Please note that the deduction cell in the spreadsheet is editable and it is NOT tied to your single/married status for a few reasons: 1. The standard deduction changes every year, so by making this an editable box, you can use this spreadsheet this year, next year, and as long as Social Security taxation works the way it does. 2. The deduction changes based on how old you are, so for those above 65, you can put in you deduction while those under 65 can use theirs. 3. Many people do not take the standard deduction, and itemize their deduction instead. Since this field is fully editable, that means the spreadsheet will work for these folks as well. Hope this helps :) Isn't an error. It is intentional.
You two are the best level-headed combination on TH-cam for helping us with retirement planning. I was forever confused about how ss benefit is taxed. The table gave me so much clarity
i watch this, go do some scenarios and do more research, get more questions -- i keep coming back and rewatching with new info and it all makes more sense. thank you so much for making this video and spreadsheet, it is helping me so much!
I entered retirement with $2m in an IRA. I’ll be doing Roth conversions for 20 years. It’s not a simple problem controlling RMDs and wealth transfer to heirs.
Great Video. I have heard so much about the Tax Torpedo. No one has suggested a way to avoid it. The spreadsheet is a wonderful tool so I can play with numbers. Thank You.
You are truly the nerdiest of all the SS nerds, and I love it! I thought I would start having to pay taxes, and maybe quite a lot, next year with the COLA. I realized that I may never actually have to pay taxes again, even if I take some money from my 401k. Thanks!
It would be really helpful if you would include more examples of people filing as Single. There is a significant percentage of people who retire while filing single. Also, what about if you retire mid year? Does that make a difference?
Finally a well thought out tool to limit or organize one's tax torpedo tax contribution levels . Thank you both! Who knows what the future will bring but, today we feast.
Another planning tip is that if your Modified Adjusted Gross Income for a couple is above approximately ninety-seven thousand dollars, you will always be in the eighty-five percent of your benefit is taxable. Thanks, Erik, for your outstanding content and excellence in teaching important financial ideas.
Another excellent Video! I retired at 61 and will now be turning 65 in a few weeks. Your Medicare videos have been invaluable to me in selecting the best path given my personal situation. I have been holding off on starting SS until minimally full retirement age of 66+10 months, but have been trying to justify that wait in my mind. This video helped me expand that thought process considerably and once I get fully familiar with your spreadsheet I'm sure I'll be able to make a truly informed decision! Thanks so much to you and Zacc for pulling this together. As I dive deep into the spreadsheet I will be sure to reach out if there are questions I can't resolve. Thanks again and best regards!!
@@Theretirementnerds Yes thanks for the Medicare videos. I'm only 63, but because of you I was able to find affordable insurance that specifically covers my cataracts. I never would have thought to make sure the insurance I chose included what I needed. Goofy me thought they all included everything LoL 😂 Thanks! ❤️
This is a great video. Good job! One reason someone might consider partial Roth conversions is to avoid that a future RMD push income over a threshold that allows lower rent. Some places in my area will double or triple the rent for income over the threshold.
Great content, as usual! And thanks Zaac for realizing that having/keeping money is different for different people - and honoring what having that money means to them!
This is such a complex subject. I have a wealth advisor and an accountant but I really need to understand this to make the final decisions. I feel more comfortable after watching your videos. Thank you so much.
I've been looking at converting a larger pile of IRA money to a ROTH.. but at my age (63) I find that if I go too far now, I get hit with IRMMA as well, so another spreadsheet calculation to deal with. Paying no taxes after a certain age is sure intriguing though. I appreciate your videos. They do make me think.
Paying IRMAA now might mean not getting bumped up into a higher tier of IRMAA later? Also possibly advantage to converting some to Roth before starting Medicare and/or starting Social Security?
These videos are fantastic! And I concur non alarmist is a great way to describe both of you. I love the non sales approach. My husband and I could use the help and discussion. Will be reaching out for advice and management. Retired, 62 and loving life and hope to for many more years to come!
Great video. Nobody else talks about scenario 3. I had determined for myself that totally eliminating tax deferred money before age 75 when I have to take RMDs was the best plan for me because I was going to be in the SS tax torpedo every year otherwise. It is not only the most tax efficient, it also has many other benefits. It reduces the impact of the so called widow tax. It avoids any IRMAA charges. It makes it easy to spend your wealth without worrying about taxes. I might keep a little tax deferred money around for long term care and qualified charitable distributions.
Thank you for going over different scenarios & reviewing how making changes to the income structure can either save you or impact your taxation. This video is extremely useful 🎉
Best discussion of the Tax Torpedo and especially the different scenarios of when and how a Roth conversion makes sense. I seem to be in the position where converting "it all" "quickly" is the best option. I'd love to hear your thoughts on leaving a portion behind for Donor Advised / Directed contributions. I don't - and probably never will - have that million dollar portfolio we all dream of. But with a small pension and more in traditional than Roth, these discussions and tools are very helpful.
It’s great. Unfortunately it showed me that I’m 85% no matter what, without adding IRA withdrawals. Probably going to do some more Roth conversions in the next few years but definitely need to keep studying. I’m only 58 and already retired so it’s not like my income is going down. @@Theretirementnerds
Great video. You mentioned about pushing thru the tax torpedo. Doing the Roth conversions BEFORE taking Social Security avoids the tax torpedo. Drain the traditional IRA amounts before taking Social Security - by either spending it or by Roth conversions.
I think people are unaware of the impact collecting SS has on their tax situation and Roth conversions. I retired at 63 (in 2023) with a $70k yearly pension. By not collecting SS I am able to convert a little under $100K to Roth each year. Total income ,with conversion, keeps me under the second IRMAA threshold and partially in the 24% bracket (my IRA is a little over $1.4M). If I was taking SS now my conversions would be much smaller and my RMDs at 75 would be much larger. Yes its a gamble that I'll live long enough but if I don't my heirs will have a more tax free inheritance.
Found you guys this weekend and love your videos. I too love my spreadsheets and trying to figure out the best strategy but so much to consider. The spreadsheet is awesome!!! I would make one suggestion. Make one unprotected cell where we can write notes.
I love it! You guys are me 40 years ago, trying to ace every dollar for my clients. Now, nearly all of them are getting their SS dinged for the extra bucks, some outrageously high, some not so much. The whole concept of brackets stands on its head with these numbers, and so thank you for making us spend some time digging in to what we all should have known during the planning phases. btw, I still love doing the planning.
Thank you so much for giving us access to this calculator. I was going to start SS at 62 and mix it with my 401K for income. I think now, I might need to live on the 401k first and let my SS "age" for a few years.
Thank you for the spreadsheet!! I have been trying to decide how much to leave in our regular IRAs after ROTH conversions to have the lowest marginal tax rate on future withdrawals. Lots of assumptions, but using the current projected 2026 tax brackets and our projected SS income, I can clearly see we can have $24K of income on top of SS and still have a marginal tax rate of 18.5%. This is the piece of the puzzle I have looking for! It at least gets me in the right ball park (I was really close but it would have been much easier had I had this tool a week ago.) Thank you for this very informative video!
Another good reason to do Roth conversions is the impact of RMDs when a spouse dies. The survivor's brackets are cut in half, and taxes increase dramatically. The survivor may end up filing as single for many years.
My pension seems to be a tax bomb, due to the value. I have no option but to pay the full 85% on my social security. It also affects my ACA subsidies. Also if I want to sell my house in California, I will have so much in capital gains, that I see a scenario where if I sell at age 63, I would trigger losing all ACA subsidies for a year, as well as pushing me to the highest IRMAA brackets for a year when I turn 65. There are so many hidden tax torpedoes. The trick is knowing the information on how to avoid it if possible.
Thank you for sharing your understanding of an overly complicated subject in ways we can understand better * What's the chance you or Zacc might do an online walk through of the tax torpedo worsheets for folks who's expertise lies in other areas outside taxes and SS? We so want to understand this well to feel a little more in control during senior years.
What a whirlwind!!! Wealth of information. Trying to wrap my brain around all of this. I’m 57, think that when I turn 591/2 I will start my Roth conversion. I don’t plan on taking social security until 67. I have 800k and make 70k a year so I will be able to move 25k a year in my tax bracket. I have ZERO cash account and this would help once I start taking social security to offset income
Thank you. Excellent explanation of the SS Tax Torpedo. Appreciate that you created - and shared - a public/consumer-facing spreadsheet to illustrate various scenarios. (Hope you plan to update it annually, especially once TCJA sunsets!) Well done and quite helpful. 👍🏻
I was going to triple thumbs-up but youtube won't let me - very well done! You guys lay out the information clearly and objectively. I listen to some other channels which I am sure you are aware of where I reckon half the people watching are convinced they will lose everything if they keep more than 500 dollars in a tax-deferred account ;-). Thanks so much and I will be referring some friends to your channel.
Request for tax year 2024: Please create the spreadsheet in time for a December 2024 video! I was trying to figure out how much I could pull out of IRA in 2023 without more 2023 taxes being triggered, and couldn't wrap my head around the scenarios in time. Gripe of the day: The provisional income allowance is another way singles get taken to the cleaners- spouse gets SSI they didn't pay in, and, spouse doesn't pay tax on the SSI they are gifted. Makes me crazy.
This spreadsheet will work next year as well 😊 Thresholds haven’t changed in 40 years and the deduction field is customizable to your situation. Appreciate you watching!
Tax Accelerator is a more intuitive reference than Tax Torpedo, imo. Thnx for the explanation, I now see I probably could’ve done better in my 60s. 😳 Now RMD is here to stay 😉
Since I'm in that higher AGI and lower Social Security, I know I will be at the high end of taxes. What I am now curious about (relating to reducing taxable v roth accounts and conversions) is the impact on capital gains taxes. You may be in the 85% taxable social security but still in the 0 tax for capital gains since the income limits are so vastly different. It may still be worth converting taxable accounts to roth if capital gains are in the conversation.
I really appreciate you guys sharing your knowledge and experience to help others. And for making the spreadsheet available for download. I like the storybook approach you take in your videos and find added value listening to the entire story. Too many other changes get to the bottom line and don’t provide situational context like you do. I created a similar spreadsheet but like your better because it will be easier for my wife to understand. I feel better equipped to prepare for each phase but would like to know your thoughts on ROTH 401k accounts. I have historically contributed to 401k but stop contributing in favor of ROTH 401k under the advice of a Financial Planner but now question the strategy and need for a ROTH 401k.
Thank you so much! So glad to hear it was helpful. We have 2 videos on the Roth vs Traditional conversation that may help. All depends on tax rates and philosophy around buckets in retirement. Video 1:(watch first) th-cam.com/video/VHHNYdpVwrU/w-d-xo.html Video 2: th-cam.com/video/-U_su7Ak7QE/w-d-xo.html
Really appreciate the great information and discussion you provide here, not to mention the invaluable tool and walkthrough. Came across your channel this week, and definitely subscribing. Regarding your discussion around incentives for recommending Roth vs Traditional and Roth conversion, would fiduciary responsibilities play into it at all? There have been a lot of talk, at least in my small circle of millennial professionals, of ensuring your FA is also a fiduciary. I would also think that the incentive may be stronger depending on where the FA is in his/her client base. If he/she is still building that base or looking to expand, building goodwill and a reputation for making good recommendations regardless of whether it garners income would go a long way. I'll tell you that that's why I've stuck with my current FA.
Thank you for watching! So glad you found us! We have a video coming out soon that goes over the fiduciary discussion. I think people are trying to earn business and one way is to make your existing relationship appear like they are hiding something from you that is costing you money.
One issue I have always had with paying the tax now (roth) vs paying the tax later (ira), is that by paying now, I am paying with a much more valuable dollar compared to a weaker dollar in the future...
What about dodging the tax torpedo by converting all of your traditional IRA/traditional 401k to Roth between the ages of 60 and 70 before you start taking social security at 70? (assuming you retire at 60) In this case you would be funding both your daily expenses and the taxes on the conversions via long term capital gains from a taxable brokerage account combined with some Roth withdrawals if needed. In this scenario you would already have ~85% of your retirement assets in Roth to begin with due to favoring a Roth IRA and Roth 401k for the entirety of your working life. There would be no pension or other income.
for federal employees, financial advisors want you to take money out of your TSP and put into an IRA so can do the conversions - they want to get to manage that TSP money!
It would be interesting to know what the median account balance of 401k’s in 2024 of those age 60 to age 70. 🤔 If it is as low as I would be lead to believe. I cannot imagine the median account holder paying much tax on the withdrawal from the median deferred account along with social security?
I graduated the CFP college but decided against the certification and CFP business. You'll never get all the credit for good outcomes, and you'll get blamed when things crash. Stick to taxes. You'll be on overload three months of the year and on vacation for nine.
Columns are too wide. Increase the height of Row 6, so sheet is not so wide (reducing column width of I:Q). Still struggling to see the Tax Torpedo effect... % multiples to tax rate might help. The blue shades seems to indicate that the torpedo effect is worse as it gets dark?
I just retired in January 2024 . In 2008 when there were lots of losses in the market and I had to leave my job for family reasons I converted a lot of losing positions to Roth so I have twice the amount in Roth as regular Ira ! I am currently still working to get a new car before I actually retire - would love your imput
Hi Edward, happy to help where we can. My email is erik@90daysfromretirement.com if you'd like to shoot me an email with what state you're in and I can connect you with a partner of mine that can help.
This made so much sense. Thank you for explaining it so well. To make it perfectly clear if you have a pension of over $50,000 you are going to pay your full 85% on Social Security. Correct?
Hi Carla, so glad it was helpful, and thank you for watching! Highly recommend downloading the spreadsheet if you haven't already. It depends on how much Social Security income you have. If you have $50k in pension and $80k in SS as a couple... No. It's not 85%. So it all boils down to a few factors, not just income from things like a pension or 401k. Hope that helps!
Hello, I sent you two emails one in the morning and one in the late afternoon for this calculator and no answer yet.... would appreciate it. Loved your presentation.
Hi Rozalia, did you fill out the form and it isn't showing in your email? Send me a message to Erik@90daysfromretirement.com and I'll send over the file.
Wondering about exactly how the SS 2 yr look back works. When is your rate set? On the calendar year or annually near my birthday? I have an October birthday. I plan to retire early June 2026 and will have Cobra for 18 months and ACA for the last 9 mos before reaching 65. My AGI will be high in calendar year 2026 bc I will be working about half the year. Will my premiums at age 65, 10/28, be based on 2026 earnings? Will that initial rate apply for 2 months or through the next year? When will the next premium be computed to apply? TIA
When you start Medicare, it is from your tax return 2 years prior. Every year moving forward, the 2 year lookback is applied on January 1st. Hope that helps!
If you know your only going to pull 1/2 of your wages, even with Min Distributions, I don't think it will be worth it unless you can make great returns in the meantime to make up the tax increase.
Another great video. I have a question about Roth conversions. If I'm $3k into the 22% bracket is "head room" the remaining amount below the 24% bracket? Just want to make sure before I pull $47k out of my 401k. Thank you.
I apologize if this was answered - I may have missed it in the video - but how do you feel about withholding taxes directly from the conversion itself as opposed to paying taxes from an outside source? I understand if you pay from an outside source you have more converted funds in the Roth but would you do it either way or stay away from withholding directly from the Roth?
Such a good question. A lot of financial advisors think that if you have to withhold taxes from the conversion that you should never do it. I think that is wrong… First, if you can afford to pay the taxes with other cash/assets/investments, that is best. Second, if you have to use the IRA for the tax payment itself, it can still be worth it if the tax rate is less than when you would otherwise withdraw the money later. The assumption is that you probably will withhold taxes when you withdraw it in retirement to spend it. So if you wouldn’t apply the logic of “if you can’t cover the taxes from other sources, you can’t withdraw $ from your IRA”, you shouldn’t apply it to conversions. Keep in mind that if you are under 59.5, your taxes withheld will be taxed and penalized as a normal early withdrawal. That usually is not worth it. Does that make sense?
Much of this advice and educational content is very useful. However, side-eye anyone who tells you they know "tax rates are definitely going up". I have been hearing this for more than 30 years. Rates are actually significantly less. My point is to set yourself up so you retain options and flexibility, not one specific situation. Also, remember, no one actually knows if the tax implications of Roth IRAs will remain the same indefinitely.
Curious if you and/or Zacc might be able to give any brief feedback on a scenario we're facing this year (2024) in terms of whether we can take advantage of an unfortunate situation... In 2023 we had a fire at a rental property, and long story short, the insurance company isn't covering it so we're having to sell it at a loss of $250k. :( Assuming this year we don't have any other income, aside from my husbands Disability of $22k for the year, might there be an option to convert some Trad 401k dollars to a ROTH to offset some of the loss? (I know this is probably difficult to answer without additional info, but thought I'd just throw it out there!) Thank you for the content. Really helpful video!
Happy to take a look. Lot of detail and follow up questions. Mind sending me an email and I'll connect you with Zacc's team? Erik@90daysfromretirement.com
Great content all the way around. But I have a question. When you change the filing status on the worksheet to single, shouldn't it cut the figure in the Tax Deduction column in half and then calculate the final column based on that? Thanks.
Thank you for watching and playing with the worksheet. The deduction column is a custom field where you can type it in. There are standard deductions that change each year as well as others who itemize their deductions and can be any number. We kept that field open so that you can free type, which makes this worksheet usable this year, next year and for those who itemize their deductions. Hope that helps! Appreciate you!
@@Theretirementnerds Here is a hypothetical to test my understanding. Let's say Joe is retired and his income consists of 30k from social security and 14k from a 401k. His wife still works a regular W2 job and makes 50k. Using your worksheet, it seems that if they file separately, 7% of Joe's SS income is subject to tax. If they file jointly, 85% of Joe's SS income is subject to tax. Is that correct? Am I using the worksheet correctly? Thanks.
My concern about Roth conversions is to avoid the IRMAA cliff ($103k in my case) and the resulting higher Plan B premium. Does my deduction of $16,550 (>65) apply to the calculation in order to remain below $103k of income? Thanks in advance for your help (my financial institution does not impart tax advice).
For IRMAA, they are looking at your Modified Adjusted Gross Income, which would be your AGI (number in the spreadsheet) plus your taxable amount of Social Security income. Does that help?
The more time you have, the more options you have. It'll also depend on your assets and investment mix. Happy to connect. My email is erik@90daysfromretirement.com That conversation with them is always no-cost.
Hello Erik... I do have one question for you as a follow-up to my comment a couple of days ago. I am 64 (will be 65 on 3/5). My wife is 60. She has been a stay at home partner for our 43 years of marriage raising our now adult children and holding down the ranch as I traveled for work. I plan to take SS starting at FRA (66 years and 10 months). When I start that my wife will be 62 years and 3 months. Assuming my FRA benefit is $3800/month is my math correct in assuming that if she were to start on the same date when she's 62 years and 3 months old; 50% of my SS amount (i.e. $1900) would be further reduced by ~(8.3%+8.3%+8.3%+5%+3.75%)=33.65% (with that last 3.75% being a the prorated reduction since she is 3 months past her 62nd BD). In other words would her monthly benefit at 62 and 3 months be $1900x 66.35% = $1260.65/month and would stay at that rate until I passed away (ahead of her)? Thanks... I think I have that right but I was hoping for more.
Thanks for your patience. Been a hectic couple of days! There is a great website where you just need her birthday and the date she plans to file and it will tell you the exact percentage she'll get: www.ssa.gov/oact/quickcalc/spouse.html#:~:text=The%20spousal%20benefit%20can%20be,will%20receive%20a%20reduced%20benefit That way, it isn't public on TH-cam for the world to see your wife's info :)
@@Theretirementnerds Thank you! Sorry I didn't "find" that on my own. I was too immersed in calculating it myself... kind of a "can't see the forest for the trees' thing. 🥴 Best regards
The spreadsheet defaults to joint filing status. I changed it to single and the spreadsheet did not change the standard deduction. I have not played with it much. Is there something additional I need to do to get the spreadsheet to correct the standard deduction? Are you using the standard deduction for 2023 for April 2024 filing? Thanks in advance.
Changing joint/single changes which thresholds on the left your provisional income will run through. The deduction field is a manual change because it depends on the year, age, and standard deduction or some may itemize deductions, so that field is not a formula/auto update. Should be able to type in whatever your deduction is and the rest of the table will adjust accordingly. Hope that helps!
Note, there is some talk, even a proposed bill, of eliminating federal income tax on social security. More likely it will be a campaign promise - "Vote for me and we can eliminate tax on social security. No more give with the right hand and take with the left." Which will turn into - "Gosh darn it, we really really tried to eliminate tax on social security but those won't cooperate."
I think if you save it to your computer and then upload it to Google drive, it should open up in sheets just fine. I’m interested to hear if this works.
Please excuse my ignorance. I use TurboTax software to calculate my taxes and I just enter/report the income from the form I received. I don’t do a separate calculation to determine whether I should enter/report less. Are you saying that tax software doesn’t do this calculation you are demonstrating and that I could be over paying tax?
Not saying the software is wrong. The software will do calculations for you, but it doesn't show you the additional details (% taxable, tax torpedo chart on the right, strategies around what and how to use it to your advantage). Also, not everyone uses TurboTax, so this is just a way for people to better understand not just the taxability, but what to do about it.
When using TurboTax, you should go through the tax forms that it generates to make sure you understand the calculations that it is doing on your behalf. You can see these by clicking on the Forms button on the toolbar. The main Form 1040 has lines 6a and 6b that are used to report your SS total payment and the taxable portion. You can double-click on the value on line 6b and it will take you to the 1040/1040SR Wks (Worksheet). Double-click on line 6b on there and it will take you to the Social Security Benefits Worksheet and it will show you how it made the calculation with the value from line 20 on this worksheet being moved up the chain that you followed. In TurboTax, Forms are submitted with your tax return, and Worksheets are the behind-the-scenes calculations that are required for some values on the actual forms. Once done looking at the information on the tax forms and worksheets, you can click the EasyStep button in the toolbar to return to the normal TurboTax interface you are familiar with. TurboTax is making this calculation for you, but this video gives you information on specific cases of how that tax calculation can cause problems (the SS Tax Torpedo) and times when you really should be paying attention to that.
So prior to age when RMDs kick in you may be able to do "tax free" Roth conversion if you have the "head room" in the table. This is extremely good news as otherwise I will take a huge tax hit when withdrawing for a new car or expensive home repairs.
Hi there, this is intentional. It is a field where you can type your deduction in. That makes this sheet usable every year and accounts for those who itemize deductions and don't have a standard deduction number. The single/joint field will adjust the threshold equations. Hope that helps!
100% lots of software will do the calculations for you from a tax perspective. Our hope with this spreadsheet is that people can plan ahead, knowing where they have tax bracket room to make decisions that won't cost as much. Appreciate you spending time with us!
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Please note that the deduction cell in the spreadsheet is editable and it is NOT tied to your single/married status for a few reasons:
1. The standard deduction changes every year, so by making this an editable box, you can use this spreadsheet this year, next year, and as long as Social Security taxation works the way it does.
2. The deduction changes based on how old you are, so for those above 65, you can put in you deduction while those under 65 can use theirs.
3. Many people do not take the standard deduction, and itemize their deduction instead. Since this field is fully editable, that means the spreadsheet will work for these folks as well.
Hope this helps :)
Isn't an error. It is intentional.
You two are the best level-headed combination on TH-cam for helping us with retirement planning. I was forever confused about how ss benefit is taxed. The table gave me so much clarity
Thank you so much for tuning in! So glad to hear it is helpful!
Nothing but positive things to say about this presentation! Thank you both!
Thank you so much!
i watch this, go do some scenarios and do more research, get more questions -- i keep coming back and rewatching with new info and it all makes more sense. thank you so much for making this video and spreadsheet, it is helping me so much!
So glad to hear it is helpful! Thank you!
I entered retirement with $2m in an IRA. I’ll be doing Roth conversions for 20 years. It’s not a simple problem controlling RMDs and wealth transfer to heirs.
Great show. You two make a perfect team, both very down to earth and explain things well, in simple ways.
You are too kind! Thank you so much! Zacc is so sharp and great at what he does.
Great Video. I have heard so much about the Tax Torpedo. No one has suggested a way to avoid it. The spreadsheet is a wonderful tool so I can play with numbers. Thank You.
You're welcome! Thank you for spending some time with us!
You are truly the nerdiest of all the SS nerds, and I love it! I thought I would start having to pay taxes, and maybe quite a lot, next year with the COLA. I realized that I may never actually have to pay taxes again, even if I take some money from my 401k. Thanks!
So glad you enjoy! 🙂 appreciate you!
Awesome....What a fantastic planning tool! Thank you.
It would be really helpful if you would include more examples of people filing as Single. There is a significant percentage of people who retire while filing single.
Also, what about if you retire mid year? Does that make a difference?
Make sure to download the spreadsheet! There's a cell for filing status and you can play with single numbers 🙂
Finally a well thought out tool to limit or organize one's tax torpedo tax contribution levels . Thank you both! Who knows what the future will bring but, today we feast.
Thank you for spending time with us! Hope it's helpful!
Another planning tip is that if your Modified Adjusted Gross Income for a couple is above approximately ninety-seven thousand dollars, you will always be in the eighty-five percent of your benefit is taxable. Thanks, Erik, for your outstanding content and excellence in teaching important financial ideas.
Thank you for adding that David!
@@Theretirementnerds My pleasure, indeed.😀
Another excellent Video! I retired at 61 and will now be turning 65 in a few weeks. Your Medicare videos have been invaluable to me in selecting the best path given my personal situation. I have been holding off on starting SS until minimally full retirement age of 66+10 months, but have been trying to justify that wait in my mind. This video helped me expand that thought process considerably and once I get fully familiar with your spreadsheet I'm sure I'll be able to make a truly informed decision! Thanks so much to you and Zacc for pulling this together. As I dive deep into the spreadsheet I will be sure to reach out if there are questions I can't resolve. Thanks again and best regards!!
Thank you so much for spending time with us! So glad to know these are helpful. We're happy to help in any way we can
@@Theretirementnerds
Yes thanks for the Medicare videos. I'm only 63, but because of you I was able to find affordable insurance that specifically covers my cataracts. I never would have thought to make sure the insurance I chose included what I needed. Goofy me thought they all included everything LoL 😂
Thanks! ❤️
This is a great video. Good job! One reason someone might consider partial Roth conversions is to avoid that a future RMD push income over a threshold that allows lower rent. Some places in my area will double or triple the rent for income over the threshold.
Thanks for the detailed examples and the spreadsheet
Of course! Thank you for spending some time with us!
Great content, as usual! And thanks Zaac for realizing that having/keeping money is different for different people - and honoring what having that money means to them!
Zacc is the best! Thank you for spending time with us!
Great video. Thank you for this insight , Appreciate the spreadsheet-Amazing !
Thank you so much! Appreciate you watching!!
This is such a complex subject. I have a wealth advisor and an accountant but I really need to understand this to make the final decisions. I feel more comfortable after watching your videos. Thank you so much.
So glad they are helpful! Thank you for spending time with us!
Such a great explaination. I really appreciate your videos and resources.
Thank you so much! Thank you for spending time with us and for your support!
Thank you for every bit of information. This has helped me sooooo much!
So glad it was helpful! Appreciate you 🙏
Zach you're the best. You make a perfect team.
Thank you so much!!
Thank you!! This answers so many questions I have had on how taxes work in retirement. I am downloading the spreadsheet.
So glad it is helpful! Feel free to reach out if you have any questions!
I've been looking at converting a larger pile of IRA money to a ROTH.. but at my age (63) I find that if I go too far now, I get hit with IRMMA as well, so another spreadsheet calculation to deal with. Paying no taxes after a certain age is sure intriguing though. I appreciate your videos. They do make me think.
Paying IRMAA now might mean not getting bumped up into a higher tier of IRMAA later? Also possibly advantage to converting some to Roth before starting Medicare and/or starting Social Security?
These videos are fantastic! And I concur non alarmist is a great way to describe both of you. I love the non sales approach. My husband and I could use the help and discussion. Will be reaching out for advice and management. Retired, 62 and loving life and hope to for many more years to come!
Thank you so much! Happy to help however we can, and we agree... we hope many more years of loving life! :)
Great video. Nobody else talks about scenario 3. I had determined for myself that totally eliminating tax deferred money before age 75 when I have to take RMDs was the best plan for me because I was going to be in the SS tax torpedo every year otherwise. It is not only the most tax efficient, it also has many other benefits. It reduces the impact of the so called widow tax. It avoids any IRMAA charges. It makes it easy to spend your wealth without worrying about taxes. I might keep a little tax deferred money around for long term care and qualified charitable distributions.
Thank you so much for watching! So glad it was a useful video :)
Thank you for going over different scenarios & reviewing how making changes to the income structure can either save you or impact your taxation. This video is extremely useful 🎉
So glad it was helpful! Thank you for watching!
thanks for this useful and ACTIONABLE information!
Our pleasure! Thank you for watching!
Best discussion of the Tax Torpedo and especially the different scenarios of when and how a Roth conversion makes sense.
I seem to be in the position where converting "it all" "quickly" is the best option. I'd love to hear your thoughts on leaving a portion behind for Donor Advised / Directed contributions. I don't - and probably never will - have that million dollar portfolio we all dream of. But with a small pension and more in traditional than Roth, these discussions and tools are very helpful.
Great information. Going to a while and some time with the spreadsheet to digest it but now I have a better starting point. Thanks
Thank you so much! Hope the spreadsheet is helpful!
It’s great. Unfortunately it showed me that I’m 85% no matter what, without adding IRA withdrawals. Probably going to do some more Roth conversions in the next few years but definitely need to keep studying. I’m only 58 and already retired so it’s not like my income is going down. @@Theretirementnerds
Thank you very much for important information
Thank you for watching! 🙂
Great information, thank you!!
Thank you so much, George! Appreciate you spending time with us!
I think it is next generation management opportunity which is aligns with client's desire to ensure generation management.
Great video. You mentioned about pushing thru the tax torpedo. Doing the Roth conversions BEFORE taking Social Security avoids the tax torpedo. Drain the traditional IRA amounts before taking Social Security - by either spending it or by Roth conversions.
Thank you for watching and sharing this comment!
I think people are unaware of the impact collecting SS has on their tax situation and Roth conversions. I retired at 63 (in 2023) with a $70k yearly pension. By not collecting SS I am able to convert a little under $100K to Roth each year. Total income ,with conversion, keeps me under the second IRMAA threshold and partially in the 24% bracket (my IRA is a little over $1.4M). If I was taking SS now my conversions would be much smaller and my RMDs at 75 would be much larger. Yes its a gamble that I'll live long enough but if I don't my heirs will have a more tax free inheritance.
The most you can contribute is $7,500 I believe. Second you have to be on Medicare at age 65 for any IRMMA to take affect.
Found you guys this weekend and love your videos. I too love my spreadsheets and trying to figure out the best strategy but so much to consider. The spreadsheet is awesome!!! I would make one suggestion. Make one unprotected cell where we can write notes.
Great suggestion! I’ll work on it 😊
Thank you for the information
You're the best, Eddie!
@@Theretirementnerds thank you
I love it! You guys are me 40 years ago, trying to ace every dollar for my clients. Now, nearly all of them are getting their SS dinged for the extra bucks, some outrageously high, some not so much.
The whole concept of brackets stands on its head with these numbers, and so thank you for making us spend some time digging in to what we all should have known during the planning phases. btw, I still love doing the planning.
Thank you so much for spending time with us!
Eye opening
Thank you so much for giving us access to this calculator. I was going to start SS at 62 and mix it with my 401K for income. I think now, I might need to live on the 401k first and let my SS "age" for a few years.
So glad to hear it is helpful! Happy to help however we can.
Thank you for the spreadsheet!! I have been trying to decide how much to leave in our regular IRAs after ROTH conversions to have the lowest marginal tax rate on future withdrawals. Lots of assumptions, but using the current projected 2026 tax brackets and our projected SS income, I can clearly see we can have $24K of income on top of SS and still have a marginal tax rate of 18.5%. This is the piece of the puzzle I have looking for! It at least gets me in the right ball park (I was really close but it would have been much easier had I had this tool a week ago.) Thank you for this very informative video!
So glad it was helpful! Thank you for spending some time with us!
Awesome information. You guys are the best.
Thank you so much!
New subscriber here I am not done with this video yet and decided you guys are my favorite nerds. Been looking for these type of discussions Thank you
So glad you found us! Thank you for tuning in! We have two episodes with Zacc in production that should be coming out in the next week or two :)
Great video, thanks!
Thank you so much!
Besides the division table there is also a multiplication table that works out the same.
Great info … very helpful!
Thank you!
Another good reason to do Roth conversions is the impact of RMDs when a spouse dies. The survivor's brackets are cut in half, and taxes increase dramatically. The survivor may end up filing as single for many years.
Great point, David!
My pension seems to be a tax bomb, due to the value. I have no option but to pay the full 85% on my social security. It also affects my ACA subsidies. Also if I want to sell my house in California, I will have so much in capital gains, that I see a scenario where if I sell at age 63, I would trigger losing all ACA subsidies for a year, as well as pushing me to the highest IRMAA brackets for a year when I turn 65. There are so many hidden tax torpedoes. The trick is knowing the information on how to avoid it if possible.
Excellent!
Thank you!!
Thank you for sharing your understanding of an overly complicated subject in ways we can understand better * What's the chance you or Zacc might do an online walk through of the tax torpedo worsheets for folks who's expertise lies in other areas outside taxes and SS? We so want to understand this well to feel a little more in control during senior years.
My email is erik@90daysfromretirement.com
Send me an email and I can connect you with Zacc's team. They are the experts on that spreadsheet.
Ouch! I wish I'd seen this before I had to take out MRD!
Great video! I subscribed to your channel.
Thank you so much! Have a few more videos with Zacc on the way!
What a whirlwind!!! Wealth of information. Trying to wrap my brain around all of this. I’m 57, think that when I turn 591/2 I will start my Roth conversion. I don’t plan on taking social security until 67. I have 800k and make 70k a year so I will be able to move 25k a year in my tax bracket. I have ZERO cash account and this would help once I start taking social security to offset income
Thank you for watching! Lots of decisions to work through. Sounds like you're in a pretty good spot!
Thank you. Excellent explanation of the SS Tax Torpedo. Appreciate that you created - and shared - a public/consumer-facing spreadsheet to illustrate various scenarios. (Hope you plan to update it annually, especially once TCJA sunsets!) Well done and quite helpful. 👍🏻
So glad to hear it was helpful! Appreciate you spending time with us!
I was going to triple thumbs-up but youtube won't let me - very well done! You guys lay out the information clearly and objectively. I listen to some other channels which I am sure you are aware of where I reckon half the people watching are convinced they will lose everything if they keep more than 500 dollars in a tax-deferred account ;-). Thanks so much and I will be referring some friends to your channel.
Appreciate this so much! Thank you for spending time with us!
First time listener!! Priceless info. Thank you Gents!
Where is the link for the spreadsheet?
Thank you for watching! Should be a link in the description, but here it is as well:
theretirementnerds.com/social-security-worksheet/
Found it ...many thanks
@@Jaxmidway1 of course!
Request for tax year 2024: Please create the spreadsheet in time for a December 2024 video! I was trying to figure out how much I could pull out of IRA in 2023 without more 2023 taxes being triggered, and couldn't wrap my head around the scenarios in time. Gripe of the day: The provisional income allowance is another way singles get taken to the cleaners- spouse gets SSI they didn't pay in, and, spouse doesn't pay tax on the SSI they are gifted. Makes me crazy.
This spreadsheet will work next year as well 😊
Thresholds haven’t changed in 40 years and the deduction field is customizable to your situation. Appreciate you watching!
Tax Accelerator is a more intuitive reference than Tax Torpedo, imo. Thnx for the explanation, I now see I probably could’ve done better in my 60s. 😳 Now RMD is here to stay 😉
Since I'm in that higher AGI and lower Social Security, I know I will be at the high end of taxes. What I am now curious about (relating to reducing taxable v roth accounts and conversions) is the impact on capital gains taxes. You may be in the 85% taxable social security but still in the 0 tax for capital gains since the income limits are so vastly different.
It may still be worth converting taxable accounts to roth if capital gains are in the conversation.
I really appreciate you guys sharing your knowledge and experience to help others. And for making the spreadsheet available for download.
I like the storybook approach you take in your videos and find added value listening to the entire story. Too many other changes get to the bottom line and don’t provide situational context like you do.
I created a similar spreadsheet but like your better because it will be easier for my wife to understand.
I feel better equipped to prepare for each phase but would like to know your thoughts on ROTH 401k accounts. I have historically contributed to 401k but stop contributing in favor of ROTH 401k under the advice of a Financial Planner but now question the strategy and need for a ROTH 401k.
Thank you so much! So glad to hear it was helpful.
We have 2 videos on the Roth vs Traditional conversation that may help. All depends on tax rates and philosophy around buckets in retirement.
Video 1:(watch first)
th-cam.com/video/VHHNYdpVwrU/w-d-xo.html
Video 2:
th-cam.com/video/-U_su7Ak7QE/w-d-xo.html
Really appreciate the great information and discussion you provide here, not to mention the invaluable tool and walkthrough. Came across your channel this week, and definitely subscribing.
Regarding your discussion around incentives for recommending Roth vs Traditional and Roth conversion, would fiduciary responsibilities play into it at all? There have been a lot of talk, at least in my small circle of millennial professionals, of ensuring your FA is also a fiduciary. I would also think that the incentive may be stronger depending on where the FA is in his/her client base. If he/she is still building that base or looking to expand, building goodwill and a reputation for making good recommendations regardless of whether it garners income would go a long way. I'll tell you that that's why I've stuck with my current FA.
Thank you for watching! So glad you found us!
We have a video coming out soon that goes over the fiduciary discussion. I think people are trying to earn business and one way is to make your existing relationship appear like they are hiding something from you that is costing you money.
One issue I have always had with paying the tax now (roth) vs paying the tax later (ira), is that by paying now, I am paying with a much more valuable dollar compared to a weaker dollar in the future...
Great video
Thank you!
What about dodging the tax torpedo by converting all of your traditional IRA/traditional 401k to Roth between the ages of 60 and 70 before you start taking social security at 70? (assuming you retire at 60) In this case you would be funding both your daily expenses and the taxes on the conversions via long term capital gains from a taxable brokerage account combined with some Roth withdrawals if needed. In this scenario you would already have ~85% of your retirement assets in Roth to begin with due to favoring a Roth IRA and Roth 401k for the entirety of your working life. There would be no pension or other income.
for federal employees, financial advisors want you to take money out of your TSP and put into an IRA so can do the conversions - they want to get to manage that TSP money!
It would be interesting to know what the median account balance of 401k’s in 2024 of those age 60 to age 70. 🤔 If it is as low as I would be lead to believe. I cannot imagine the median account holder paying much tax on the withdrawal from the median deferred account along with social security?
How the heck is it legal for States to tax your Social Security
❤❤❤ this!
Thank you!!
Hi, Thanks for the helpful information on the video.
Please provide the link to your spreadsheet.
Hi there! The link for the spreadsheet is in the description of the video
I graduated the CFP college but decided against the certification and CFP business. You'll never get all the credit for good outcomes, and you'll get blamed when things crash. Stick to taxes. You'll be on overload three months of the year and on vacation for nine.
Columns are too wide. Increase the height of Row 6, so sheet is not so wide (reducing column width of I:Q). Still struggling to see the Tax Torpedo effect... % multiples to tax rate might help. The blue shades seems to indicate that the torpedo effect is worse as it gets dark?
I just retired in January 2024 . In 2008 when there were lots of losses in the market and I had to leave my job for family reasons I converted a lot of losing positions to Roth so I have twice the amount in Roth as regular Ira ! I am currently still working to get a new car before I actually retire - would love your imput
Hi Edward, happy to help where we can. My email is erik@90daysfromretirement.com if you'd like to shoot me an email with what state you're in and I can connect you with a partner of mine that can help.
Before watching these videos, I didn't know ss was taxed! Surprising.
Most don't! So you're not alone. Don't hate us as the messengers :)
This made so much sense. Thank you for explaining it so well.
To make it perfectly clear if you have a pension of over $50,000 you are going to pay your full 85% on Social Security. Correct?
Hi Carla, so glad it was helpful, and thank you for watching!
Highly recommend downloading the spreadsheet if you haven't already. It depends on how much Social Security income you have. If you have $50k in pension and $80k in SS as a couple... No. It's not 85%. So it all boils down to a few factors, not just income from things like a pension or 401k.
Hope that helps!
*sigh* If only we could predict the future (tax rates, our health, lifespan, etc).
Should have completed my thought before I posted. If I have $47k of head room do I convert $47k before taxes or $60k minus taxes to get to $47k?
Hello, I sent you two emails one in the morning and one in the late afternoon for this calculator and no answer yet.... would appreciate it. Loved your presentation.
Hi Rozalia, did you fill out the form and it isn't showing in your email? Send me a message to Erik@90daysfromretirement.com and I'll send over the file.
Sent email, thank you@@Theretirementnerds
Received, thank you much @@Theretirementnerds
Wondering about exactly how the SS 2 yr look back works. When is your rate set? On the calendar year or annually near my birthday? I have an October birthday. I plan to retire early June 2026 and will have Cobra for 18 months and ACA for the last 9 mos before reaching 65. My AGI will be high in calendar year 2026 bc I will be working about half the year. Will my premiums at age 65, 10/28, be based on 2026 earnings? Will that initial rate apply for 2 months or through the next year? When will the next premium be computed to apply? TIA
When you start Medicare, it is from your tax return 2 years prior. Every year moving forward, the 2 year lookback is applied on January 1st. Hope that helps!
If you know your only going to pull 1/2 of your wages, even with Min Distributions, I don't think it will be worth it unless you can make great returns in the meantime to make up the tax increase.
if S.S. is your only income u don't have to file
Another great video. I have a question about Roth conversions. If I'm $3k into the 22% bracket is "head room" the remaining amount below the 24% bracket? Just want to make sure before I pull $47k out of my 401k. Thank you.
The most you can take out this year is $7,000 under 49 and $8,000 over age 50.
Zach I need your advice!! Is that possible? Super helpful videos but I need personal advice if possible please. Thank you!
Happy to help! Send me an email to erik@90daysfromretirement.com and I'll connect you with Zacc and his team
I'm totally lost
I apologize if this was answered - I may have missed it in the video - but how do you feel about withholding taxes directly from the conversion itself as opposed to paying taxes from an outside source? I understand if you pay from an outside source you have more converted funds in the Roth but would you do it either way or stay away from withholding directly from the Roth?
Such a good question. A lot of financial advisors think that if you have to withhold taxes from the conversion that you should never do it. I think that is wrong…
First, if you can afford to pay the taxes with other cash/assets/investments, that is best.
Second, if you have to use the IRA for the tax payment itself, it can still be worth it if the tax rate is less than when you would otherwise withdraw the money later. The assumption is that you probably will withhold taxes when you withdraw it in retirement to spend it. So if you wouldn’t apply the logic of “if you can’t cover the taxes from other sources, you can’t withdraw $ from your IRA”, you shouldn’t apply it to conversions.
Keep in mind that if you are under 59.5, your taxes withheld will be taxed and penalized as a normal early withdrawal. That usually is not worth it.
Does that make sense?
Much of this advice and educational content is very useful. However, side-eye anyone who tells you they know "tax rates are definitely going up". I have been hearing this for more than 30 years. Rates are actually significantly less. My point is to set yourself up so you retain options and flexibility, not one specific situation. Also, remember, no one actually knows if the tax implications of Roth IRAs will remain the same indefinitely.
Spreadsheet improvement: column P needs to be updated to be accurate for "single" filers
Hi Steve, that cell is editable. So you are able to type in whatever your deduction would be. Hope that helps!
Curious if you and/or Zacc might be able to give any brief feedback on a scenario we're facing this year (2024) in terms of whether we can take advantage of an unfortunate situation... In 2023 we had a fire at a rental property, and long story short, the insurance company isn't covering it so we're having to sell it at a loss of $250k. :( Assuming this year we don't have any other income, aside from my husbands Disability of $22k for the year, might there be an option to convert some Trad 401k dollars to a ROTH to offset some of the loss? (I know this is probably difficult to answer without additional info, but thought I'd just throw it out there!) Thank you for the content. Really helpful video!
Happy to take a look. Lot of detail and follow up questions. Mind sending me an email and I'll connect you with Zacc's team? Erik@90daysfromretirement.com
The Great Taking - free PDF
Great content all the way around. But I have a question. When you change the filing status on the worksheet to single, shouldn't it cut the figure in the Tax Deduction column in half and then calculate the final column based on that? Thanks.
Thank you for watching and playing with the worksheet.
The deduction column is a custom field where you can type it in. There are standard deductions that change each year as well as others who itemize their deductions and can be any number. We kept that field open so that you can free type, which makes this worksheet usable this year, next year and for those who itemize their deductions.
Hope that helps! Appreciate you!
@@Theretirementnerds Thanks for the quick response and for all of your great content. That all makes sense.
@@Theretirementnerds Here is a hypothetical to test my understanding. Let's say Joe is retired and his income consists of 30k from social security and 14k from a 401k. His wife still works a regular W2 job and makes 50k. Using your worksheet, it seems that if they file separately, 7% of Joe's SS income is subject to tax. If they file jointly, 85% of Joe's SS income is subject to tax. Is that correct? Am I using the worksheet correctly? Thanks.
Great information! How do I find and download the worksheet?
Here is the link:
theretirementnerds.com/social-security-worksheet/
My concern about Roth conversions is to avoid the IRMAA cliff ($103k in my case) and the resulting higher Plan B premium. Does my deduction of $16,550 (>65) apply to the calculation in order to remain below $103k of income? Thanks in advance for your help (my financial institution does not impart tax advice).
For IRMAA, they are looking at your Modified Adjusted Gross Income, which would be your AGI (number in the spreadsheet) plus your taxable amount of Social Security income. Does that help?
Thanks
At what age should people start contacting Capita to plan for tax optimization in retirement? 10 yrs out? 5 yrs out? ASAP?
The more time you have, the more options you have. It'll also depend on your assets and investment mix. Happy to connect. My email is erik@90daysfromretirement.com
That conversation with them is always no-cost.
Hello Erik... I do have one question for you as a follow-up to my comment a couple of days ago. I am 64 (will be 65 on 3/5). My wife is 60. She has been a stay at home partner for our 43 years of marriage raising our now adult children and holding down the ranch as I traveled for work. I plan to take SS starting at FRA (66 years and 10 months). When I start that my wife will be 62 years and 3 months. Assuming my FRA benefit is $3800/month is my math correct in assuming that if she were to start on the same date when she's 62 years and 3 months old; 50% of my SS amount (i.e. $1900) would be further reduced by ~(8.3%+8.3%+8.3%+5%+3.75%)=33.65% (with that last 3.75% being a the prorated reduction since she is 3 months past her 62nd BD). In other words would her monthly benefit at 62 and 3 months be $1900x 66.35% = $1260.65/month and would stay at that rate until I passed away (ahead of her)? Thanks... I think I have that right but I was hoping for more.
Thanks for your patience. Been a hectic couple of days!
There is a great website where you just need her birthday and the date she plans to file and it will tell you the exact percentage she'll get: www.ssa.gov/oact/quickcalc/spouse.html#:~:text=The%20spousal%20benefit%20can%20be,will%20receive%20a%20reduced%20benefit
That way, it isn't public on TH-cam for the world to see your wife's info :)
@@Theretirementnerds Thank you! Sorry I didn't "find" that on my own. I was too immersed in calculating it myself... kind of a "can't see the forest for the trees' thing. 🥴 Best regards
The spreadsheet defaults to joint filing status. I changed it to single and the spreadsheet did not change the standard deduction. I have not played with it much. Is there something additional I need to do to get the spreadsheet to correct the standard deduction? Are you using the standard deduction for 2023 for April 2024 filing? Thanks in advance.
Changing joint/single changes which thresholds on the left your provisional income will run through.
The deduction field is a manual change because it depends on the year, age, and standard deduction or some may itemize deductions, so that field is not a formula/auto update. Should be able to type in whatever your deduction is and the rest of the table will adjust accordingly. Hope that helps!
Note, there is some talk, even a proposed bill, of eliminating federal income tax on social security.
More likely it will be a campaign promise -
"Vote for me and we can eliminate tax on social security. No more give with the right hand and take with the left."
Which will turn into -
"Gosh darn it, we really really tried to eliminate tax on social security but those won't cooperate."
Looks like you get how it works :)
It has been promised for a long... long... time.
Hi thanks for a great video. Do you happen to have the spreadsheet avail in google sheets? I don't have MS products.
Hi Sheila, unfortunately, it is just in Excel right now. We can work on trying to get it in other formats.
Thank you for letting me know. Great info. @@Theretirementnerds
I think if you save it to your computer and then upload it to Google drive, it should open up in sheets just fine. I’m interested to hear if this works.
Please excuse my ignorance. I use TurboTax software to calculate my taxes and I just enter/report the income from the form I received. I don’t do a separate calculation to determine whether I should enter/report less. Are you saying that tax software doesn’t do this calculation you are demonstrating and that I could be over paying tax?
Not saying the software is wrong. The software will do calculations for you, but it doesn't show you the additional details (% taxable, tax torpedo chart on the right, strategies around what and how to use it to your advantage). Also, not everyone uses TurboTax, so this is just a way for people to better understand not just the taxability, but what to do about it.
When using TurboTax, you should go through the tax forms that it generates to make sure you understand the calculations that it is doing on your behalf. You can see these by clicking on the Forms button on the toolbar. The main Form 1040 has lines 6a and 6b that are used to report your SS total payment and the taxable portion. You can double-click on the value on line 6b and it will take you to the 1040/1040SR Wks (Worksheet). Double-click on line 6b on there and it will take you to the Social Security Benefits Worksheet and it will show you how it made the calculation with the value from line 20 on this worksheet being moved up the chain that you followed. In TurboTax, Forms are submitted with your tax return, and Worksheets are the behind-the-scenes calculations that are required for some values on the actual forms. Once done looking at the information on the tax forms and worksheets, you can click the EasyStep button in the toolbar to return to the normal TurboTax interface you are familiar with.
TurboTax is making this calculation for you, but this video gives you information on specific cases of how that tax calculation can cause problems (the SS Tax Torpedo) and times when you really should be paying attention to that.
@@Theretirementnerds Thank you!
Great video. Where do I inquire on the software
There is a link in the description of that video, or, you can email me and I can send it to you.
Erik@90daysfromretirement.com
So prior to age when RMDs kick in you may be able to do "tax free" Roth conversion if you have the "head room" in the table. This is extremely good news as otherwise I will take a huge tax hit when withdrawing for a new car or expensive home repairs.
Downloaded the chart but it does not change when you switch from joint filing status to single! Please fix this!
Hi there, this is intentional. It is a field where you can type your deduction in. That makes this sheet usable every year and accounts for those who itemize deductions and don't have a standard deduction number.
The single/joint field will adjust the threshold equations.
Hope that helps!
I have used Turbo Tax and let their software do the calculations. I have provisional income and SS. ???
100% lots of software will do the calculations for you from a tax perspective. Our hope with this spreadsheet is that people can plan ahead, knowing where they have tax bracket room to make decisions that won't cost as much. Appreciate you spending time with us!
Maybe I missed it it but what kinds of "tax exempt income" would go into that field?
Most common is Municipal Bonds. Roth does not go in there