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I AM SENIOR CITIZEN ON SOCIAL SECURITY. I AM 65 YRS OLD. I

HAVE NO EARNED INCOME. I...
I AM SENIOR CITIZEN ON SOCIAL SECURITY. I AM 65 YRS OLD. I HAVE NO EARNED INCOME. I HAVE DIVIDENDS, INTEREST AND STOCK SALE PROFITS (SHORT TERM)
OF AROUND 70,000 THIS YR. HOW DO I FIGURE OUT MY INCOME TAX BRACKET.
I UNDERSTAND I PAY TAXES ON 85% OF SS INCOME.
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Answered in 5 minutes by:
11/8/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,134
Experience: Taxes, Immigration, Labor Relations
Verified

Lev :

Hi and welcome to our site!

Lev :

I will help to estimate your possible tax liability.
Please provide teh amount of your social security benefits.

Customer:

1400 per month

Lev :

Also - please provide separately the amount on interest income, and dividends.

Customer:

10,000 interest

Customer:

dividends 4000

Lev :

and you are Single - correct?

Customer:

yes single,

Lev :

Please stay with me which I calculate your liability...

Customer:

very good, thanks

Lev :

that might take a few mins...

Lev :

so your income would be
SS benefits - $1400*12=$16800
interest income $10,000
dividends $4000 - I assume qualified dividends
capital gain $70,000 - short term
So your Adjusted Gross income (AGI) would be $98280
Assuming standard deduction (including additional for being above 65) - $7600
Personal exemption $3900
Taxable income -
$86780
Estimated tax liability - $17224

Customer:

what tax bracket is this?

Lev :

Your marginal federal tax rate is 25% - see page 4 in this publication for Singles - http://www.irs.gov/pub/irs-drop/rp-13-15.pdf
If Taxable Income Is Over $36,250 but not over $87,850 - The Tax Is $4,991.25 plus 25% of the excess over $36,250.
So far - you are a little below 28% tax bracket.

Customer:

I usually itemize deductions and deduct property taxes, charitable contributions, so if the itemized deductions are above the 7600 then i wold be better off taking itemized deductions, is that right?

Customer:

does any of the tax money that i pay apply to my social security to increase my monthly check?

Lev :

Yes - if your itemized deduction is more than $7600 - you better to itemize and your tax liability will be less than estimated. Please be aware that is a raw estimate - and to be precised - we need to prepare your tax return.
However unless your itemized deduction is large enough to change your taxable income from estimated $86780 to less than $36,250 - you still will be in marginal 25% tax bracket.

Customer:

OK GOT IT. SO DO YOU PREPARE TAX RETURNS TOO?

Lev :

I do for our office clients.

Customer:

I SEE. WELL, THANK YOU VERY MUCH . YOU HAVE BEEN MOST HELPFUL.

Lev :

You are very welcome. I am glad to be helpful.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,134
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 4 years ago

LEV, I HAVE NEW FIGURES FOR YOU TO CALCULATE MY FED TAXES. ALSO I HAVE ADDITIONAL QUESTIONS...

Sure - go ahead - and post your questions.
Ask Your Own Tax Question
Customer reply replied 4 years ago

THANK YOU:


I AM SINGLE SENIOR AGE 65 AS OF JAN 2013.


SHORT TERM INCOME FROM STOCKS 86,000 YTD


ORDINARY DIVIDENDS 1,200


QUALIFIED DIVIDENDS 12,584


SOCIAL SEC INCOME 17,244


INTEREST INCOME OF 755


CURRENTLY I HAVE LONG TERM LOSSES FROM YEARS PRIOR OF AROUND 150,000


 


I WILL HAVE TO TAKE STD DEDUCTIONS SINCE I DONT HAVE ENOUGH TO ITEMIZE.


SO CAN YOU RECALCULATE MY TAXES AGAIN FOR ME. OBVIOUSLYI KNOW I WILL PAY FOR THIS SESSION .


I NEED TO MAKE PLANS NOW FOR THESE TAXES

Short term capital gains will be fully offset by your long term capital losses carried over from previous years.
In additional - $3000 from your long term capital losses will be used to offset other taxable income.
So far because of your long term capital losses carried over from previous years - your situation will be very different from what we originally anticipated.

so your income would be
SS benefits - $17,244
interest income $755
ordinary dividends $1200
qualified dividends $12,584

capital gain $86,000 - short term will be offset by carried over capital losses - total you will have $86,000 - 150,000 = negative $64,000 - from which $3000 will be deducted and $61,000 will be carried over to the following tax year.

So your Adjusted Gross income (AGI) would be $12,584 + $1200 + $755 - $3000 = $11539
None of your social security benefits would be taxable.
Because you are in low tax bracket - qualified dividends are taxed at zero tax rate.

Assuming standard deduction (including additional for being above 65) - $7600
Personal exemption $3900
Taxable income - $86780
Estimated tax liability - zero - no need to itemize.

Let me know if you need any help.
Ask Your Own Tax Question
Customer reply replied 4 years ago

OMG..I THINK I LOVE YOU..!!!LOLOLOL..I HAVE BEEN SO WORRIED ALL NIGHT LONG .COULDN'T SLEEP. I DIDNT THINK THAT I COULD DEDUCT MY LONG TERM LOSSES, EXCEPT FOR 3000. SO I AM SO STUPID I MISREAD THE IRS PUBL.


SO I CAN CONTINUE TO KEEP TRADING AND MAKING A PROFIT


THIS YEAR?


AND I DONT KNOW WHAT STATE YOU ARE IN BUT COULD YOU DO MY TAX RETURN? I COULD SEND IT TO YOU..


 

Yes - that is correct - your capital losses carried over from previous years may be fully used to offset your capital gains.
These calculations should be done on schedule D. So far - additional $64,000 of capital gains could be fully offset by your losses.
You should not stop trading just to avoid tax liability.
That should not be an issue to pay taxes on your real income when you have cash in your account.
But in your situation you might want to avoid the situation when your social security benefits becomes taxable.
Ask Your Own Tax Question
Customer reply replied 4 years ago

YES I AGREE. THANK YOU YOU DIDNT ANSWER REGARDING MY 2013 RETURN. IS THIS NOT SOMETHING THAT YOU CAN DO?


I WANT TO STAY WITH YOU AND I HAVE ANOTHER CLIENT FOR YOU TOO!!!

Unfortunately rules on this site prevent me from contacting customers outside this site.
As you likely know - posts are for general information, and are not intended to substitute for informed professional advice and do not establish a professional-client relationship.
Based on these rules - I may not prepare your tax return or contact you outside this site.
Sorry.
However - I will be glad to help you with estimations and will help to verify your calculations - as well as will address all your tax related questions.
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,134
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 4 years ago

GOT IT. I NOW REALIZE THAT YOU ARE IN A CERTAIN POSITION AND I UNDERSTAND. SO I WILL PREPARE RETURN MYSELF AND THEN


CONTACT YOU TO VERIFY WHAT I'VE DONE. THANKS SO MUCH.


YOU ARE NUMBER ONE. . THANKS SO MUCH.

Appreciate you for warm words and for excellent rating.
I am very glad to be helpful - that is why I am working on this site.
You are welcome back for all your tax related issues.
Ask Your Own Tax Question
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Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,134
30,134 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

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