There is a wiki on the taxation of Social Security if you have not seen it.Curious about others' thoughts on this. Defer and pay with other taxes Apr 15? Have some taken out? Have "all" taken out?
https://www.bogleheads.org/wiki/Taxatio ... y_benefits
There are nice color charts near the bottom of the wiki which will show you your effective marginal tax rates.
I have a fairly simple situation where I get Social Security and most of my investments are in an IRA
In January I use that chart then I add up my;
1) Expected Social Security
2) RMDs
3) Expected dividends and interest on the modest amount I have in taxable accounts.
In January I take the RMDs and have taxes withheld to cover the expected federal taxes. If that does not take me to the top of the 0% taxes on that color chart I will withdraw enough to use up all of the 0% space.
Later in the year if I need to withdraw more money I use that chart to see how much I need to have withheld. For example with had our bathrooms remodeled this year so I needed to take some more money out of the IRA for that so the chart said I was in the 18.5% effective marginal tax bracket.
In December when the tax software becomes available I do a dummy tax return and if I need to have more withheld I will make an IRA withdraw and have 99% of it withheld for taxes which is the maximum which my brokerage will allow.
I have done my taxes but not submitted them them yet was close enough that I will only need to pay $85.
That might not work as well for people with high incomes or more complex taxes but to me it seems easier than filing quarterly estimated taxes.
I will not need to pay any state income taxes because of a state retirement exclusion which I get.
Statistics: Posted by Watty — Thu Feb 13, 2025 12:11 am — Replies 10 — Views 496