Standard disclaimer applies: the core of the following confusion might be due to pilot misunderstanding or error. What I am trying to understand is why, when we take our SSI in 2030 at age 70 to the tune of ~$80K, along with $20K rental income (so a combined income for that decade of ~$100K/yr), how is it that our SSI taxable income drops to $11K in 2034, jumps to $31K in 2035, and climbs slowly the rest of the decade.
Is there a proposed change in the tax code that would make this happen - surely not OBBBA?
A single file attached.
@bolddane Hi Patrick, this is Charlie Stone with Pralana.
[I moved your question from the PRC Excel (Bronze and Gold) section of the forum to the Pralana Online section]
You can see how Pralana calculates your Taxable SSI by going to: Review > Tax Forms & Brackets > Tax Forms and selecting 2034 and from the forms list, pick Pub 915 Figuring your Taxable SSI Benefits. Note the Tax Forms are aways presented in Future $ and so the taxable SSI on line 19 is higher than the tabular projection you provided which is shown in Today's $.
The math for taxable SSI starts with the amount on Line 6 which is half of your SSI plus most of your other income. You have very little non-SSI income on Line 3 in 2034, and considerably more in 2035 when your RMD's start. So Line 6 is much lower in 2034 than in 2035.
The IRS applies some thresholds to taxable SSI. For MFJ, the 1st $32K of half your SSI plus other income is not taxed. Check out line 10. And the math continues from there.
I hope this is helpful. On the outside chance you have not found the 'Metric MRI' feature, in the tabular projections and tax forums, you can click on underlined amounts to see how that amount is calculated.
@cstone Charlie,
thanks so much for the reply and, yes, it is very helpful.
I did look briefly at Review > Reports > Tax Forms & Brackets, but the start year is 2025 and so there wasn't any Pub 915 form to review for that year - which was my error: I should have reset the year to 2034. In addition, the 50% x on line 2 of Pub 915 was not something I was doing in my back-of-the-envelope calculation, so that explains a lot right there.
I have to admit that I did not pay enough attention to the tax forms themselves, which is where the guts of non-trivial tax calculations can be seen in detail.
Lastly, thanks for moving my post to the PO section.
