Bill is single and retired with a taxable income of $46,138, which puts him right in the middle of the 22% tax bracket. His income includes $38,000 from his IRA plus $37,500 from Social Security. He decides he’d like to take a trip and withdraws an additional $1,000 from his IRA.
How much will Bill owe in federal taxes on that extra $1,000? You’d think it would be $220 since he’s in the 22% tax bracket, right?
Nope. Bill will owe $407 in tax – a 40.7% federal tax rate – on that income.
What?
Why? That’s just one tax trap. There are a few others, but it’s just one example of why it’s important to do tax planning through all four stages of retirement. And, it’s important to do your homework.
I’ve created an on-demand video that will take you through it. So, grab some coffee and get ready to arm yourself with some information that could save you tens of thousands of dollars. You can see it here.
Enjoy!
