Rejected

:speech_balloon:

Separate Fed and State Income Tax Withholding in Setting

When you execute a Roth conversion, you fill out a form that indicates the amount of withholding for Fed taxes, and a separate value for State withholding. Currently PL has one value for Tax Withholding: “Tax Withholding is a single bucket used to settle any Federal, State (or Local if applicable /supported) income taxes”. I think it would be useful to be able to enter separate withholding values for Fed and State for Roth conversions,. Example: if you withheld 20% fed and 4% state on the actual Roth conversion, and it turns out you over-withheld for an 18% balance for Fed and under-withheld for a 8% balance state, IRL you would get a 2% fed return (20-18) and have to pay extra 3% for state (5-8). I think the way PL would handle that situation now is it would show a 7% return for fed (25-18) and a balance due of 8% for state (0-8). Maybe that washes out in the end but it is confusing (to me, anyway…)

1 vote

Tagged as Suggestion

Suggested 07 June by user Dan Matthews

Moved into Rejected 08 June

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  • 07 June Dan Matthews suggested this task

  • avatar
    Dan Matthews

    typo, not sure how to edit it: “Example: if you withheld 20% fed and 4% state …” should be “Example: if you withheld 20% fed and 5% state …”

    07 June
  • avatar
    Shawn @PL

    Thanks for your suggestion. The representation of all income tax payments/refunds as a single entity is very much intentional. This detail (state vs federal tax refund/payment) is beyond the scope of what PL is likely to implement, since its focus is not on granular cash flow, budgeting, and tracking individual transactions, but on macro-level estimation and long-term projection.

    Given this, I think we will defer your suggestion. We appreciate your time though, thanks again.

    08 June

  • 08 June Shawn @PL approved this task

  • 08 June Shawn @PL moved this task into Rejected

  • 08 June Shawn @PL edited this task

  • 08 June Shawn @PL approved this task

  • avatar
    Dan Matthews
    Shawn @PL: Thanks for your suggestion. …

    Thanks for the feedback. FWIW I do actually view this request as part of long term projection. I nearly mentioned the actual Roth conversion process to illustrate the point that if you are withholding, you must indicate %’s for both fed and state. My thinking is that the 25% withheld (25k in the example I provided) might impact differently across the projection if it is all applied against fed only, vs the split. I might be wrong, but given the richness of the toggles you can set in the optimizer, this seemed relevant.

    That being said, I am happy to be deferred as you guys have a ton of stuff to look at…

    09 June
  • avatar
    Dan Matthews

    nearly=merely…

    09 June
  • avatar
    Dan Matthews

    also, FWIW, I tried this just now - I changed the tax withholding from 25% to 20% to reflect what would be applied just to fed fully, meaning PL figured out the state tax without withholding. Doing that did make a small difference in ending net worth…

    09 June