017, 03:59 PM
 
Location: Straddling two worlds
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Quote:
Originally Posted by Hefe View Post
Plus whatever she draws out of her IRA & Social Security too.
Right. Which is why I'm planning to retire Jan 1, 2018 and get a part time job (less than $15k or whatever the limit is till FRA in 2018). Will roll over tiny pension to Roth IRA and move to PA where the state won't tax it.
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Old 08-09-2017, 04:03 PM
 
Location: OH>IL>CO>CT
5,230 posts, read 8,392,545 times
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Be careful when making withdrawals from 401Ks, IRAs, etc, and/or receiving pensions and SS benefits, be sure to estimate how much you need taken out in withholding taxes to cover any taxes due each April.

It may be helpful to do a "what-if" IRS 1040, estimating your expected year-end numbers, to see what you need withheld to avoid any underpayment penalties.
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