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Heartlander · 80-89, M
By the way, interesting that you mention $75,000 income. In my state, $75,000 is the break off point for whether social security benefits are taxed or not. If the magic $75K is equaled of exceeded, we pay state taxes on basically that same amount. If lower than $75K, we get to deduct all of our taxable social security benefits for state income tax purposes. So step over the line and you suddenly may owe $2,000+/- more in state income tax. Duck below that line and suddenly state income taxes drop by that amount.
Even crossing that line by 1 cents can translate into an extra $2K in state income taxes.
Taxes aren't fair.
Even crossing that line by 1 cents can translate into an extra $2K in state income taxes.
Taxes aren't fair.
sunsporter1649 · 70-79, M
@Heartlander A demonocrat never met a tax he did not like
Stillwaiting · M
@Heartlander On top of state impacts .. Most Federal thresholds cut off within a relatively narrow AGI range across multiple deduction types. You pretty quickly go from full deductions to none for IRA pretax contribution and Roth IRA eligibility, deductability of college tuition, rtc. Then there is the $10k cap on state/local income and property tax, child credits, moving expenses, deductions for kids >17 yrs old reduce even if they are full time college/trade school students, etc.
The eligibility for aid for college cuts off even lower. That's all on top of paying a higher tax rate as your income rises across that band. You basically start getting bent over the tax barrel in mutiple ways from $125k to $150k in joint AGI up to about $175k-$185k for most people... well below the $400k so often quoted as the income level being targeted to pay a more fair share.
The eligibility for aid for college cuts off even lower. That's all on top of paying a higher tax rate as your income rises across that band. You basically start getting bent over the tax barrel in mutiple ways from $125k to $150k in joint AGI up to about $175k-$185k for most people... well below the $400k so often quoted as the income level being targeted to pay a more fair share.
Heartlander · 80-89, M
@Stillwaiting
It's like you need an elaborate spreadsheet or computer model to optimize your taxes. In too many cases, less may be more, in both time and earnings. There are both advantages and consequences to passive income Vs earned income.
I understand about all those cutoffs, all designed so that politicians can brag about not raising taxes, but raise them anyway by limiting deductions or manipulating thresholds.
It's like you need an elaborate spreadsheet or computer model to optimize your taxes. In too many cases, less may be more, in both time and earnings. There are both advantages and consequences to passive income Vs earned income.
I understand about all those cutoffs, all designed so that politicians can brag about not raising taxes, but raise them anyway by limiting deductions or manipulating thresholds.
SomeMichGuy · M
@Heartlander I just read your reply now. Which state is doing this? That's odd that the tax is an all-or-nothing switch, rather than being phased in over, say $10k of income.
Heartlander · 80-89, M
@SomeMichGuy
Kansas. Yep all or nothing. It starts with federal AGI, then applies Kansas adjustments. One line, AGI
less than 75K? If so subtract taxable SS benefits to arrive at
Kansas taxable income. It's expresses as a favor for those earning less than 75K, but really a penalty if not.
Kansas is the 3rd most unfriendly state, tax wise, for retirees.
Kansas. Yep all or nothing. It starts with federal AGI, then applies Kansas adjustments. One line, AGI
less than 75K? If so subtract taxable SS benefits to arrive at
Kansas taxable income. It's expresses as a favor for those earning less than 75K, but really a penalty if not.
Kansas is the 3rd most unfriendly state, tax wise, for retirees.
SomeMichGuy · M
@Heartlander Is that from AARP? Who "leads" in this category?
Heartlander · 80-89, M
@SomeMichGuy
I think it came indirectly from moneywise.
https://kansaspolicy.org/moneywise-kansas-3rd-worst-state-for-taxing-retirees/?print=print
I think it came indirectly from moneywise.
https://kansaspolicy.org/moneywise-kansas-3rd-worst-state-for-taxing-retirees/?print=print
SomeMichGuy · M
@Heartlander Thanks, I'll check this out!