Managing IRA distributions

Forum|Forum|6 years ago
January 17, 2020
2 replies
12 views

A brief background for context, I'm retired and my income is a combination of interest, dividends, social security, annuity, IRA distributions and brokerage mutual fund investments including capital gains. With Turbotax before the tax reform, I was able to calculate the IRA distributions so I maxed out the 15% tax bracket and then drew other income from selling brokerage account mutual funds with capital gains also taxed at 15%. Now, the Tax Worksheet is so complicated, I actually can't figure out how to manage my income sources to minimize my taxes as I did before. Do any of you have any suggestions for calculating IRA distributions to minimize taxes with the 2019 Turbotax? Thanks.

NCperson

Level 15

here is how I do it:

in forms view (I use the desktop version), there is a form called "qual div / cap gain".... look for line 7 - THAT is the income subject to ordinary taxes (if you follow closely, the form is subtracting out capital gains and qualified dividends, etc. to get to line 7)..... so if that line goes above $78,950, you've exceeded the 12% ordinarily tax bracket and have entered into 22% tax bracket (I assumed married joint).

is that what you are trying to figure out?

dmertz

Level 15

If your tax is calculated using the Schedule D Tax Worksheet instead of the Qualified Dividends and Capital Gain Tax Worksheet, it's line 21 you need to look at rather than line 7.

MytwocentsAuthor

Level 2

1. My social security is already at 85%. That doesn't change in any scenario.

2. Hypothetical data points:

Line 7 - $11,334; Tax - $1170

Line 7 - $21, 334; Tax - $3140, Difference = $1,970 or 20%

3. I agree that some other income source or limit or qualification or something is changing the tax calculations, but it isn't social security.

4. I'll probably have to just experiment with ranges to identify the "sweet spot", but that really isn't what I wanted. My goal was to find that sweet spot without trial and error and Line 7 doesn't do it.

Thanks for the responses.

NCperson

Level 15

I appreciate you provided hypothetical datapoints, but if the real numbers are near what you provided as the hypothetical, then the social security numbers are what is impacting this.

before you change anything, look at each number on the Form 1040, lines 1-11b. write them ALL down.

then add your $10,000 in

then check Form 1040, lines 1-11b again. what changed unexpectedly? i bet it's line 5b

let me know what you find!