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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75381  
Subject: Re: Withdrawal Strategies...Again Date: 3/10/2014 3:19 AM
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The way the IRS tax worksheet operates, they consider capital gains first.
So you'd have $70,700 of capital gains at 0% and $9,300 taxed at 15% for a total capital gains tax of $1,395.


Sorry, you've got that backwards. The ordinary income is taxed first, then the long term capital gain. (Plus your figure for the top of the 15% bracket is from 2012. For 2013 it's $72,500 and for 2014 it's $73,800. All for married couples.)

So the 40k of IRA withdrawals is taxed at 10% and 15%. Then for 2013 you get 32.5k of capital gain at 0%. The balance of the cap gain - 47.5k - would be taxed at 15%.

The 10% bracket goes to 17,850 for 2013, so the tax on our hypothetical income (which ignores the standard deduction and personal exemption) is:

17850 * 10% = 1785
22150 * 15% = 3323
32500 * 0% = 0
47500 * 15% = 7125

total 12233



--Peter
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