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  • The Individual Investor’s Guide to Personal Tax Planning 2015

    AAII
    The Individual Investor’s Guide To Personal Tax Planning 2015 Splash image

    Once again, the changes to taxes are modest.

    Depending on your income and expenses, your tax bill for 2015 may not differ much from your 2014 tax bill. In 2016, your tax bill should not be significantly different either, as long as your taxable income, expenses and deductions remain similar to 2015.



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    Discussion

    Mary Reding from MN posted 9 months ago:

    so where on AII.com is the fillable tax forecasting .pdf worksheet mentioned in the tax planning article?


    Charles Rotblut from IL posted 9 months ago:

    Hi Mary,

    Near the top of this article is a link on the left-hand side that says, "Estimate Your Taxes on AAII.com." Alternatively, you can go directly to the .pdf worksheet by clicking here.

    By the way, We'll have the 2015 guide posted online next week.

    -Charles


    D Cannon from OH posted 8 months ago:

    There's an error on the kiddie tax in the 2015 and 2016 tax tables.
    O% rate is up to first $1050, not $1000.


    T Valenti from IL posted 8 months ago:

    Great Tax info! Will we get a hard copy of this??


    Charles Rotblut from IL posted 8 months ago:

    This guide is part of the December AAII Journal.

    -Charles


    Jim from MI posted 8 months ago:

    With reference to medical cost deductions, can I pay my 2016 total year heath insurance premiums in December 2015 and claim them as a 2015 deduction?


    Charles Rotblut from IL posted 8 months ago:

    Jim - I would check with a tax professional about pre-paying health insurance premiums.

    D - Sorry for the error. We've adjusted the child tax credit.

    -Charles


    J Larson from MN posted 8 months ago:

    It says the Tax Forecasting Worksheet calculates the results. I'm sure not finding that to be true. It does some summing up of income and so on. But as far as figuring taxes, it does nothing. One has to look it up in the tax tables. And of course the tax tables do nothing about long term capital gains and qualified dividend income -- one has to figure all that out using the Qualified Dividends and Capital Gain Tax Worksheet - a monumental task, but obviously a vital one for AAII members.

    I tried it out on last year's Tax Forecasting Worksheet too (the December 2014 issue), assuming bugs had been fixed in that one, but no, the same thing.

    What is this thing useful for? Are there any good tax calculators out there that can handle the basics?

    Thanks


    J Larson from MN posted 8 months ago:

    It says the Tax Forecasting Worksheet calculates the results. I'm sure not finding that to be true. It does some summing up of income and so on. But as far as figuring taxes, it does nothing. One has to look it up in the tax tables. And of course the tax tables do nothing about long term capital gains and qualified dividend income -- one has to figure all that out using the Qualified Dividends and Capital Gain Tax Worksheet - a monumental task, but obviously a vital one for AAII members.

    I tried it out on last year's Tax Forecasting Worksheet too (the December 2014 issue), assuming bugs had been fixed in that one, but no, the same thing.

    What is this thing useful for? Are there any good tax calculators out there that can handle the basics?

    Thanks


    J Larson from MN posted 8 months ago:

    Oops, sorry about the double posting. The first time I attempted to post, I got an error message. The second time it went through. Well, it turns out it went through both times.


    Karl Brueckner from CA posted 8 months ago:

    In Table 1, "Overview of Tax Change in Coming Years" for 2015, Estate Tax Exemption is $5.34 million. In Estate Tax article below it is stated: The exemption is $5.43 million in 2015. The 4 and 3 are reversed. Which one is correct?


    Allenb777 from ct posted 8 months ago:

    Nice Work.


    Charles Rotblut from IL posted 8 months ago:

    Karl - The estate tax exemption is $5.43 million. Sorry for the confusion. It's been fixed online.

    J - The tax worksheet is designed to provide an estimate; it is not a comprehensive web app. I would suggest using a full-fledged tax app or software program, such as TurboTax if you want a more complete estimate. You can always fill out dummy returns that will not be filed.

    -Charles


    H Mercer from TX posted 8 months ago:

    Isn't it strange that QUARTERLY TAX ESTIMATED PAYMENTS are due on 4/15, 6/15 (2 months), 9/15 (3 months), and 1/15 of the next year (4 months). Thus two of the payments are on a quarterly basis and one is 2 months and one 4 months! How does this affect the "?90% of the tax liability based on a quarterly annualization of current year-to-date income" as outlined above in the estimated tax section? We incur liability quarterly, but we pay sometimes quarterly and sometimes not quarterly. Yes a minor, technical quibble which I ignore. I did however, once long ago, use this form 505 to show larger income in the year end estimated payment due to mutual fund capital gains. Not sure it was worth the extra calculations to show when the income was received versus equally throughout the year.


    SL from CA posted 8 months ago:

    Since I have gone paperless, how do I request a printed copy of the December Tax Guide?

    For a quick Tax forecast est. go to www.dinkytown.net and scroll to Tax calculations for 2015 or past years, it will figure your tax liability. You will still need a Tax software to complete your tax form. Remember garbage in, garbage out.


    Richard Shaw from AZ posted 8 months ago:

    An important missing detail (if you do not itemize deductions) is that the standard deduction for a married couple filing jointly and who are both over 65 at the end of 2015 is enhanced by an age related amount of $1,250 for each person, so the total SD is $ 15,100 ($12,600+1250+1250).
    See IRS Pub 17 for full details (note it only has 2014 amounts as this time).


    Charles Rotblut from IL posted 8 months ago:

    SL,

    Contact member services and they will be able to assist you.

    -Charles


    JT from New York posted 8 months ago:

    Could you provide some clarification here.

    A married couple with income under the $170,000 will pay $121.80 in Medicare Part B.

    Who then are the "most people" paying 104.80 -- those over $170,000.

    Sorry if I have misread the text.

    =======
    "As such, the 2016 Medicare Part B premium will be $121.80 in 2016 for taxpayers who file married joint returns with 2014 MAGI of $170,000 or less and single filers with 2014 MAGI of $85,000 or less. (Medicare says most people who receive Social Security benefits will pay $104.90 per month.)" The Guide to Personal Tax Planning


    Charles Rotblut from IL posted 8 months ago:

    JT,

    The lower premium applies to those who are receiving Social Security benefits. Medicare's website has information about the 2015 & 2016 premiums.

    -Charles


    JT from New York posted 8 months ago:

    Charles:

    Thank you.

    It appears that only new enrollments (and some others) in Medicare will pay the $121.80. Here is the language from the web site.

    Thanks again.

    In 2016, the standard Part B premium amount will be $121.80 (or higher depending on your income). However, most people who get Social Security benefits will continue to pay the same Part B premium amount as they paid in 2015. This is because there wasn't a cost-of-living increase for 2016 Social Security benefits.


    Albert from NJ posted 8 months ago:

    FYI -Tax Scam IRS Protection

    All Florida, Georgia and District of Columbia residents are eligible for a free
    Identity Protection Pin from the IRS before
    any problems occur.


    Michael Hulbert from CA posted 8 months ago:

    I understand that charitable contributions can be taken from RMD this year (2015) and deducted on the first page of the 1040 on IRA distributions. Is this correct?


    William Penczak from TX posted 8 months ago:

    To Michael Hulbert
    Good news. Yes you can. Online updated version of AAII Tax Guide on page 2 says "More than 50 tax breaks for individuals and businesses expired at the end of 2013 have been permanently renewed in the budget bill passed in mid-December. They include --- tax-free distributions from an individual retirement account to a charity---"


    Adam Gallucci from MA posted 8 months ago:

    A careful reading of this article made me notice the significant difference between the taxation levels of IRAs and regular stock investments. This is especially true for people like me who can neither deduct IRA contributions or contribute to a Roth IRA. It would be helpful to have an article written regarding the actual post tax returns of non-deductible IRAs vs. standard stock or mutual fund investments. My own calculations using historical data for several funds I own indicated I would be a bit better off in an non-IRA investment.


    Zachariah Tripp from NH posted 7 months ago:

    I posted a tax question on the forum: http://www.aaii.com/boards/messageview.cfm?catid=72&threadid=2547&enterthread=y


    Thought I would post here also.

    I have not had this situation (yet) but I was asked at work and I did not know.

    Let's say I am single and have $64,000 earned income, right in the middle of the 25% bracket. And I also have $400,000 in qualified dividends (15% tax rate).

    Is my AGI considered $464,000, putting me in the 39.6% bracket and therefore paying 39.6% on my $64,000 income and 20% on my dividends?

    Or are they handled separate, $64,000 @ 25% and $400,000 @ 15%?

    Thanks,

    Curious Investor (aka, Zach)

    P.S.- I understand once you itemize the AGI will change, but I am just trying to understand in general how this would work.


    Loren Kindler from OH posted 7 months ago:

    It is stated in the Guide that tax exempt interest is to be reported on Form 1040 for informational purposes only.

    In reality, that exempt interest income is added to AGI to derive "Modified Adjusted Gross Income"

    MAGI may have a dramatic effect on the amount paid for Medicare premiums among other things.


    SL from CA posted 7 months ago:

    To Zach Tripp,

    They are handled separately as in your last statement. You add up all your incomes(W2s, Banks/Saving bonds interests, short term Cap. Gains, non-qualified dividends, 85% of SS, Pension, Roth IRA conversion, etc), minus
    your deductions and personal Exemption, to arrive at your marginal tax rate.
    In your situation, you indicated you are in the third bracket.
    Because you are in the 25% bracket, all your qualified dividends, Long Term Cap. Gains are computed at 15% rate.

    If you are married filling jointly, with $64,000 Taxable Income(line 43), then you are in the 15% tax bracket(up to 74,900). Therefore, $10,900 of your $400,000 (qualified dividends) is tax-free and $389,100 is taxed at 15%. Always consult your tax preparer for your unique situation.

    I find the Bankrate.com under Tax Calculation tap, to provide me with a quick summary of my tax amount in a quick glance.

    SL.


    Charles Rotblut from IL posted 7 months ago:

    Zach,

    Here is what the folks at JK Lasser said:

    Even though capital gains and qualified dividends are taxed at lower rates as compared with rates on ordinary income, capital gains and qualified dividends are taken into account in determining taxable income. And it is the amount of taxable income that determines whether the rate on this investment income is taxed at zero, 15%, or 20%. Such income is considered investment income that may be subject to the net investment income (NII) tax for those with modified adjusted gross income over a threshold amount ($250,000 for joint filers, $200,000 for singles, $125,000 for married persons filing separate returns).

    -Charles


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