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Returning Member
posted Jul 15, 2021 9:08:28 AM

How to minimize tax impacts

How do I minimize the tax impact living entirely off of Social Security and Retirement Account Distributions?

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1 Replies
Level 5
Jul 15, 2021 1:37:51 PM

My suggestion is to focus on your tax bracket in determining the impact of taxes on your income. If you can fill up the bracket without going to a higher bracket. I do not know your tax bracket but here is an example:

 

Tax Brackets and Rates, 2021

22%

$40,526 to $86,375

$81,051 to $172,750

24%

$86,376 to $164,925

$172,751 to $329,850

32%

$164,926 to $209,425

$329,851 to $418,850

35%

$209,426 to $523,600

$418,851 to $628,300

 

Using the above bracket amounts of $40,526 to $86,375. If your adjusted gross income is $50,000, you will not enter a higher tax bracket until you make $36,375 more to fill up the bracket. Do not forget to withdraw your standard deduction amount from your gross income to arrive at your adjusted gross income.