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| Name | How Much Will I Pay in Taxes in Retirement? Complete Guide to Retirement Taxes |
| Video Uploader | Video From James Conole, CFP® |
| Upload Date | This Video Uploaded At 27-01-2024 18:00:34 |
| Video Discription | Important Numbers for 2024 FREE PDF 👉 https://rootfinancialpartners.com/important-numbers As we transition from our working years to retirement, the landscape of taxes undergoes a significant transformation. I explore various types of income commonly received during retirement and the tax implications associated with each. Transitioning from Payroll Taxes When you retire, one of the initial benefits is the relief from payroll taxes, also known as FICA taxes. These taxes, which fund Social Security and Medicare, are levied on your salary or wage income. The 6.2% Social Security tax on earnings up to $168,600 (in 2024) ceases, and the 1.45% Medicare tax remains but is no longer matched by your employer. Understanding Federal Taxation Retirement brings forth federal income taxes, a departure from the uniform payroll taxes during your working years. The federal tax landscape is intricate, with distinctions between ordinary income tax rates and long-term capital gains tax rates. Ordinary income tax rates range from 10% to 37%, while capital gains tax rates fluctuate between 0% and 20%, depending on your income level. Social Security Taxation Social Security income, a prevalent source for retirees, is subject to federal taxation. The taxable portion can range from 0% to 85%, with the exact amount contingent on your provisional income. Careful consideration of strategies to minimize Social Security taxes is essential. Pensions and State Variations Pension income is typically subjected to federal and state income taxes at ordinary income rates. However, state taxation on pensions varies, with some states fully taxing pension income and others offering exclusions or partial exemptions. Interest Income Taxation Interest income, whether from savings accounts, corporate bonds, treasury bills, or municipal bonds, faces federal taxation. Understanding the tax implications of each type of interest income is vital for effective tax planning. Navigating Dividend Taxation Dividend taxation hinges on whether the dividends are qualified or non-qualified. Qualified dividends benefit from lower long-term capital gains tax rates, while non-qualified dividends are taxed at ordinary income rates. Capital Gains Tax Considerations Realizing capital gains from investments held outside retirement accounts introduces tax implications. The holding period significantly influences the tax rate, with short-term gains taxed at ordinary rates and long-term gains enjoying favorable rates. Roth IRAs and Traditional IRA Distributions Roth IRAs provide a tax-free haven for qualified distributions, offering a distinct advantage in retirement planning. In contrast, traditional IRA distributions are fully subject to federal ordinary income taxes, emphasizing the importance of strategic distribution planning. Rental Income and Tax Deductions Rental income is subject to federal taxation, with deductions such as mortgage interest, property taxes, and depreciation mitigating the taxable amount. Crafting a tax-efficient strategy involves optimizing the timing and sources of income to minimize overall tax liability. By strategically leveraging different income streams and understanding the tax implications, retirees can enhance their financial well-being. Transitioning into retirement brings forth a new tax landscape that demands careful consideration and planning. Seeking guidance from financial professionals and staying informed about tax laws can empower retirees to make informed decisions and get the most out of their hard-earned savings. ======================= Learn the tips & strategies to get the most out of life with your money. Get started today → https://www.rootfinancialpartners.com/ Get access to the retirement software I use in this video and more → https://retirement-planning-academy.mykajabi.com/rpa 🔔 Make sure to subscribe here to be notified for future videos! https://www.youtube.com/channel/UCBNdQfS-fzODmYb8Hkr4egA?sub_confirmation=1 _ _ 👥 Make sure to connect with us on all socials below → https://beacons.ai/rootfinancialpartners ⏱Timestamps:⏱ 0:00 - Taxes that stop with retirement 1:50 - Income versus capital gains tax 3:22 - SS is taxable income 6:05 - Taxes on pensions 7:21 - How interest is taxed 10:56 - Tax on dividends 12:15 - Capital gains 14:04 - Roth IRA and IRA distributions 16:18 - Rental income 17:42 - Other taxes to be aware of Other videos we think you'll like: About Root: https://www.youtube.com/watch?v=ZPy7Qlmemy8&t=1s Worried about retirement? Start here: https://www.youtube.com/watch?v=c1dCo73XTw4&t=1s |
| Category | Education |
| Tags | investing | retirement planning | tax planning | financial planning | retirement | personalfinance | taxes | dividend investing | financial planning at 50 | how do I retire? | long-term investing | financial planning at 60 | roth conversions | roth ira | IRA | individual retirement account | benefits of investing | pros and cons of investing | donor advised fund | financial education |
