. Now that the 3rd quarter is behind us, I thought it would be a good time to project my total 2025 income and see if I could manage a small Roth conversion while still staying in the 12% bracket, which tops out at $48,475. Cus I'm not sure my income would ever exceed the 22% bracket, which tops out at $103,350 for a single person, so not sure during a Roth conversion now and paying 22% taxes would offer any benefit.
To my surprise, my projected income this year, between annuity payouts, traditional IRA distributions and a few taxable mutual fund distributions, total about $63,000, and that's not including dividends or cap gains on two taxable brokerage funds. That was surprising since my expenses have remained in the low $40s for many, many years. But then I already forgot the January purchase of my new SUV, and the whole idea of taking out a loan for the purchase was to avoid a larger $30K bump-up in my income that would push me into the 22% bracket. I've been aggressively prepaying the loan in addition to the regular payments, and all told, all those car payments do seem to account for most of my income increase. (I plan to have it paid off next year.)
Although my income will be over $63,000 this year, with the standard deduction of $15,750, my adjusted income will be roughly $47,416, just within the 12% bracket. Cap gains and dividends will likely add another $3,000 or so to that total, but I guess I can live with that.
October 1st, 2025 at 09:48 pm 1759351728
October 1st, 2025 at 11:29 pm 1759357767
October 2nd, 2025 at 01:21 am 1759364493
October 2nd, 2025 at 01:32 pm 1759408342
LAL, no, I don't get RMDs yet but it would be desirable, if I had room in the 12% bracket for small conversions between now and age 70, when I plan to collect SS, to draw down my trad IRA funds to make future RMDs lower. I like the idea of not being beholden to anyone for (possibly higher) future tax payments, but it's not essential.
Tabs, it IS a nice "problem" to have, and I am eternally grateful to myself for having worked very hard for many years to have this problem. I think when you're single, you make greater efforts to ensure for your financial well-being since no one else is going to do that for you.
October 2nd, 2025 at 01:33 pm 1759408413
Also if any of your mutual fund distributions are coming from a regular BROKERAGE account rather than an IRA or qualified retirement plan account, the distributions are not taxed. For taxable brokerage accounts, you are taxed on the interest, dividends, and cap gains from sales, but not on actual distributions. That's why it is nice to have a good-sized taxable brokerage account in retirement and not just everything in retirement plan accounts.
October 2nd, 2025 at 01:43 pm 1759409017
October 2nd, 2025 at 02:13 pm 1759410837
Does this mean it makes more sense now to itemize deductions if you have big deductions like property taxes since the new $6K deduction for seniors is available whether or not you itemize?
October 2nd, 2025 at 05:54 pm 1759424043
October 2nd, 2025 at 07:16 pm 1759429015
October 2nd, 2025 at 09:59 pm 1759438740
And yet, my own personal calculations came out to be roughly $300 for those who earns roughly $50k per year, compared to their average addition of roughly $60k extra for the top 1%. Extra. That's on top of whatever tax breaks they already have or typically use to dodge EIC to begin with. And that's just on the Trump tax cuts alone, without even getting into anything else that was even more egregious contained within the BBB.
It's like drinking a poison cocktail, but then say, "Hey, see how the Republicans added drops of mint and vanilla so for you? Doesn't it taste good?"
October 2nd, 2025 at 10:11 pm 1759439496
Dido distributions from mutual funds are taxed if in a regular brokerage account. They are capital gain distributions on line 2 of the 1099 and they flow to schedule D below the line 13. Non-dividend distributions are also taxed. https://www.fidelity.com/learning-center/investment-products/mutual-funds/taxes
PS you do get the $6k off the top to the standard deduction plus the 65 over $2k extra. So total is $17,750 + 6000 + 48475 = $72225.
It's hard becaues a lot of distributions happen at the end of the year causing people a problem who are retired. What I mean by wait is I would wait to see how things are shaking out before converting
October 3rd, 2025 at 01:34 am 1759451680
Part of becoming a financial professional is that you start to use words in the way that the profession uses them, which can depart from ordinary understanding.
Many people use "RMD" as a short-hand for IRA distribution, even when they are not yet required to take distributions. PS's RMD age will indeed be 73.
October 3rd, 2025 at 01:42 am 1759452137
October 3rd, 2025 at 02:25 am 1759454723
Also, perhaps my analogy of poison is a bit unfair. If so, let me stand corrected, as there is nothing poisonous about getting $300 extra on your tax returns. However, I hope the unnecessarily huge gap for the rich is quite evident.
Source: https://www.cbpp.org/research/federal-tax/by-the-numbers-house-republican-tax-agenda-favors-the-wealthy-and-leaves
October 4th, 2025 at 08:48 pm 1759607330
“In all, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $864 billion in income taxes while the bottom 90 percent paid $599 billion.”