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Ted, I think it is important to know when you are retired and in the 15% tax bracket, that either 85% of your Social security or less depending on the interest, dividends, including tax-free, and capital gains are included in taxable income. Lower than 85% is good if you can control the amount. Also, for 2011-2012 capital gains are taxed at 0% if in 15% tax a bracket.
I'm one of those "lucky" ones: 10% tax bracket, so cap gains are untaxed. What was Ted saying? Dividends and interest ARE taxed? I should already KNOW that, but I don't. And I have a professional do my taxes. I wouldn't dream of trying to go through all that crapola MYSELF. My Rollover IRA (PREMX: TRP) generates monthly income I've not yet decided to tap, so it gets reinvested. My Trad. IRA is in MAPIX and spins-off $$$ every quarter, likewise untapped and reinvested. Current employment income is non-taxable. Strange but true, yes. I'm not complaining.
Reply to @MaxBialystock: You might need to pay taxes on your Pfizer (PFE) dividends and other taxable assets that generate distributions even if you choose to re-invest. If distributions are big enough they may bump you to next bracket. You may use a professional to do your taxes but you have to know the tax result of your actions before the tax time.
Comments
Thank you........an area several here at MFO keep on the radar.
Regards,
Catch
It's always good to hear from you, big guy.
Several funds seem to be taking more eclectic views about income. I'm trying to think through their strategies. I'll share what I can.
David
I think it is important to know when you are retired and in the 15% tax bracket, that either 85% of your Social security or less depending on the interest, dividends, including tax-free, and capital gains are included in taxable income. Lower than 85% is good if you can control the amount. Also, for 2011-2012 capital gains are taxed at 0% if in 15% tax a bracket.
Good to hear from you again. I will probably retire soon, and this excellent article looks like homework I should be doing!
Thanks,
Archaic