I just finished my Federal taxes for 2012 ..... [View all]

[oldhippie]

.... using Turbotax. I know there is a lot of interest here regarding effective tax rates between us and the 1%, so I'll share mine here.

(edited to add I take the standard deduction.)

I'm not rich. I'm retired and live on a pension, social security and a small withdrawal from my IRA. I take the Standard Deduction (no fancy loophole deductions.) I also sold some stocks from my small brokerage account to get the funds to help my son with the down payment for his first house purchase last year, so I had a bit of long term capital gains tax, just like a rich guy. I also have some tax free interest income from a tax free municipal bond fund in my brokerage account. Not nearly enough to live on, but enough for a dinner out every couple of months.

The good news is that I get to contribute a total of $12,154 to our society in the form of Federal Income Tax for the year 2012.

And here are the effective tax rates:
Tax on Total Income: 11.7%
Tax on Adjusted Gross Income: 11.7% (I don't have any adjustments)
Tax on Taxable Income: 14.7%

I don't think that is too great a burden to pay for the benefits of living in a civilized society. You can do the math and see that I am doing OK in retirement so far. I like to think that is the result of a long and stable career in engineering, a stable family, good retirement planning, (mostly) wise investments, and being fortunate in having had no major medical or other emergencies. I hope this luck holds.

So I pay almost 15% of my retirement income in Federal income tax. I'm not complaining. But since I didn't have enough withheld from my pension (and 85% of my SS is taxable) I end up still owing the Feds almost $2300. (First time I have not gotten a refund in over 30 years.) I think I will wait until April 15 to send them a check.

What do you think of the rates compared to a 1%er? How do yours compare?