Americans are now filing their 2021 Tax Returns. We all know our taxable income (AGI), in US Dollar terms. Even those from other countries probably know or can easily figure their own taxable income converted to US Dollars. This poll asks (assuming you’re willing to share this information):
WHAT IS/WAS YOUR TAXABLE INCOME FOR 2021 in US DOLLARS?
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0 voters
This poll asks (assuming you’re willing to share this information):
WHAT IS/WAS YOUR TAXABLE INCOME…
Given the age distribution of the posters here, it would be interesting to see a series of polls comparing income and net worth. For example, one might have an income of only $75K but a net worth of $5 million.
DB2
How should retirees answer this poll? Meaning some wont have earned income.
How should retirees answer this poll? Meaning some wont have earned income.
Leap1,
For Americans, I anticipated they would use AGI (Adjusted Gross Income), which is gross income after qualified adjustments (reductions).
Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income.
The IRS definition for AGI, including the above quote is found at the following link:
https://www.irs.gov/e-file-providers/definition-of-adjusted-…
Another alternative would be to use “taxable income,” which is defined by the IRS at the following link:
https://www.irs.gov/businesses/small-businesses-self-employe…
There are retirees and individuals with low incomes while having a very high net worth due to their ownership of non-income-producing assets.
In many places, assets are taxed - such as real estate and personal property. Taxable or non-taxable wealth or asset taxes are not included in this particular poll.
Some of our readers are “trust fund kids,” who are the beneficiaries of sizeable estates placed in trust by their deceased parent(s) or grandparent(s). They would respond to this question with their taxable income, after application of IRS rules:
- Trust beneficiaries must pay taxes on income and other distributions that they receive from the trust.
- Trust beneficiaries don’t have to pay taxes on returned principal from the trust’s assets.
- IRS forms K-1 and 1041 are required for filing tax returns that receive trust disbursements.
https://www.investopedia.com/ask/answers/101915/do-beneficia….
ZERO, NILL, NADA, Nothing, ZILCH.
Not quite true. EU VAT is high and market trades have “fees” but not worth tracking. Just the cost of living in an organized society.
The Captain
Ours was skewed by Roth Conversion so not playing.
IP
DrBob2 writes,
Given the age distribution of the posters here, it would be interesting to see a series of polls comparing income and net worth. For example, one might have an income of only $75K but a net worth of $5 million.
Absolutely! If you’re living off an investment portfolio you have almost complete control over the amount of taxable income you realize each year.
About 30 years ago there was a quote in the Wall Street Journal form a reporter attending Warren Buffett’s annual shareholder meeting in Omaha. Surveying the look of the crowd, he wrote, “this is the largest gathering of multimillionaires living on $30,000/yr.”
intercst
Our taxable income was very different from our actual income.
Income from Roth IRA. (Not reported or taxed.)
Conversion from Traditional to Roth IRA. (Not income, but reported and taxed.)
Tax paid on interest from I-Bonds and CDs, which were not redeemed so can’t be spent as income.
Net Operating Loss carryforward from DH’s family business.
Unrealized capital gains, which I don’t include in my income calculations but some might.
I always know to the dollar what my actual income is since “Cash Flow is King”…but that’s not what you asked. 
Wendy
You’re using two different terms when speaking of household income. “Adjusted Gross Income”, line 11 of the form 1040, is the gross income minus what prior to 2018 was called ‘above the line’ deductions that are now listed out in Part II of Schedule 1 Adjustments to Income. “Taxable income”, line 15 of the 1040, is income after all deductions from which your actual tax is calculated but before any tax credits.
I suspect you’re looking for gross income…but that’s a guess.
What might be equally interesting is what % of income is earnings from employment, investment income, capital gains and for retirees, pension income, Social Security Income and retirement plan withdrawals.
BruceM
My income, my joint return income, or my household income?
Not that it really matters all that much. I’m just glad not to be poor. I was poor long enough to know that it is really not a good thing.
Many retirees hold earnings as paper profits so heirs can inherit tax free.
Then taxable income is largely what you spend. Plus RMDs, pensions, etc.
The number is not meaningful.
0
You’re using two different terms when speaking of household income. “Adjusted Gross Income”, line 11 of the form 1040, is the gross income minus what prior to 2018 was called ‘above the line’ deductions that are now listed out in Part II of Schedule 1 Adjustments to Income. “Taxable income”, line 15 of the 1040, is income after all deductions from which your actual tax is calculated but before any tax credits.
I suspect you’re looking for gross income…but that’s a guess.
“Income” is all the money or money-like thing you didn’t used to have but now you have it. Paycheck? Income. Bank interest? Income. Dividend check? Income. Selling on eBay? Income. Find a Rembrandt in the attic and don’t sell it? Not income. (When you sell it: Income.) Bought Apple at $2 and haven’t sold it? Not income.
Found a penny on the street? Income. Got paid in gold dust instead of fiat money? Income.
I don’t find it at all difficult to define “income”, and it boggles me that there are hundreds, maybe thousands of pages of IRS regulations which define it.
PS: If this year’s figure is an anomaly, use a figure from a recent year that isn’t. Nobody will know. I promise not to tell.
WHAT IS/WAS YOUR TAXABLE INCOME FOR 2021 in US DOLLARS?
As of today, responses to the above poll question suggest that the majority (66% of us) earn $150K or less. 31% earn $75K or less, while 35% earn between $75K and $150K.
One may reasonably assume that those of us earning more than $150K have sufficient discretionary free cash flow to provide some degree of insulation from discomfort caused by price inflation. However, the two-thirds of METAR respondents earning $150K or less are likely to face at least mild discomfort, if not some difficulty, as a result of a rising cost of living.
In my own household, I recently briefly considered using a Visa card instead of Amex when facing a higher-than-expected $1,500 vehicle maintenance bill (a belt and new tires). I was not concerned about being able to pay Amex in full at the end of the month, but I try to ensure that the balance in my checking account doesn’t dip below a certain constant “comfort level” in my own mind.
I like to pay all my bills - including occasional spikes in maintenance and repair expenses - out of ordinary monthly income cash flow. Rarely do I even think about dipping into savings to cover routine bills.
However, in recent months, food and fuel expenses have taken a noticeably larger bite out of my monthly income. Price inflation has become even more evident as DW and I bear increases in the cost of landscape maintenance and housekeeping help.
One may reasonably assume that ordinary Americans, especially those who earn less than $150K per year, are experiencing at least some discomfort as a result of price inflation. If they modify their spending or change their investing behavior in response to inflation, our individual portfolios may be directly or indirectly affected.
What sectors or investment theses should we consider in light of these circumstances?
The same as it ever was,Notehound. Search for companies with pricing power and earnings growing over time. Search for companies controlling real assets with fixed rate debt. Two specifics would be Berkshire -Hathaway and Brookfield Asset Management. Others in general,perhaps as Etf products, are medical devices and hard commodity funds. Also qqqe,equal weight Nasdaq 100.
Other than those choices at least 5 years a mix of cash and cash like stuff.
I personally am at 5 years cash like things if no dividends ever come in,about 10 years assuming dividends continue and inflation moderates within 2 to 3 years.
Jk
Fine with slightly lower returns with slightly more certainty.
As of today, responses to the above poll question suggest that the majority (66% of us) earn $150K or less. 31% earn $75K or less, while 35% earn between $75K and $150K.
One may reasonably assume that those of us earning more than $150K have sufficient discretionary free cash flow to provide some degree of insulation from discomfort caused by price inflation.
However, the two-thirds of METAR respondents earning $150K or less are likely to face at least mild discomfort, if not some difficulty, as a result of a rising cost of living.
I don’t think we have enough data to reasonably assume that. It depends on the source of the income, given that selling something for a gain gives you that gain as income but also potentially large amount of return of investment. Additionally, many of us are retired. Our annual expenses are well under $100K.
IP
Absolutely! If you’re living off an investment portfolio you have almost complete control over the amount of taxable income you realize each year.
Most of the time, but not always. I know a couple that invested in a really good non-dividend-paying stock a few decades ago. Suddenly a few years ago, the company decides to pay a dividend and keeps increasing it each year. Meanwhile, their shares have rocketed in value. So there is “no way out”, can’t sell the stock without HUGE income from capital gains, and those dividends keep going up and up every year. The dividend from that one company alone eats up all the lower tax brackets!