401A --> ?

First - I'd be very careful tracking this - as you describe it, the funds were taxed by the state, so on withdrawal, they shouldn't be taxed again. Converting to a Roth at some point will help put an end to that separate tracking. I'd suggest you look at

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Thanks so much for the information. I feel like I now have a decent plan of action. I will most definitely check out the calculators so I can attempt to get the money transferred over as soon as the tax man will allow. Thanks again!

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I have no doubt this is a completely ignorant question, so I will apologize in advance. Where can I find the bracket amounts? How/ where can I see the brackets to determine what amount of income moves me into the next higher bracket? Once I know the brackets, how do I apply the logic? Do the brackets apply to Line 43 of the return "Taxable Income"? Would this be the right place to look?

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Of course you can use TurboTax on line, and adjust your numbers up and watch your tax change. That can work, but it seems quite the effort for what you are trying to discover.

Joe

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No need to apologize for asking an ignorant tax question, the answer isn't at all obvious. I just did one of these projections for a client and every rate we came up with for "taxes on the next dollar earned" was a strange hybrid rate that didn't match any of the tables. Especially when adding in Social Security/self-employment taxes.

To address "what amount of income moves me into the next higher bracket?" you need to know what type of additional income you're talking about, and how much & what types of income you currently have.

Yes, line 43 on 2007 Form 1040 is your "taxable income" and that's the figure used to calculate your tax bill. And if all your income (and any additional income) is "ordinary income" such as salary/wages or taxable interest, you can just look to those tables to see when you'll cross into the next bracket, and do the same with your state income tax bracket chart, and that answers the question for a lot of people.

There are many complicating factors though...just a couple examples:

If some of your income, or the additional income you'd tack on, would be from long-term capital gains or qualified dividends, then a different rate applies (0% initially, then 15%). If you paid AMT in 2007 (see line

Which is to say, this isn't always an easy question to answer. As JoeT suggested, you can put the income into TurboTax or something similar and see what comes out, though that won't factor in tax-law changes from year to year (including the bracket changes).

-Tad

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Tad is exactly right that outcomes are not necessarily obvious. What tax bracket I am in (or will be in) is not the same answer as what is my marginal tax rate (on the next dollar) which is not the same answer as how will my computed taxes be affected by any particular change to my income. The only answer to the latter question, which is the only real question in practice, is to calculate the new return exactly considering all the effects on all the factors that go into a tax calculation.

If one is attempting to forecast tax scenarios for future years this requires the use of a tax model with future year rates, bracket points, phase outs, and AMT rules written in.

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