![]() There’s a 3.8% “net investment income tax” that shows up halfway through the “15%” qualified bracket. The real “qualified” bracket sizes are different than the ordinary ones. I’ve made the bracket sizes even numbers, but they actually change a little every year. The first “bracket” is really the “Standard Deduction”, and is tax-free for all income types. For a married-filing-jointly couple in 2021: Rough Bracket Sizes Social Security is ordinary income, but not all of it is taxed. Stock must be held for over one year for capital gains to be Qualified income. Stock must be held for over one year for dividends to be Qualified income. So here’s a version which provides approximate tax amounts with much, much less complexity.įirst, there are three types of income: Income Type I tried to write an accurate but simplified summary of the tax rules. Taking your retirement money in the right mix from different account types can drastically lower your taxes. Save in the right account types with the right investments and don’t try to pre-plan for your 2040 taxes right now. If you are many years from retirement, you don’t need to worry about this stuff. Once you retire, which accounts should you take your retirement spending from first? If you retire before age 59.5, how do you get IRA money out at all? Are there any retirement tax surprises to watch out for?
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