Will keeping my income low prevent me from being taxed too heavily?

I have significant assets and my home is paid for. Will keeping my income (dividends, IRA distributions, and SS) low prevent me from being taxed at all? Will dipping into my Roth be excluded from reportable income?

Financial Planning, Retirement Savings, Taxes
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April 2017

You should always keep in mind that on the federal level, a certain amount of your income is exempt. This is the sum of your personal exemption and your standard deduction. A couple over 65 years old will have the first $23,200 dollars of taxable income exempt. The 10 percent bracket would allow you to add about $18,450 to that number. A Roth distribution does not have any impact on that number, nor does any return of capital from an annuity or other investment.

In the 10% and 15% brackets, qualified dividends, and capital gains are not subject to tax but are included in the AGI calculation. I would suggest that each year you plan ahead and determine what level of taxation is comfortable for you and keep within that limit. Keep in mind that if you are married, when you or your spouse pass away, the following year, the tax brackets will shrink dramatically and the surviving spouse may be forced into a higher bracket.

It seems to me that you do like to plan ahead and good luck!

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