Tax Planning

4 replies
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I just retired in early February this year, and wanted to see if there is a tool that can calculate my up to year MAGI, so I can know my buffer before i hit the next tax bracket

J

JFW3Answer

Level 4

Your taxable income, based on your Adjusted Gross Income (AGI) less deductions, determines your income taxes, not your Modified Adjusted Gross Income (MAGI). You may be asking about MAGI for Medicare IRMAA (Income-Related Monthly Adjustment Amount) surcharges. For tax planning, I often use last year’s TurboTax program and update it with current-year information (making sure to change the file name when I save it and certainly not to file). I know it’s not perfect, but it will calculate your AGI and taxable income based on last year’s tax rules. One thing I realized last year is that the IRS’s definition of MAGI varies by form. For Medicare, MAGI includes tax-exempt interest (such as on municipal bonds); but for the higher SALT deduction, MAGI does NOT include that tax-exempt interest. It seems the way the IRS “modifies” AGI to determine MAGI is form-dependent.

K M W

Employee Tax Expert

Congratulations on retiring! Since your income is going to look completely different this year, it is a great idea to estimate your taxes now so you don't get a surprise come tax season.

Since you don’t have the actual tax reporting forms for 2026 yet, you will have to use other documents to recreate your estimated income for the year. Grab your final paystub to see what you earned prior to retirement. If you started taking distributions from a retirement plan, you will need to know the gross amount you are taking out monthly, what portion of that is considered taxable vs. non-taxable income, and the amount of withholdings. The same holds true if you are receiving Social Security benefits. And, if you have investment income such as interest, dividends, and capital gains, you will need to check your portfolio statements to see how much income has been realized to date, and then estimated how much more income will be realized through the end of the year.

You will also want to consider any specific deductions from your Gross Income, as well as your standard or itemized deductions you will be taking.

Once you have gathered all the information needed, you can use an on-line tool to enter your estimated 2026 income and deduction information to determine what your taxes will look like in 2026. The IRS has a tool, as does TurboTax, as well as several other sites.

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catglass

Employee Tax Expert

Hi there! Are you single or filing jointly? What type(s) of income do you have?

I

iiisee

Level 2

Says this question was solved, but I don’t see the answer? Is there a tool to track throughout the year?

J

JFW3Answer

Level 4

Your taxable income, based on your Adjusted Gross Income (AGI) less deductions, determines your income taxes, not your Modified Adjusted Gross Income (MAGI). You may be asking about MAGI for Medicare IRMAA (Income-Related Monthly Adjustment Amount) surcharges. For tax planning, I often use last year’s TurboTax program and update it with current-year information (making sure to change the file name when I save it and certainly not to file). I know it’s not perfect, but it will calculate your AGI and taxable income based on last year’s tax rules. One thing I realized last year is that the IRS’s definition of MAGI varies by form. For Medicare, MAGI includes tax-exempt interest (such as on municipal bonds); but for the higher SALT deduction, MAGI does NOT include that tax-exempt interest. It seems the way the IRS “modifies” AGI to determine MAGI is form-dependent.