Have you ever received a payment — such as a dividend check or a bond interest payment — and noticed that 24% of the expected amount was missing? If so, you may be subject to backup withholding.
This tax action can be irritating, but it only applies to certain kinds of payments and is easily fixed by making sure the IRS has correct tax information from you.
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What is backup withholding?
Backup withholding is an action where the IRS makes payers, such as banks, deduct a 24% tax from certain kinds of payments to taxpayers who have failed to provide the IRS or payers with needed information and send that amount to the government. It’s a way of ensuring the IRS receives the money it’s owed by potentially uncooperative taxpayers.
There are two ways someone can become subject to backup withholding:
The backup withholding “B” program applies to taxpayers who fail to provide a correct tax identification number (TIN) to entities that pay them — for example, a bank at which they have a high-yield savings account. A TIN can be a Social Security number, an employer identification number or an individual taxpayer identification number. (Payers need a valid TIN from payees so that they can accurately report payments to the payee to the government.)
The backup withholding “C” program applies to taxpayers who have unreported interest or dividend income on their federal tax return, or who have accidentally marked themselves as subject to backup withholding due to previous underreporting of income. (Many investment institutions, such as brokers, are required to ask new users if they’re subject to backup withholding. If a user mistakenly checks that box, they may become subject to it.)
If you’re subject to backup withholding, that 24% deduction counts toward your taxes owed. You may be able to get some of it back if you file a Form 1040 that shows that the amount you’ve paid via backup withholding is greater than the amount you owed for a particular year.
What payments are subject to backup withholding?
Backup withholding can apply to many different kinds of nonpayroll income — typically the kind of things that are reported on a 1099 form, which records passive income and nonsalary work, or a W-2 G form, which records gambling winnings. These include:
Dividends.
1099-K income from credit or debit card payments.
Attorney’s fees and court proceeds, for attorneys.
Patronage dividends from co-op businesses.
Rents, profits and other capital gains.
Payments from brokers.
Royalty payments.
Cash payments from fishing boat operators.
Certain government payments.
Gambling winnings (reported on form W-2 G).
But backup withholding doesn’t apply to all nonpayroll income. Certain kinds of payments are excluded from it, such as:
How do you know if you’re subject to backup withholding?
If you’re subject to backup withholding, you should receive at least one letter notifying you of backup withholding before it starts. But which letter you receive and who it comes from depends on which specific backup withholding program you’re subject to.
Backup withholding “B” program notification
If you’re subject to “B” backup withholding, the payer you failed to provide a valid TIN to will send you notices asking for you to provide the missing information. The IRS, however, will not send you a notice — they will send a notice to the payer, who will then reach out to you.
If you provided an obviously incorrect TIN (e.g., one that doesn’t have enough numbers) or you didn’t provide one at all, backup withholding may begin immediately. For example, if you fail to provide a TIN while signing up for an online savings account, backup withholding of interest payments may begin upon account opening.
If there’s just a discrepancy between the name and TIN you provided, you may have up to 60 days to correct the issue before backup withholding begins.
Backup withholding “C” program notification
If you’re at risk of becoming subject to “C” backup withholding due to unreported interest or dividend income, the IRS will send you up to four notices over a 120-day period asking you to correct your income tax return to account for the unreported income. If you don’t make those corrections, the final notice informs you that you’re now subject to backup withholding.
If you become subject to “C” backup withholding because you failed to certify that you’re not subject to it, you will not receive a notice from the IRS, and backup withholding may begin immediately. For example, if you accidentally checked the “backup withholding” box while signing up for a brokerage account, backup withholding may begin upon account opening.
If you want to contact the IRS about backup withholding, you can call them at 800-829-1040 from 7 a.m. to 7 p.m. local time.
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How to stop backup withholding and get credit for it
Backup withholding doesn’t have to be permanent. If you end up paying more than you actually owe, it can be partially refunded, just like any other tax payment. But the details of how to stop backup withholding vary based on which program you’re subject to.
How to stop “B” backup withholding
Stopping “B” backup withholding is simply a matter of sending the payer a W-9 form with a correct TIN. The payer may send you a W-9 form when they notify you of intent to begin backup withholding. If not, you can download it yourself here.
How to stop “C” backup withholding
To stop “C” backup withholding due to unreported interest or dividend income, you’ll need to report that income — and pay taxes on it, if applicable.
If you’ve become subject to “C” backup withholding accidentally, due to an error while filling out a form, contact the customer service department of the relevant bank, brokerage or other payer institution and see if they can help. They may ask you to send them a new W-9 form to stop backup withholding.
How to get credit for past backup withholding
If you were subject to backup withholding for a particular year, you should get documentation of the amount withheld by each payer on your 1099 or W-2 G forms for that year. To get credit for past backup withholding, add those amounts together, enter the total in line 25 of Form 1040, and then attach the relevant 1099 and W-2 G forms when you file it.
California might have some of the highest sales tax rates in the country, and calculating how much is owed can come down to where the item is sold, what the item is and who it’s sold to.
California state sales tax rate
In California, the statewide sales tax is 7.25%. However, the final price of any taxable purchase could be higher due to district taxes, which can be anywhere from .10% to 1.00%. It’s also possible to have more than one district tax applied to a purchase.
California state sales tax calculator
Who pays CA sales tax?
In California, sellers are responsible for calculating sales tax and paying the correct amount to the California Department of Tax and Fee Administration (CDTFA).
During a sale, if sales tax is not included in the price, sellers pass the California sales tax to their buyers by meeting three conditions:
The sales agreement calls out the addition of sales tax reimbursement.
The sales tax is listed separately on receipts and invoices.
There’s a sign on the premises (or on price tags, advertising or other printed materials) stating that sales tax reimbursement will be added to prices of taxable products.
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If the sales tax is included in the price, then a notice to the buyer needs to be visible that states either one of the following:
“All prices of taxable items include sales tax reimbursement computed to the nearest cent.”
“The price of this item includes sales tax reimbursement computed to the nearest cent.”
What items are subject to sales tax?
Tangible personal property sold at retail is subject to California sales tax. This could include furniture, gifts, toys, antiques and clothing. Service and labor costs may also charge sales tax, particularly if they create physical items.
Some items exempt from sales tax include certain food products and prescription medicine.
Who is exempt from California sales tax?
No organizations, whether nonprofit, religious or exempt, have a blanket exemption from California sales and use taxes. Instead, it depends on the type of sale and organization.
In general, the types of sales and purchases that are exempt from sales tax include certain food products, prescription medicine, some vehicle and vessel transfers, as well as sales to the U.S. government.
Who collects CA sales tax?
California sales tax is collected by sellers, who then pay that amount to the CDTFA.
Does California have a sales tax holiday?
California does not have any sales tax holidays.
Can you deduct California sales tax?
You may be able to deduct California sales tax from your federal tax return by taking the SALT deduction. This allows for the write-off of up to $10,000 of state or local taxes paid that year.
However, this strategy requires itemizing, which may be ideal for those who live in a state with a high sales tax and who purchase a large number of taxable goods and services throughout the year. Otherwise, itemizing might not result in the largest tax refund, so it can be helpful to seek professional tax advice if you’re considering deducting your California sales tax.
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New York — and New York City in particular — is known for having some of the highest taxes in the United States. NYC residents pay income taxes and sales taxes to both the state and the city, which can make it a bit confusing to figure out how much tax you’re paying to which entity.
What is New York City’s sales tax?
The total sales tax rate in New York City is 8.875%. That consists of a 4.5% sales and use tax from the city, a 4% sales and use tax from the state, and a 0.375% Metropolitan Commuter Transportation District (MCTD) surcharge.
Sales taxes apply to retail sales of most goods and services, with a few exceptions, while use tax applies to business purchases from out-of-state vendors that don’t collect state and local sales taxes. (If you buy a printer for your business from a website that doesn’t collect sales taxes, for example, it’s probably subject to city and state use tax.)
State sales taxes apply to any sales made in New York state, city sales taxes apply to any sales made in New York City and MCTD surcharges apply to any sales made in the city, as well as Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester counties.
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What is exempt from NYC sales tax?
There are a few exemptions from city and state sales and use taxes, generally involving essential day-to-day goods. The following items are exempt from city, state and MCTD sales taxes:
Clothing and footwear costing less than $110.
Unprepared and packaged food.
Certain items used in clothing manufacturing and repair.
In addition, there are a few other items that are exempt from New York state sales taxes but may still be subject to city and MCTD taxes:
Beautician, barbering and hair-restoring services.
Hair removal services.
Manicures and pedicures.
Massage services.
Tanning salons.
Tattooing or permanent makeup.
Weight control and health salons, gyms, Turkish and sauna baths, and similar places.
Who pays NYC sales tax?
If you’re a consumer, NYC sales tax is generally baked into the price of whatever you’re buying — and isn’t something you need to worry about, unless you want to try to deduct it from your income tax liability (more on that in a moment).
Businesses are responsible for actually paying NYC and New York state sales, use and MCTD taxes to the government by filing sales tax returns.
How do you file NYC sales tax returns?
NYC sales and use taxes — as well as the MCTD surcharge — are collected by New York state.
Businesses can file New York sales tax returns on the state’s Sales Tax Web File site
. Some businesses, such as those with taxable receipts of more than $500,000, must use the state’s PrompTax program, which a business can join through an Online Services for businesses account.
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Can you deduct NYC sales tax?
You can deduct NYC sales tax via the state and local tax (SALT) deduction — but doing so comes with some big caveats. The SALT deduction is only available to taxpayers who choose itemized deductions, is capped at $10,000 for joint filers, and makes you choose between deducting your state and local income taxes or your state and local sales taxes.
Itemizing isn’t right for every taxpayer. It’s a good idea to consult a trusted tax professional, such as a certified public accountant (CPA), to see if it’s right for you.
Inside: Are you confused about the differences in types of income? This guide will help you understand earned income, passive income, and investment income, and their importance in achieving financial stability. Learn about the different tax implications for each type of income.
Understanding the differences in income types is a vital component of your financial literacy.
Earned, passive, and investment income all play a distinct role in your financial portfolio and tax liabilities.
These types of income are important to grow your wealth.
We will quickly answer the difference, provide examples, and understand the tax implications.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What Is Earned Income?
Earned income is the money you actively work for. You trade your time for money.
This comes in the form of salaries and wages, where you receive a fixed amount of compensation for your role or job. It can also occur as hourly wages in part-time or contractual jobs.
Other forms include tips received in the service industry, bonuses for achieving specific goals, and self-employment income for freelancers, consultants, and small business owners. Any income that directly results from your personal efforts and active participation falls under earned income.
Typically, this is the most common form of income for most people.
Real Life Examples of Earned Income
A supermarket cashier receives an hourly wage.
A financial analyst is being paid for salary.
A freelance graphic designer receiving payment for a recently completed project.
A waitress at a restaurant receives a tip from a satisfied customer.
A real estate agent receives a commission on the sale of a house.
A sales manager at a car dealership receives a bonus for meeting sales targets.
A renowned author receiving an honorarium for delivering a keynote speech at a literature festival.
A hairstylist at a salon receives income from the haircuts and styling services provided.
A fitness coach generating income through personal training sessions.
Any side hustle income is typically earned income.
How Is Active Income Taxed?
Active income, also known as earned income, is subject to income tax at various rates as determined by the IRS’s current tax brackets. Seven tax brackets, ranging from 10% to 37%, are set for individual taxpayers. 1
The tax treatment is wholly dependent on where an individual’s income falls within these brackets. Your employer typically deducts this tax directly from your paycheck, reducing net take-home pay. It’s advisable to understand the tax implications of your earnings to avoid any surprises at tax time.
Use this tax calculator to know your taxes due.
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Role of Passive Income
Passive income refers to money earned that is not directly linked to active efforts or time spent, often described as income one can earn while sleeping, vacationing, or indulging in hobbies.
This kind of income usually demands some sort of initial investment, which could be financial, a substantial time commitment, ingenuity, or a mixture of all. For many, they invested 10k to get started. Examples include writing a book, creating a course, investing in real estate, or running an affiliate marketing program.
Despite the upfront work often required, passive income potentially provides a steady additional revenue stream and financial independence, making it an attractive prospect for many.
Common Forms of Passive Income
Dividends and interest income: Profits made from investments in stocks or bonds often involve receiving dividends or interest.
Rental income: This is earned from renting out property you own, like houses or apartments as a real estate rental.
Royalties: Income from allowing others to use your intellectual or creative properties, such as copyrighted books, music compositions, or patented inventions.
Capital gains: Profits from buying assets like stocks or property for a certain amount and selling them at a higher value.
Product or Course Sales: A small business owner receiving income from a product or sales that they created once and can resell.
Remember, there is still a level of effort involved in managing these streams, even though they are considered passive.
How Is Passive Income Taxed?
The tax liability of passive income can vary based on how the income is generated. 2
In general, how passive income is taxed depends on how the income is earned. The key note is you are not trading your time for money.
Some forms of passive income are subject to self-employment taxes, while others may be taxed at your regular income tax rate. For instance, net rental income, a form of passive income, may attract unique taxation rules.
However, the applicable tax rules can be complex. Therefore, it’s highly recommended to seek advice from a licensed tax professional when managing taxes for passive income.
Insights into Investment Income
Investment income is a distinct financial category mainly composed of profits resulting from various investments. This pathway consists of the strategic acquisition of assets with a prime focus on their long-term appreciation or regular income, potentially in the form of dividends or interest.
Unlike earned income which often demands a substantial time investment, and unlike passive income which may need initial setup, investment income principally necessitates strategic decision-making and periodic performance reviews.
The common form is learning how to invest in the stock market or real estate.
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Examples of Investment Income And Strategies
Dividends: Income received from owning shares of a company. A long-term investment strategy generally works best here.
Bond Interest: Income paid from bonds for lending money to entities. Risk-averse investors often lean towards bonds for steady income.
Capital Gains: Profits from selling investments at a higher price than their purchase. This needs a strategic understanding of market patterns.
Real Estate Investment Trusts (REITs): Income from investing in property-related assets. This strategy may provide steady cash flow with potential growth.
P2P Lending: Returns from lending money through online platforms. The ability to scale and diversify this investment depends on your risk tolerance.
Interest on savings accounts – Money earned on the balance held in your savings account.
All require a strategic approach, balancing risk and rewards, to drive income growth effectively.
Please note, that the successful generation of investment income often requires careful financial decision-making and strategic asset allocation.
Impact of Tax on Investment Income
Taxes on investment income include interest, dividends, and capital gains. However, the rate is usually lower than that for earned income.
Investment income is often taxed at a lower rate than earned income, however, the exact tax rates can depend on an individual’s tax bracket and the holding period of the investment.
In certain circumstances, Investment income can be subject to capital gains taxes, which apply if you sell a stock or other investment at a profit.
For some high-income individuals, Investment income may be subjected to the Net Investment Income Tax (NIIT). The NIIT is an additional 3.8% tax on certain investment income, such as interest, dividends, and capital gains.
Capital gains from the sale of assets (like real estate or a business) are often taxed at a lower rate compared to ordinary income.
Therefore, it’s important to consider these tax implications when shaping your investment strategies. Proper tax planning can help mitigate the impact of taxes on your investment income.
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Major Differences Between Active (Earned) and Passive Income
The primary differences between active (earned) income and passive income revolve around how they are earned and managed.
Active (earned) income requires active, day-to-day involvement in work. For example, a full-time job where you’re on the clock. It’s often less scalable due to time and energy constraints. Earned income is also more prone to risks like job loss or health issues that prevent work. Furthermore, in most regions, earned income tends to fall in higher tax brackets.
Conversely, passive income demands initial setup and some regular review but not daily oversight. Examples include earning royalties from a book you wrote or income from renting properties. This is more scalable because you aren’t exchanging time for money in the same way.
Advantages of Diversifying Your Income Sources
#1 – Achieving Financial Goals with Flexibility
Diversifying your income source adds flexibility to your personal finance strategy, helping you achieve your financial goals effectively. An income diversified across active, passive, and investment income can cushion against financial downturns whilst providing multiple avenues for wealth generation.
An unexpected job loss, for example, maybe less devastating when you have additional income streams to bank on, such as rental income or dividends, providing you with the flexibility to navigate financial bumps. It also allows you to explore unique investment opportunities without undue stress.
Consequently, a multi-faceted income model can be a stepping stone towards financial freedom.
#2 – Stable Financial Standing with Multiple Income Streams
Having multiple income streams provides a buffer that can significantly enhance your financial stability. “You’ll catch more fish with multiple lines in the water,” says Greg McBride, chief financial analyst at Bankrate. 4
If one income source dwindles or disappears, other income streams continue to provide essential financial flow. This duplication shields you from the full brunt of economic or occupational changes, ensuring you maintain your standard of living while working towards your financial goals. Thus, a diverse income portfolio lays a foundation of financial resilience and prosperity.
#3 – Tax Benefits and Deductions: Navigating the Complexities
Income diversification presents an opportunity to mitigate taxes through various benefits and deductions. Depending on your jurisdiction, you may be eligible for specific tax breaks or deductions on passive or investment income. For instance, certain expenses related to generating rental income may be deductible, or long-term capital gains might be taxed at a lower rate.
It’s also noteworthy that certain types of income like qualified dividends or long-term capital gains can offer potential tax advantages over regular income. While tax laws can be complex, a basic understanding of these concepts could be beneficial to reduce your tax obligations.
That said, always consider seeking the help of a tax professional to navigate these intricacies, especially with an S corporation or with a schedule C.
FAQ About Different Types of Income
Earned income and passive income are two distinctly sourced income channels. Earned income is money received as a direct result of work performed or services provided. This includes wages, salaries, tips, and self-employment income.
Passive income, on the other hand, is money earned without active, daily participation. Although it may require initial efforts to set up, its subsequent generation entails minimal direct input. The key difference between the two lies in the level and timing of involvement required to generate them. Passive income gives you more time freedom.
Portfolio income and passive income are often misunderstood as the same. However, the Internal Revenue Service (IRS) distinctly categorizes them. 3
While passive income generally refers to earnings gained without active involvement, portfolio income specifically relates to income derived from investments such as interest, dividends, or capital gains. Although both involve some lack of active participation, their origins, and tax implications are different.
No, investment income and earned income are not the same. The key difference lies in the source: one is actively earned by working, while the other is accrued through investing or letting money work for you.
The variance also manifests in their respective tax treatment by the IRS.
Earned income refers to wages, salaries, bonuses, and other income earned by providing a service or actively participating in a job or business.
On the other hand, investment income is generated from things like dividends, interest, and capital gains from the sale of financial assets such as stocks or bonds.
Diversification is the Key to Types of Income
Choosing the right income channel—earned, passive, or investment income—depends heavily on your financial goals, resources, risk tolerance, and time commitment.
Earned income may provide stable, regular income, but requires active participation.
Passive income, while enticing with its offer of money while you sleep, requires initial effort and savvy management.
Investment income may promise attractive returns, yet it can involve significant risk and demand financial acumen.
Diversifying your income streams could provide economic stability, flexibility, and potential tax benefits.
One wise woman, Teri Ijeoma, once stated, “It is better to make more money than you know what to do with rather than worry about how the taxes work.”
Remember, there’s no one-size-fits-all answer to financial prosperity, but understanding the nuances of various income types is a step in the right direction toward financial literacy and independence.
Now, let’s move to how to become financially independent.
Source
Internal Revenue Service. “IRS provides tax inflation adjustments for tax year 2024.” https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024. Accessed November 20, 2023.
Internal Revenue Service. “Passive Activity and At-Risk Rules.” https://www.irs.gov/pub/irs-pdf/p925.pdf. Accessed November 20, 2023.
Internal Revenue Service. “Publication 550 (2022), Investment Income and Expenses.” https://www.irs.gov/publications/p550. Accessed November 20, 2023.
Bankrate. “23 passive income ideas to help you make money in 2023.” https://www.bankrate.com/investing/passive-income-ideas/. Accessed November 20, 2023.
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Inside: Do you want to claim your partner as a dependent on your taxes? This guide will explain the rules of claiming dependents whether girlfriend or boyfriend and help you take the necessary steps to do so.
Navigating the waters of tax credits can be tricky, especially when it involves claiming an unmarried partner as a dependent.
The Internal Revenue Service (IRS) does permit the declaration of a non-relative adult as a dependent, provided certain conditions are met.
And that is where it gets tricky for the tax novice.
That is where we are going to reference the IRS guidance, so you can determine whether or not you qualify for this deduction.
By pointing you in the right direction, you can understand the specific tests and requirements to avoid any tax-related complications.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Understanding dependency in the context of taxes
The word “dependent” might remind you of a newborn baby or an elderly family member. But in tax terms, the meaning broadens.
In the IRS terms, a “dependent is a person, other than the taxpayer or spouse, who entitles the taxpayer to claim a dependency exemption.” 1
This might be a child, an adult family member, a significant other, or even a close friend. This term “qualifying relative” is crucial in IRS parlance for its implications on your tax dues.
Typically, any person can qualify as a dependent if more than half of their financial support, including living and medical expenses, is taken care of. Also, it’s an opportunity to boost one’s tax return by up to $500 with the Other Dependent Tax Credit.
What qualifies a person as a dependent?
The IRS bases dependents on two categories: “Qualifying children” and “Qualifying relatives.”2 You might think of a qualifying child as your son or daughter. Expanding the scope, a qualifying relative can be a sibling, a parent, or even a significant other.
The essence lies in their financial reliance on you and the nature of your relationship. They ought to:
Be related to you via blood, marriage, or adoption;
You provide over 50% of their financial support including housing, food, medical care, and other expenses
They are U.S. citizen.
The income of the possible dependent.
These nuanced rules might sound overwhelming, but IRS guidance and tax experts like TurboTax can help lighten the load.
Now, let’s address this sticking point: Can you actually claim your partner as a dependent? The following section unravels the mystique.
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Can I Claim My Partner as a Dependent?
You can claim your partner as a dependent on your tax return, provided they meet certain criteria explained by the IRS, including passing the non-qualifying child test, the citizen or resident test, the joint return test, the income test, and the dependent taxpayer test.
I know this is where it gets difficult to follow for the average person.
So, we are here, to break this terminology down into layman’s terms, as such you can then make the best decision for your tax situation.
If you are still confused, then consult with an online tax software like TurboTax or a tax professional for guidance on your personal taxes.
Basic requirements for claiming your partner as a dependent
This essentially means that your partner should be financially dependent on you, where you bear more than half of their living expenses.
In essence, claiming your partner as a dependent revolves around these fundamentals: 2
Residency: Your partner must have been living with you for the full tax year.
Income limit: Your partner’s gross income should not exceed $4,700 for the year 2023.
Support Requirement: You are the main pillar for your partner’s financial needs by covering over half of their total expenses.
Anyone Else Claiming Them: None else should claim your partner as their dependent.
Unmarried. Your partner must be unmarried legally.
All fulfillment of these criteria moves you a step closer to enjoying some tax relief.
Confirm with an accountant or tax expert as exceptions can exist, such as temporary absences due to illness, education, business, and others.
Common scenarios where you can claim your partner as a dependent
Claiming a partner as a dependent isn’t as fancy as it sounds, but it’s plausible. Here are common scenarios enabling you to do so:
Co-habiting Before Marriage: You and your partner share a home, and you pay more than half of your partner’s living costs. However, your living situation cannot violate local laws, as in some states, “cohabitation” by unmarried people is against the law.
Unemployed Partner: Your partner’s tie with working life is severed (e.g., due to health issues or being laid off), and you bear most of the living expenses.
Supporting Student Partner: Your partner pursues their education, and you shoulder the majority of their expenses.
Take this interactive IRS quiz to determine whom I may claim as a dependent.
How much will I get if I claim my girlfriend as a dependent?
Now the pivotal question: what’s the advantage in dollars and cents?
In essence, claiming your partner as a dependent will slash your taxable income by $500 with the Other Dependent Tax Credit. 3
If you already qualify for Head of Household status with another dependent, then it is possible your deduction may be more. 4
Remember, there’s no one-size-fits-all answer. When tax complexities strike, consult an expert!
Is it better to claim my girlfriend as a dependent?
Honestly, like most tax questions, the answer is: it depends.
If you’re covering your partner’s majority expenses and they’re fulfilling all IRS criteria, then claiming them can bring solid tax savings.
Yet, bear in mind:
If your partner earns substantial income (greater than $4,700), they might lose personal benefits by becoming your dependent.
By claiming your partner, their Social Security or medical benefits may take a hit.
So, assess your partner’s income, benefit entitlements, and your tax situation. Then, tread wisely.
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Important Rules to Keep in Mind When Claiming Your Partner
When filing taxes, it’s crucial to understand that both parties are responsible for the accuracy of each other’s tax reporting and liability.
It’s worth noting that tax advantages and disadvantages exist in the scenario of being married and filing jointly, such as potential reductions in your tax bracket and sharing of business losses. So, it may be something to consider.
Can I claim my girlfriend as a dependent if she has no income?
In a nutshell, yes! If your girlfriend had no income in the tax year, you might claim her as a dependent. Given you provide over half of her total support and she lived with you all year, you’re golden.
For 2023, your partner’s gross income should not exceed $4,700.
However, keep in mind that in cases where public assistance or Social Security benefits are her primary financial sources, claiming her could negatively impact those benefits.
Learn the answer to do you have to file taxes if you have no income.
Remember: tax waters are often murky. When in doubt, lean on a tax professional’s shoulder!
Support factors
Answering the support question plays a hefty role in determining who qualifies as a dependent.
You shouldn’t just share the living cost; you should pay more than half of it. Remember, it includes an array of expenses, like food, clothing, education, or medical expenses.
The implication of your partner being claimed by someone else
Here’s a key rule: if someone else is claiming your partner as a dependent, you’re out of the game. The IRS rules say a person can be claimed as a dependent by only one taxpayer in a single tax year.
This could happen if your partner perhaps lives part of the year with someone else like a parent.
Another possibility is if your partner is legally married still, then they would have to file a married, filing separately return.
So, if your partner qualifies as someone else’s dependent, even if they don’t claim them, you can’t claim your partner.
Frequent Situations Where You Can’t Claim Your Partner as a Dependent
Considerations for Non-resident or Non-citizen partners
If your partner isn’t a U.S. citizen, resident, or national, the dependent claiming game changes. Notably, nonresident aliens cannot be claimed as dependents.
However, if your partner is a resident of Canada or Mexico or a U.S. national, you may claim them. But they should be living with you full-time. 2
This rule extends to partners awaiting changes in their residency or citizenship status. In such cases, you must wait until their status changes before claiming them.
When your partner earns more than the stipulated income threshold
When your partner’s income level sails past the IRS limit ($4,700 in 2023), claiming them as a dependent slips off the table. 2
Any part-time job, seasonal work, or income source counts, even those seemingly negligible. As soon as they cross this threshold, regardless of how heavily they rely on you or where they reside, they can’t qualify as your dependent.
Make sure to stay updated on IRS rules. They adjust the income limit for inflation annually, which changes this income ceiling. Keep an eye peeled for those IRS updates!
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How to Officially Claim Your Partner on Your Taxes
To officially claim your partner as a dependent on your tax return, you will do this when you file your taxes.
Thankfully, this is made easier with online software companies like TurboTax or H&R Block.
The same is true when you are trying to figure out how to file taxes without a W2.
Necessary steps to claim your partner on your taxes
You will first identify them as “other qualifying dependent” or “other qualifying relative”.
Gather the facts first: Confirm your partner’s income, residency, and who has been supporting them for more than half the year.
Document expenses: Keep track of all relevant bills and receipts to demonstrate your majority support.
Use tax software or a professional: Follow prompts about dependents in tax software like TurboTax. They could guide you through the process and specifics.
Complete relevant Tax Forms: Prepare the necessary forms such as Form 1040 and Schedule H and have proof of residency, financial support, gross income information, and certification of your domestic partnership to support your claim.
File your return: Don’t forget to include your partner’s details and tick the correct boxes.
Remember, the devil is in the details. So carefully evaluate your situation to avoid missteps, and consult with a tax professional when in doubt.
Pitfalls to avoid while filing tax returns
While preparing to file your tax returns, beware of these common pitfalls:
Incorrect income calculation: Ensure you tally your partner’s gross income accurately. Reminder: it should not eclipse $4,700 in 2023.
Overlooked Living Qualification: Your partner must have resided with you the entire year. Temporary absences (illness, education) can be exceptions.
Ignoring Other Claimants: If someone else is poised to claim your partner as a dependent – even if they don’t – you can’t claim them.
Emergency Funds Consideration: If your partner taps into their savings for a large expense, this could speak against you providing most of their support.
Forgotten Documents: Maintain a record of bills, receipts, and other expense documents.
The IRS overlooks no mistakes, so take care and stay informed. When in doubt, professional tax help is a button away.
Frequently Asked Questions (FAQ)
Intriguing question! Here’s the short answer: Your partner’s marital status may indeed affect your ability to claim them as a dependent.
For instance, if your partner is married and files a joint tax return with their spouse, you can’t claim them as a dependent.
Remember, tax rules are lock-key specific, and bending them can lead to penalties. Always seek advice from a tax professional.
While you might be able to claim your partner as a dependent, laying claim on their children as dependents is unlikely. IRS rules are clear: you can claim a dependent only if they’re your child or relative.
Since your partner’s children don’t fulfill this requirement, you can’t claim them unless they can be considered your qualifying relative AND you provide more than half of their support.
As always, it’s best to run this by a tax professional for clarity on your unique situation. All we tax-seers can do is guide; the decision falls on your shoulders.
Here’s the hard truth: if your partner didn’t live with you all year, you couldn’t claim them as a dependent. IRS rules are stringent about this: your partner must have the same home as you for the entire year. That is 365 days, no less.
However, IRS grants a green light to temporary separations due to special circumstances like illness, education, military service, or even a holiday. The key lies in their intent to return and, of course, their follow-through.
Stay wise and stay informed, and consult with a tax analyst to seal your decision with assurance.
Get Online Help
Navigating tax rules and regulations doesn’t need to be overwhelming. With the advent of online help, understanding whether you can claim your partner as a dependent becomes considerably more manageable. Here are a few benefits of seeking online help:
Convenience: With online help, you can access the information you need anywhere, anytime. No need to schedule appointments or deal with traffic to get to a tax office. You can get the updates and instructions right from the comfort of your own home.
Accessibility: Some great examples of accessible platforms are TurboTax, e-File, and H&R Block which provide 24/7 support and resources. They offer a wealth of information and experts at your fingertips.
Expertise: Apart from the convenience, these websites employ tax experts who deliver professional analysis and guidance tailored to your specific needs. Specifically, you can use TurboTax Live Full Service for someone to do your taxes from start to finish. Or you can ask questions with TurboTax Live Assisted.
File your own taxes with confidence using TurboTax. This can greatly simplify the process and minimize potential missteps.
Now, Can I Claim my Unmarried Partner as a Dependent is Up to You
As they say, “Ignorance of the law is no excuse”. The same holds true for tax rules.
Falsely claiming a dependent can lead to severe penalties, not just a dinging of your wallet. You’d be sailing the choppy waters of tax evasion, which can bring on hefty fines or even dark days behind bars.
In blatant cases, the IRS could impose a Civil Fraud Penalty. That means a penalty amounting to 75% of the unpaid tax amount resulting from fraud. 5
In short, play by the rules! Accurate and clear tax filing may seem tedious, yet it will steer clear of any legal trouble. Remember, it’s always safer to ask if you are unsure!
Now, are you wondering why do I owe taxes this year?
Source
Internal Revenue Service. “Tax Tutorial.” https://apps.irs.gov/app/understandingTaxes/hows/tax_tutorials/mod04/tt_mod04_glossary.jsp?backPage=tt_mod04_01.jsp#dependent. Accessed October 23, 2023.
Internal Revenue Service. “About Publication 501, Dependents, Standard Deduction, and Filing Information.” https://www.irs.gov/forms-pubs/about-publication-501. Accessed October 23, 2023.
Internal Revenue Service. “About Publication 501, Dependents, Standard DeductionUnderstanding the Credit for Other Dependents.” https://www.irs.gov/newsroom/understanding-the-credit-for-other-dependents. Accessed October 23, 2023.
Intuit TurboTax. “Guide to Filing Taxes as Head of Household.” https://turbotax.intuit.com/tax-tips/family/guide-to-filing-taxes-as-head-of-household/L4Nx6DYu9. Accessed October 23, 2023.
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Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
Taking out a home mortgage or refinancing a currently existing mortgage? If so, you need to know the tax rules for deducting interest.
home equity loans is tricky.
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You can deduct this interest if the loan is secured by a first or second residence and used to buy, build or substantially improve a home. That’s part of the $750,000 (or $1,000,000) acquisition debt. Improvements are substantial if they add value to the home, extend the residence’s useful life or create new uses for the home. Additions and renovations count. Basic repairs and maintenance don’t.
You can’t deduct interest if you use the home equity loan proceeds for purposes other than to buy, build or substantially improve the home. Before 2018, you could use cash from these loans to buy a car, pay off credit card debt, take a trip and the like, and deduct interest on up to $100,000 of debt. But, the 2017 tax law temporarily ended this tax advantage for home equity loans.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.
When preparing your taxes for the 2022 tax year, one thing you’ll need to know is your tax bracket. The IRS uses these tax brackets to identify your tax rate and determine how much you owe in taxes. This guide provides more information about these tax brackets and how they work. Keep in mind that this guide covers only general information. For more specific information regarding your personal taxes, it’s best to meet with a tax adviser.
In This Piece
2022 Marginal Tax Brackets
To determine your tax bracket, you first need to know your filing status. There are currently five different IRS tax filing statuses: single, married filing jointly, married filing separately, qualified widow(er) and head of household. Additionally, the IRS divides these tax brackets into seven tiers that range from 10% to 37%, which are based on taxable income ranges.
2022 Tax Brackets for Married Filing Jointly and Qualifying Widow(er)s
Tax Bracket
Taxable Income
How Much You Might Owe (rounded to the nearest dollar)
10%
$20,550 and under
10% of taxable income
12%
$20,551 to $83,550
$2,055 plus 12% of taxable income over $20,550
22%
$83,551 to $178,150
$9,615 plus 22% of taxable income over $83,550
24%
$178,151 to $340,100
$30,427 plus 24% of taxable income over $178,150
32%
$340,101 to $431,900
$69,295 plus 32% of taxable income over $340,100
35%
$431,901 to $647,850
$98,671 plus 35% of taxable income over $431,900
37%
$647,851 and over
$174,253.50 plus 37% of taxable income over $647,850
2022 Tax Brackets for Individuals and Married Filing Separately
Tax Bracket
Taxable Income
How Much You Might Owe (rounded to the nearest dollar)
10%
$10,275 and under
10% of taxable income
12%
$10,276 to $41,775
$1,027.50 plus 12% of taxable income over $10,275
22%
$41776 to $89,075
$15,213.50 plus 24% of taxable income over $89,075
24%
$89,076 to $170,050
$29,502 plus 24% of taxable income over $172,750
32%
$170,051 to $215,950
$34,647.50 plus 32% of taxable income over $170,050
35%
$215,951 to $539,900
49,335.50 plus 35% of taxable income over $215,950
37%
$539,901 or more
$162,718 plus 37% of taxable income over $539,900
2022 Tax Brackets for Head of Household
Tax Bracket
Taxable Income
How Much You Might Owe (rounded to the nearest dollar)
10%
$14,650 and under
10% of taxable income
12%
$14,651 to $55,900
$1,465 plus 12% of taxable income over $14,650
22%
$55,901 to $89,050
$6,415 plus 22% of taxable income over $55,900
24%
$89,051 to $170,050
$13,708 plus 24% of taxable income over $89,050
32%
$170,051 to $215,950
$33,148 plus 32% of taxable income over $170,050
35%
$215,951 to $539,900
$47,836 plus 35% of taxable income over $215,950
37%
$539,901 and over
$161,218.50 plus 37% of taxable income over $539,900
How Tax Brackets Work
The United States uses a progressive tax system. In basic terms, this system increases a taxpayer’s tax liability as their taxable income rises. Simply put, the higher your taxable income, the higher the amount of taxes you can expect to pay.
There are four factors impacting these tax brackets: filing status, adjusted gross income, deductions and taxable income. Each of these factors is discussed below.
Filing Status
The IRS designates five different filing statuses:
Single: Taxpayers who aren’t married and weren’t married at any point in 2022.
Married Filing Jointly: Married couples who combine their income, deductions and credit by filing their tax return together.
Married Filing Separately: Married couples that choose to file their tax returns separately rather than jointly.
Qualified Widow(er): Widow(er)s who haven’t remarried and have a qualified dependent may be able to file as a qualified widow(er) for the two years following the year their spouse dies.
Head of Household: Unmarried taxpayers with a qualifying dependent.
You may qualify for more than one tax filing status. It’s important to evaluate your options and determine which status provides the greatest tax benefits.
Adjusted Gross Income
Your adjusted gross income is the difference between your total gross income and any qualifying adjustments. You can calculate your AGI by taking your total gross income for the year and subtracting any qualifying deductions. However, if you work with a tax preparer or use an online tax preparation service, these services will automatically calculate your AGI based on your answers to a series of questions regarding your finances.
It’s important to note that your AGI doesn’t determine your tax bracket. Instead, you can use your AGI to determine what tax deductions you may be eligible for. With this information, you can then calculate your taxable income, which is done by taking your AGI and subtracting all eligible deductions.
Deductions
Taxpayers have the option of taking either a standard deduction or itemizing their deductions. A standard deduction is a flat amount based on your specific filing status. Itemized deductions, on the other hand, require you to complete Schedule A and make a list of your qualifying deductions.
Using the standardized deduction is the easiest and most popular route. However, you may be able to decrease your tax liability by itemizing your deductions instead. It’s important to evaluate your specific situation to determine which option is best for you.
Here’s a look at the standard deduction amounts for the 2022 tax year.
Single: $12,950
Married Filing Jointly: $25,900
Married Filing Separately: $12,950
Qualifying Widow(er): $15,900
Head of Household: $19,400
Taxable Income
Once you calculate your AGI, you can subtract your standard or itemized deduction from your AGI to determine your taxable income. For instance, if you’re married and filing jointly with a combined income of $120,000 and you choose to take the standard deduction, your taxable income would be $94,100.
Examples of AGI and Federal Tax Brackets in Action
Now that you understand how to calculate your taxable income, let’s look at a few examples.
Jane has an AGI of $64,500 and is filing as head of household. She opts for the standard deduction of $19,400, bringing her taxable income to $45,100. Using the tables above
She owes 10% of the first $14,650, or $1,465.
Plus 12% on $30,450, the remainder of her income, or $3,654.
This brings her tax liability to $5,119 before any eligible credits.
Sarah and John have a combined income of $126,700 and their status is married filing jointly. They opt for the standard deduction of $25,900, which brings their taxable income to $100,800. Using the tables above:
They owe 10% of the first $20,550, or $2,055.
Plus 12% on $63,000, the amount of their income between $20,550 and $83,550, or $7,560,
Plus 22% on $17,250, which represents their income over $83,550, or $3,795.
This brings their total tax liability to $13,410.
Just because you have a big tax liability, it doesn’t necessarily mean you’ll owe a lot of money at the end of the year. In most cases, taxes are taken from every paycheck. You can deduct this amount from your total tax liability. For example, if Sarah and John, in the example above, paid $12,000 throughout the year from their wages, they’d only owe $1,410 when they file their taxes.
If, however, you do have a big tax liability, you may want to talk to a tax adviser, because how you pay your taxes could impact your credit score.
Tax Brackets and State Income Tax
States have the freedom to set their own personal income tax rules, which may or may not be similar to the federal tax system.
Of the 50 states, eight have no state personal tax:
Alaska
Florida
Nevada
South Dakota
Tennessee
Texas
Washington
Wyoming
An additional nine states use a flat rate system, where all taxpayers pay the same percentage of their income. These states are:
Colorado
Illinois
Indiana
Kentucky
Massachusetts
Michigan
North Carolina
Pennsylvania
Utah
The remaining 33 states, along with the District of Columbia, use a progressive tax scale similar to the one the IRS uses.
Maximize Your Tax Return
Understanding how the tax brackets for 2022 work can help you maximize your tax return and minimize your overall tax liability. You can use tax preparation software now to enter your anticipated information to estimate your tax liability now. Additionally, there are several ways you can file your taxes for free to help save you even more money.
Learn more about preparing your taxes with this tax guide.
Massachusetts is one of a handful of states with a flat income tax rate. For tax year 2022, people who are required to file a Massachusetts tax return will see the entirety of their taxable income charged at a flat 5% rate. Certain types of income in the Bay State, however, are subject to a different tax rate.
The 2022 tax-filing deadline in Massachusetts was April 18, 2023. If you met certain criteria and paid 80% of your total tax bill before this date, a six-month extension to Oct. 16, 2023, was automatically provided.
Starting with income earned in 2023, an additional 4% tax on income over $1 million will be levied, making the highest tax rate in the state 9%.
Massachusetts state income tax rates and tax brackets
For tax year 2022, Massachusetts’s state income tax rate is 5% on annual gross income over $8,000.
Gross income in Massachusetts includes both earned income, such as salaries, wages, tips and commissions, and unearned income, such as interest, dividends and capital gains. The exceptions to Massachusetts’ 5% tax rate are certain types of capital gains, such as short-term capital gains and gains on collectibles, which are taxed at 12%
.
Do I have to pay Massachusetts state income tax?
Anyone earning over $8,000 in Massachusetts annual gross income is required to file a state tax return.
Those earning less than this amount do not need to file a return, but they can still file a return to claim refundable tax credits.
This $8,000 income threshold is on a per-person basis, giving married couples the option to file jointly or separately.
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Am I a resident for Massachusetts state income tax purposes?
Resident status rules
There are two ways to be considered a full-time resident of Massachusetts. The first is to live in Massachusetts for the entire tax year, while the second is to maintain a home in Massachusetts and spend at least 184 days of the tax year in the state.
Part-year resident status rules
Part-year residents refer to individuals who either moved to the state and became residents or moved out of the state and ended their residencies within the tax year.
Nonresident status rules
If neither of the above applies, then an individual is considered a nonresident of Massachusetts. A state tax return is still required if your Massachusetts annual gross income exceeds $8,000 or the prorated personal exemption, whichever is less
.
What is Massachusetts’ standard deduction?
Unlike other states, Massachusetts does not have a state standard deduction. Instead, state taxpayers can determine if they qualify for certain tax exemptions to reduce the amount of tax owed.
Anyone who files a Massachusetts state tax return is given a personal exemption amount based on their tax-filing status. Taxpayers may also be eligible for additional exemptions, such as those for having qualifying dependents or for having paid certain types of medical or dental costs throughout the tax year. Mass.gov has the full details.
Tax-filing status
Personal exemption amount
Married filing separately.
Head of household.
Married filing jointly.
What’s the filing deadline for my Massachusetts state income tax bill?
The filing deadline for 2022 Massachusetts state income tax returns was April 18, 2023.
To have qualified for a six-month extension, you must have paid at least 80% of the total amount of tax owed by that mid-April deadline. If you didn’t owe any taxes and didn’t file by the deadline, an extension to October was automatically granted.
The state extension deadline follows the federal extension deadline set by the IRS, which for the 2022 tax year is October 16, 2023.
Those who have been affected by a federally declared disaster automatically receive an extension for filing tax returns, paying their tax bill and filing a Massachusetts tax extension
.
4 things to know about Massachusetts state tax
Free tax-filing is available to eligible Massachusetts full-time and part-time residents through MassTaxConnect.
The Massachusetts Department of Revenue encourages taxpayers to file and pay their tax returns online. Filing can be done through a tax vendor or MassTaxConnect. Paper filing options are also available.
Massachusetts offers payment plans for people who can’t afford their tax bills. If you owe $5,000 or less, you can sign up for a plan online. People with higher tax bills should reach out to DOR collections for more information
Check the status of your Massachusetts state tax return online or by phone at 617-887-6367 Monday through Friday, 9 a.m. to 4 p.m. Eastern time.
Ultimately, retirement planning is like a math equation — you input several variables and estimate whether what you’ll have will pay for what you will need in retirement. The challenge is that many of the variables are future values that are unknowable today.
But that doesn’t mean you can’t make some educated guesses. So let’s examine the “what you’ll need” part of the equation — that is, how much the retired life will cost you each year — to see if we make the murky crystal ball any clearer.
How much do retirees need?
The standard rule of thumb is that retirees need 70 to 80 percent of their pre-retirement income. Fortunately, we can examine how spending changes as we age by looking at the Consumer Expenditure Survey that is produced every year by the U.S. Bureau of Labor Statistics. That can help us figure out if this 70-to-80-percent estimate has any basis in reality.
The following table highlights average income and expenditures of households led by people in different age groups. (I selected particular categories from the much larger Consumer Expenditure Survey.)
EXPENSE ITEMS
AGE 25-34
AGE 35-44
AGE 45-54
AGE 55-64
AGE 65-74
AGE 75+
Income before taxes
$59,613
$76,128
$79,589
$68,906
$49,711
$31,782
Avg. number of persons per household
2.9
3.3
2.8
2.2
1.9
1.6
Average annual expenditures
$46,617
$55,946
$57,788
$50,900
$41,434
$31,529
Food at home
$3,338
$4,255
$4,369
$3,681
$3,213
$2,643
Food away from home
$2,753
$3,227
$2,861
$2,387
$1,935
$1,230
Housing
$16,845
$20,041
$18,900
$16,673
$14,420
$11,421
Apparel and services
$2,087
$2,040
$1,966
$1,571
$1,186
$708
Transportation
$8,231
$8,763
$9,255
$8,111
$6,086
$4,288
Health care
$1,800
$2,583
$3,261
$3,859
$4,922
$4,754
Entertainment
$2,251
$3,058
$3,088
$2,683
$2,341
$1,374
Reading
$61
$80
$104
$126
$147
$135
Education
$839
$963
$2,094
$917
$240
$140
Pensions and Social Security
$5,151
$6,664
$7,227
$5,932
$2,261
$763
Personal taxes
$1,055
$1,992
$3,323
$2,295
$1,116
$144
Factors that reduce living expenses among retirees
As you study the table, you notice that expenditures peak somewhere between age 45 and 54 — then they gradually decline. Here are some of the reasons that drive the trend:
Fewer people under the roof. Eventually, kids leave the house and you wind up spending less money on food, utilities, education, and Febreze. Also — and this is the sad part — a spouse will pass away. When a two-person household goes down to a one-person household, expenses drop by approximately 30 percent.
We eat less as we age. As our metabolisms slow down, so does our need for calories. Another unfortunate reason some older people eat less is that they find it more difficult to go shopping and to cook meals.
The mortgage eventually gets paid off. Roughly 55 percent of households in the 45-to-54 age group have a mortgage, whereas just 13% of the 75-and-older group still have that monthly payment.
We just slow down. As we age, we spend less on entertainment, clothes, travel, and other semi-discretionary expenses. As a writer and former English teacher who is married to a writer, I was heartened to see that expenditures on reading generally increase as we age, with just a slight dip after age 75.
We don’t save for retirement forever. Once you retire, you’ll stop paying the 7.65 percent FICA tax that pays for Social Security and Medicare (15.3 percent if you’re self-employed) and you’ll stop contributing to your 401(k)s, IRAs, and other savings vehicles. This alone could shave 15 percent to 25 percent off your pre-retirement expenses.
Uncle Sam likes older people. Senior citizens pay much less in taxes, for several reasons: They receive a higher standard deduction, most Social Security is not taxed, and other sources of income — such as qualified dividends, municipal bond interest, and long-term capital gains — are taxed at lower rates than ordinary income. Plus, as you can see from the first row in the table above, income declines as we age, which puts most older people in the bottom two tax brackets.
Not every expense decreases as we age — notably, health care costs increase. Also, there’s a legitimate question about whether senior spending declines out of choice or necessity — i.e., retirees would spend more if they had more. However, for many of the categories, the spending declines are the logical result of getting older and not working anymore. Thus, on the whole, the evidence indicates that the old rule of thumb that you’ll need 70 percent to 80 percent of your pre-retirement income in retirement has its foundation in reality.
How to translate statistics to your retirement plans
However, while the average retiree spends less than the average 50-year-old, this is not the case for every retiree. Many spend quite a bit more, especially in the first few years of retirement, as they fill their newfound free time with travel, hobbies, classes, and other forms of recreation. Others see their income needs drop to half of their pre-retirement income. So when it comes to your own financial planning, especially once you’re within a decade of retirement, it’s important to look at and refine your budget, estimating how much you’ll actually need after you kiss the working world good-bye.
Virginia state income tax rates are 2%, 3%, 5% and 5.75%. Virginia state income tax brackets and income tax rates depend on taxable income and residency status. Virginia state incomeâ¦