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However, in my mind, that IRA is MY money, and every withdrawal decreases the balance, so it's hard for me to think of it as "income."

This has probably already been addressed, but I just had it explained to me by ChiliSpouse, my personal finance/econ guru.

"Say you made $50,000 one year and you put $2000 into an IRA." To the IRS, you made $48,000 and were taxed as such. So when you take that money out, the IRS wants the tax owed on that $2,000 that was deferred from X number of years ago."

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