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Year End Tax Situation; Future Tax Planning; Retirement Account Contributions

December 11th, 2015 at 01:42 pm

Looking at my income tax situation for 2015, I estimate that I will owe $446 to the federal govt and receive a refund of $88 from the state. So, not a bad job estimating withholding.

It is very possible that 2015 is the last year I will be able to file head of household and claim J as a dependent.

In 2015, I had a small amount of income taxed at 25% federal and 8% state. In 2016, it is very possible I will have much more of my income taxed at those rates.

Therefore, in 2016 I will be contributing solely to my tax-deferred accounts and skipping Roth contributions.

After I relocate to Reno, I will no longer be paying state income tax. If I am earning less (which is a distinct possibility), I may not be in the 25% bracket any longer. It will make more sense to continue Roth contributions then; at the very least I will revisit the issue.

My 2015 gross wages should come in at $55,168.95. I aim to contribute 15% of that to retirement accounts, and I do include matching. That means my target is $8,275.35.

By year end, I will have contributed 3.6k to my Simple, 2k to my Roth, and 1k to my traditional. My employer contributed another $1,623.00 to my Simple. Those contributions total $8,223.00, which is $52.35 short. I will contribute another $100 to my traditional by the end of the year and consider this goal met.

Including 2015, I have now contributed a grand total of 19.5k to my Roth. I like to keep track of this number, as Roth IRA contributions can be withdrawn at any time for any reason, no tax or penalty. The rest is earnings and must be left alone until I reach age 59.5. It's shocking how close that time is drawing!

I'm really hoping to break 200k in tax-deferred in 2016. Let's see if Mr. Market cooperates.

1 Responses to “Year End Tax Situation; Future Tax Planning; Retirement Account Contributions”

  1. creditcardfree Says:

    Great plans! I thought we would move to more in tax deferred, but we are still in the 15% bracket...so still maximizing our ROTH IRA's first.

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