The Boldin Planner computes your taxes based upon sources of income such as work, passive income, Social Security, and pensions as well as withdrawals from savings and investment accounts.

The Planner estimates your federal and state income tax, FICA, and Capital Gains taxes annually. You can view the annual tax liability estimate in the Insights > Tax > Estimated Taxes Chart.

The planner also makes estimated tax expense payments. On the back end, monthly tax payments are made for income streams such as work and pensions. One time transactions such as Transfers, One Time Expenses, Disbursements, and Roth conversions incur a tax payment equal to 20% of the transaction in the month of the transaction. Taxes expenses are paid in the same manner as all expenses - from available income and then shortfall withdrawals as necessary.

You can view the annual tax payments in the Insights > Income and Expenses > Estimated Expenses Chart.

You may note a difference between the tax figures in the Estimated Taxes and the Estimated Expenses charts in a particular year or years. This is due to the fact that the tax modeling is iterative and each year’s tax payments are based on the previous year’s tax liability. In most years you should be able to match the tax liability and expense. However, in years where significant fluctuations occur, such as the year after retirement, you will see more variability in the tax projections.

While annual tax modeling fluctuates, we do not recommend making any adjustments. This is because the software performs an annual reconciliation and when the tax paid in the previous year does not meet the tax liability any underpayment is added to the Estimated Income Tax Payments for that year. If the tax paid in the previous year exceeds the tax liability an overpayment is added to the account used for excess income that year. So, if you are saving excess income, the excess income account increases.

Boldin utilizes proprietary methods to reasonably estimate taxes and therefore tax estimates should only be considered directional. As needed, consult a tax professional for more precise tax estimate, payment, and filing requirements if you want more precise values.