Is There An Easy Way To Figure What Someones Taxes Would Have Been Without Muni Bonds

[GeoGeo]

Duh, I figured it out right after I posted.

[villagetinker]

If you used a tax service (HR Block or equal) they should be able to bring up your return and simply back out the tax free bonds and hit the recalculate button. If you did your own, you should be able to make a copy of the return, then do the same edits (above) and recalculate. If you used one of the online services, you may need to make a phone call to see if they would offer the capability to recalculate.
Hope this helps.

[Villageswimmer]

Calculating income generated from interest is simple. You'd just include it in interest income in your straw man. Calls, however, are nearly impossible to predict with any degree of certainty. One of mine, for example, has been in "refunding" status for over a year and yet to be called. No worries there. I continue to collect my 5% in the meantime.

So, you need to allow some space to avoid too much income when unexpected cap gains could jeopardize the Medicare thing. In my experience, bond issuer gives 30-45 days redemption notice. Your individual bond carries a call date at which time it may or may not be called prior to its maturity date.

I don't believe the issuer can call prior to call date, so that would give you a clue as to when NOT to expect a call. (I'm not positive about this. You'd want to discuss with bond broker.) If I'm correct about this, you may wish to buy bonds with longer call dates while you're concerned about exceeding income limits for Medicare.

Of course, longer bonds generally carry more risk.

Liquidity is also an issue to consider.

Now that I'm writing this, I realize this is too complex a subject for a message board. :MOJE_whot:

I'd suggest you do some in depth research. Before jumping into munis, be sure you really understand them.

You might also want to look at a muni bond fund. Vanguard offers several, including state specific ones. These allow significant diversification as well as a more predictable income stream.

Hope this helps a little. Good luck.

[Villageswimmer]

Please disregard my post. I misread your OP. Sorry.

[GeoGeo]

What was I thinking or not thinking should I say. After I posted I realized I could just redo the tax form without the cap. gains and tax free income. Interest from the munis is way more than the savings in taxes. I don't know why it is a concern that people talk about, if you are making more than what the difference would have been.