When Fed Tax or No Fed Tax?

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olds442jetaway
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Re: When Fed Tax or No Fed Tax?

Post by olds442jetaway »

The biggest bummer for me of all is the cap on state and local taxes of $10,000 when you itemize your deductions. If you have the maximum state tax withheld like I do it could add up to thousands and thousands of dollars that in Connecticut you will be unable to write off as an itemized deduction because between your house taxes and car taxes you may be over the $10,000 cut off right there.
Connecticut does have the ability to file a return and get a refund to answer that question. However if anything we usually hold more at the end
The drastic increase in Medicare part B premiums is based on your income after I post this I will look it up quick and if I have time post it as a quick reply

olds442jetaway
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Post by olds442jetaway »

Here is a screenshot right from the Social Security website to give you an idea MAGI stands for modified adjusted gross income so you could have one number for your Federal AGI but if you have tax exempt interest for example it could boost your MAGI where you could get clipped on the part B premiums
29FEA5AC-A670-489E-9393-F03C4D16B5D0.png
Just go to the Social Security website for more detail

Lucky Larry
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Post by Lucky Larry »

seemoreroyals wrote:
Fri May 21, 2021 4:40 am
LL you raise some interesting points.

In your response to TT you mention La non-resident state income tax. Our accountant uses a similar software package to do our taxes. I think the threshold for getting all La state income tax refunded is around $12K. Receive more than that in w2gs in a given year they keep some of it. Not sure of the exact formula. Do other states besides La allow for filing to get some or all of your state income taxes back?

In your response to olds you mention the effect of gambling w2gs on AGI and medicare premiums. We are just a few years away from receiving medicare. If you receive for instance $10K in gambling w2gs in a given year, how much higher does this make your medicare premiums?

I am curious with your decision to withhold fed income taxes from your w2gs. If you have adequate savings in place, which I am sure you do, why would you fork over taxes any earlier than you have to? Are there some other factors that went into your decision?
seemoreroyals,
We don't use an accountant but enter our data into the software. The biggest issue is having to list all the data for every G-2, a real "Pain in the A..." but with Sweet C calling out the data and me typing or vice versa we get it done. But, entering the same Casino information for every G is the killer.

The way the Medicare premiums works is based on income, so when you add the gambling G2 income (even thought you can deduct up to losses), it raises your income so the premium goes up. Premiums are in two year increments, so for two years they stay up even if up income comes down the next year.

We decided to withhold because being retired on a pensions, and only working part-time. The University part-time is only during the school year and based on enrollment since I supervise students in the schools we never know what my next semester salary will be. This limits the flexibility of altering withholding during the year especially if we hit a couple of big G's late in November or December. It also means there is no University income for 3 months. We like to limit our 401 withdrawals and we still like to go gambling in the summer. :D So, to smooth finances and eliminate April surprises we have decided to withhold. We felt $2K was a reasonable amount and we'll evaluate as we go.

Lucky Larry
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Post by Lucky Larry »

Hey Olds thanks for pulling that up and posting. I'm curious, do you guys have home taxes frozen at age 65? Even though Texas doesn't have a state income tax they make up for it in county and school taxes. You know the "old pea under the shell" switch. Instead of using the wealth of the entire state, the legislative leaders keep lowering state corporate taxes and force the local schools and county/city to raise taxes to provide basic services. But, at age 65 there is a freeze on homes from county taxes currently up to $200+K. So we've fought our appraisal every year until we reached that age and our county tax liability has been zero the past few. Sales tax is the other big! Currently 8.25%.

LL

olds442jetaway
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Post by olds442jetaway »

Welcome. No freeze in Ct. In fact, the New Yorkers fleeing the city in droves have caused bidding wars in real estate sales. That will cause town taxes to rise as well as they are based on a mill rate on assessed values. . I am sure the towns are licking their chops now. A small 5 room ranch on an average lot and an hour drive from NYC can easily go for 350,000 now even needing remodeling. Pre Covid and the crime wave in the cities, 200,000 would have been top dollar. I am sure the State is ready to pounce too with even higher rates than our current 7 percent or so upper bracket. I hate to drag in politics here, but I am afraid the wild Fed printing press will return us to the Jimmy Carter days of Inflation and sky high interest rates sooner than later. Our sales tax has already gone up as well too and an extra 1 percent on restaurants. If anyone is planning to retire in Ct, bring a big checkbook and be prepared to lose a huge chunk of your SAA pension to the offset in this state. I don’t have the quarters for an SSA annuity and just have my Fed pension, but if I did, the State would offset most of it. That will happen to my Mrs as soon as she starts to draw hers.

OTABILL
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Post by OTABILL »

Don't get me started on the reduction of earned SSA benefits for those of us who retired under the Civil Service Retirement system. Basically the politicians screwed us royally. The Windfall Elimination Provision and especially the Government Pension Offset are odious. Because I earned a significant CSRS pension, the Congress determined that I am not entitled to her SSA pension as a surviving spouse.

olds442jetaway
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Post by olds442jetaway »

That is a real disgrace OTA. I have a CSRS pension as well. I am short only 10 quarters and when I retired 18 years ago, I could have worked the other side of the fence in private industry for probably 50 percent more than my Fed Salary. I wouldn’t do it on principal due to the offset. At the same time, both my parents were dealing with severe health issues, so I chose family over money. Good thing because those health ussues went on from 2003 until now. I hope they have found each other on the other side and I would do the same thing all over again with no regrets.

OTABILL
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Post by OTABILL »

olds442jetaway wrote:
Sun May 23, 2021 11:50 am
That is a real disgrace OTA. I have a CSRS pension as well. I am short only 10 quarters and when I retired 18 years ago, I could have worked the other side of the fence in private industry for probably 50 percent more than my Fed Salary. I wouldn’t do it on principal due to the offset. At the same time, both my parents were dealing with severe health issues, so I chose family over money. Good thing because those health ussues went on from 2003 until now. I hope they have found each other on the other side and I would do the same thing all over again with no regrets.
After I retired, I was offered a "Godfather" offer that was too good to turn down so I got my 40 quarters in. I get a reduced SSA payment because of the Windfall provision. Under other circumstances I would be entitled to my late wife's much larger SSA monthly pension. As I mentioned, I am ineligible because of the CSRS pension. It is blatant discrimination.

BobDancer
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Post by BobDancer »

I never have taxes withheld from jackpots. To me this is just lending the government money at zero interest rate.

Carcounter
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Post by Carcounter »

And interest rates are so high today.

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