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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: tax planning ... Date: 2/1/2007 2:26 PM
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Where is a good place on the web to get just an outline of:

1. 2005 tax rate schedules, personal exemption amounts (including 65+) and phaseouts, standard deduction (and) itemized deduction phaseouts.

2. 2006 - the same

I have found some sites but then found later that they didn't print. Ugh. I'd like capsule info for now. I don't remember things so I need to print.

>>>>>

Background for later:

DH retired 12/31/06. I want to plan retirement withdrawals going forward (from tax deferred and/or taxable accts) and integrate with some tax planning. DH went from self employed in 2004, to salary for 2005/2006, asset sale 2004, installment sale of goodwill (2005, 2006, 2007), bonus 2005 and 2007 (deferred). IOW, the income is jumping around from year to year. Max SS will start mid 2007 at age 66.5. (FRA was 65.6).

So, ... I'm trying to work my way to a 4 year spreadsheet starting with 2005. Sources of income, Schedule A deduct, and Exemptions - with the "initial" goal of determining how much distribution to take from Rollover IRA to max out the 15% tax bracket. (Remainder if needed from taxable account). I do NOT need help with that right now. It's just where I think I'm headed. OK?

I input old 2004 tax return into TT for practise. Currently inputting old 2005 return into TT, also for practise. However, in looking at the 2005 return I don't understand why 2 personal exemptions (with 1 of them 65+, DOB 12/40) was recorded as $6400. Shouldn't it have been $7400? MFJ. $218,950 begins the exemption phaseout for 2005, right? AGI was under that amount. What am I missing?

I'm sorry. That was a lot of info for the ultimate question. Why $6400 for 2 personal exemptions in 2005 when 1 of them was 65+, and AGI under the phaseout amount?

As for the rest of the info? Just background. I suspect I'll be back with more questions as the spreadsheet progresses. For now, I don't understand the 2005 exemption amount.

Thank you .... Lethean

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Author: wintbill Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 91588 of 121572
Subject: Re: tax planning ... Date: 2/1/2007 2:45 PM
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Where is a good place on the web to get just an outline of:

IRS Publication 17, "Your Federal Income Tax" and the Instructions for Form 1040 have extensive information that can be used to answer your questions.

These are large documents, but if you know what section you need to address, it's very easy to navigate and find information.

http://www.irs.gov/pub/irs-pdf/p17.pdf

http://www.irs.gov/pub/irs-pdf/i1040.pdf

Best of luck,
Bill

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 91589 of 121572
Subject: Re: tax planning ... Date: 2/1/2007 4:16 PM
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Why $6400 for 2 personal exemptions in 2005 when 1 of them was 65+, and AGI under the phaseout amount?

Because age doesn't affect personal exemptions. It affects the standard deduction.

I'm afraid we're dating ourselves. (In my case, no one else will.) Back when the earth was cooling over 65 meant an additional personal exemption, and Congress hadn't invented phaseouts. I don't remember exactly when they shifted it to the current system of an "enhanced" standard deduction for age and blindness, but it's been a while.

Phil

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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 91590 of 121572
Subject: Re: tax planning ... Date: 2/1/2007 4:20 PM
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Bill

Thanks. The first irs link was for 2006/2007. The second link didn't work for me.

I have this from 2004/2005 printed and in my tax file.

http://72.14.209.104/search?q=cache:C5jUsQZwCu0J:www.bnatax.com/tm/quick_tax_2004_2005.pdf+quick+tax+reference+2005+-+2007&hl=en&gl=us&ct=clnk&cd=2&ie=UTF-8

It's just the format I'd like to have for 2006/2007. Is there a way to get it? The site is now asking for personal/prof(?) info.

I don't remember how I got the quick tax reference for 2004/2005 from them a couple years ago. A link from a prof on this board? Or a promo from bna at that time? I don't know.

In reviewing the printed material re "quick tax reference 2004/2005" (linked above), I still don't get why our exemptions for 2005 were $6400 rather than $7400. Phaseout BEGINS at $218,950 in 2005. We weren't there. DH DOB 12/1940; he was 65+ YE 2005. 2005 return prepared by CPA/software. So I'm perplexed by the $6400 exemptions reflected on the 2005 return, rather $7400. I don't get it.

Reagrds ...... Lethean

ps. I'd love to have that bna "quick tax reference" for 2006/2007. Just what I need right now.







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Author: Parkway Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 91592 of 121572
Subject: Re: tax planning ... Date: 2/1/2007 4:37 PM
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Is this format okay?

http://www.smbiz.com/sbrl001.html

In reviewing the printed material re "quick tax reference 2004/2005" (linked above), I still don't get why our exemptions for 2005 were $6400 rather than $7400.

Because each exemption amount was $3100 in 2004 -- at least, according to the site I just linked to.

- Parkway

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 91593 of 121572
Subject: Re: tax planning ... Date: 2/1/2007 4:43 PM
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lethean: "Thanks. The first irs link was for 2006/2007. The second link didn't work for me.

I have this from 2004/2005 printed and in my tax file.

http://72.14.209.104/search?q=cache:C5jUsQZwCu0J:www.bnatax.com/tm/quick_tax_2004_2005.pdf+quick+tax+reference+2005+-+2007&hl=en&gl=us&ct=clnk&cd=2&ie=UTF-8

It's just the format I'd like to have for 2006/2007. Is there a way to get it? The site is now asking for personal/prof(?) info.

I don't remember how I got the quick tax reference for 2004/2005 from them a couple years ago. A link from a prof on this board? Or a promo from bna at that time? I don't know.

In reviewing the printed material re "quick tax reference 2004/2005" (linked above), I still don't get why our exemptions for 2005 were $6400 rather than $7400. Phaseout BEGINS at $218,950 in 2005. We weren't there. DH DOB 12/1940; he was 65+ YE 2005. 2005 return prepared by CPA/software. So I'm perplexed by the $6400 exemptions reflected on the 2005 return, rather $7400. I don't get it.

ps. I'd love to have that bna "quick tax reference" for 2006/2007. Just what I need right now."


Have you tried www.fairmark.com, specifically:

http://www.fairmark.com/refrence/index.htm

Regards, JAFO

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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 91595 of 121572
Subject: Re: tax planning ... Date: 2/1/2007 5:37 PM
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Thanks Phil

me: Why $6400 for 2 personal exemptions in 2005 when 1 of them was 65+, and AGI under the phaseout amount?

you: Because age doesn't affect personal exemptions. It affects the standard deduction.

>>>>

me: I sort of figured I was confused about something. But that was really stupid. Sheesh.

Thanks a lot ... Lethean

ps There'll probably be more questions off and on as I work through this (2005 - 2008), but I'll use the same thread. OK? Contains the background info.

I tend to work on it. Then drop it for a while (tired of it/avoid?). Pick it up again months later. Forget things. Start over.

















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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 92175 of 121572
Subject: Re: tax planning ... Date: 2/15/2007 1:52 AM
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Hi again,

I've tried to use the what-if function for TT the past few days, 2006 - 2009. I thought my aim was to arrive at a similar avg tax rate over those years. I.e., tax divided by taxable income. Smoothing of the avg tax rate.

I was surprised tonight that TT uses the effective tax rate on its report. I.e., tax divided by AGI.

Then there's the marginal tax rate.

Is this part of my thinking OK? ....

Deductions and exemptions are relatively set going forward. AGI minus those leads to taxable income. Tax/taxable income = a percentage. I.e., the avg tax rate. Right? Therefore, I've aimed for smoothing the avg tax rate for 2007 - 2009. Does that make sense?

I'm ignoring the "effective" tax rate because deductions and exemptions are relatively set and because income and sources of income are different over those few years. Salary, capital gain, SS, and IRA withdrawal in retirement. I.e., minimal salary then no salary thereafter; big capital gain and then none effectively thereafter; 1/2 year SS then full year SS thereafter; and finally, the elective IRA distribution allows me to withdraw enough to roughly "hit" an avg tax rate each year.

Am I right to be looking at smoothing the average tax rate year to year given the circumstance and goal of tax rate smoothing? Tax/taxable income. Rather than the effective tax rate? Tax/AGI.

I think I'm focusing on the right thing. But I can sometimes get out in the weeds, too. Ugh.

Thanks so much ..... Lethean

ps Just an FYI ... I am aware that I could draw down taxable funds instead of IRA funds and thereby reduce taxes in 2007 - 2009 considerably. I don't think I want to do that.

















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