IRS Tax Brackets and Tax Bracket Management

 

 

2022 Tax Table

2022 Tax Rate

Single

Married Filing Joint

10%

$0 to $10,275

$0 to $20,550

12%

$10,275 to $41,775

$20,550 to $83,550

22%

$41,775 to $89,075

$83,550 to $178,150

24%

$89,075 to $170,050

$178,150 to $340,100

32%

$170,050 to $215,950

$340,100 to $431,900

35%

$215,950 to $539,900

$431,900 to $647,850

37%

$539,900 or more

$647,850 or more

Source: IRS

2021 Standard Deduction

Filing Status

Deduction Amount

Single

$12,950

Married Filing Joint

$25,900

Keep in mind that if and when you withdraw that money from the IRA, the withdrawn amount is 100% subject to income tax at whatever the prevailing income tax rates are at that time.

As for when to take money out of your IRA if you’re looking to protect it using the Living Trust Plus®, please keep in mind that as a result of the Tax Cuts and Jobs Act (TCJA) that was signed into law on Dec. 22, 2017, the top income tax rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% bracket was also unchanged. However, these changes are temporary, set to sunset at the end of 2025.

Tax Bracket Management:

For people already in the 22% tax bracket, all income withdrawn from a qualified retirement account such as an IRA or 401(k) will be taxed at a minimum rate of 22%. Optimal tax bracket management would involve withdrawing an additional amount, potentially over several years, in order to bring your income to the top of the 24% tax bracket, thus locking in the low 24% tax rate. The money withdrawn could then be used to fund a Roth IRA (there are no limits on these types of “back-door” Roth contributions) or to put this money into the Living Trust Plus® Asset Protection Trust.

The financial strategy examples above are not financial advice and are not intended to be used as the sole basis for financial decisions. Financial advice and specific strategies must be designed to meet the particular needs of your specific situation.

Expected Increase in Tax Rates

2016 Tax Rates

Current Tax Rates

2026 Tax Rates

10%

10%

10%

15%

12%

15%

25%

22%

25%

28%

24%

28%

33%

32%

33%

39.6%

37%

39.6%

2022 Medicare Part B Premiums By Income

The standard Part B premium amount in 2022 is shown below. If your modified adjusted gross income, as reported on your IRS tax return from 2 years ago, is above the threshold, then the IRMAA (Income Related Monthly Adjustment Amount) assessment increases the Part B and Part D premiums to the amounts shown in the tables below:

If your yearly income in 2020 (for what you pay in 2022) was You pay each month (in 2022)
File individual tax return File joint tax return File married & separate tax return
$91,000 or less $182,000 or less $91,000 or less $170.10
above $91,000 up to $114,000 above $182,000 up to $228,000 Not applicable $238.10
above $114,000 up to $142,000 above $228,000 up to $284,000 Not applicable $340.20
above $142,000 up to $170,000 above $284,000 up to $340,000 Not applicable $442.30
above $170,000 and less than $500,000 above $340,000 and less than $750,000 above $91,000 and less than $409,000 $544.30
$500,000 or above $750,000 or above $409,000 or above $578.30

Source: CMS

2022 Medicare Part D Premium By Income

Part D premiums by Income – 2022

The chart below shows your estimated prescription drug plan monthly premium based on your income as reported on your IRS tax return. If your income is above a certain limit, you’ll pay an income-related monthly adjustment amount in addition to your plan premium.

If your filing status and yearly income in 2020 was
File individual tax return File joint tax return File married & separate tax return You pay each month (in 2022)
$91,000 or less $182,000 or less $91,000 or less your plan premium
above $91,000 up to $114,000 above $182,000 up to $228,000 not applicable $12.40 + your plan premium
above $114,000 up to $142,000 above $228,000 up to $284,000 not applicable $32.10 + your plan premium
above $142,000 up to $170,000 above $284,000 up to $340,000 not applicable $51.70 + your plan premium
above $170,000 and less than $500,000 above $340,000 and less than $750,000 above $91,000 and less than $409,000 $71.30 + your plan premium
$500,000 or above $750,000 or above $409,000 or above $77.90 + your plan premium

Source: CMS

The financial strategy examples above are not financial advice and are not intended to be used as the sole basis for financial decisions.  Financial advice and specific strategies must be designed to meet the particular needs of your specific situation.

 

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