- Welcome to Curt's Chart Talk, Transition Tax Topic Series. I'm Curt Sheldon with C.L. Sheldon and Company and today, I'd like to congratulate you. After you retire and start your second career, you're going to become one of the evil rich. Congratulations. Now as you may be aware, our tax code is skewed to tax the higher earners more. And it's not just in tax rates, it's also in things that you lose. So let's give you a couple examples.
Are you a landlord? Do you like to take that tax deduction every year with that passive loss caused by your depreciation? Well, if you hit $150,000 worth of adjusted growth income, you'll no longer be able to take that deduction against your current income.
You got kids in college? If you go above $180,000 in adjusted gross income, you no longer have the opportunity to take the American Opportunity Credit. And oh, by the way, that starts to phase out at $160,000.
Ever heard of the Obamacare surtaxes? Well, if your wages hit $200,000 if you're single, or 250 if you're married, you're going to get to pay an additional 0.9% social security tax, or correction, medicare tax. And if those same numbers apply, you'll pay an additional 3.8% if your total income, including investment income, exceeds that amount. That amount of investment income above the threshold is going to be subject to a 3.8% tax.
Now, granted, this is a first world problem. If you're making a lot of money, you're gonna pay a lot of taxes. But you need to be aware of it as you make the transition.
And if you'd like to be aware of other things that you need to be concerned with as you make the transition, check out our financial checklist. You can get it at www.clsheldon.com/tax. That's www.clsheldon.com/tax.
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