I just wrapped up our 2023 income tax returns after filing a last minute extension back in April. The extension was needed as we worked to wrap up the estate for Mrs. Dress Pockets’s biological father. Final estate tax returns were filed in May and we received an estate K-1 to pass estate income through to our personal return.
We filed our first and hopefully last Arizona non resident tax return due to the estate. This return was accepted and refund deposited so I must not have messed it up too badly. I don’t see us becoming snow birds but you never know.
Our dividend income continues to climb and interest income hovers around a grand. I suppose this confirms our cash position remains high. For 2024, I estimate $1,000 in interest income and $14,000 in taxable dividend income.
We just crossed the threshold to pay net investment income tax the past 2 years. Now that my W-2 income is zero, we should avoid that going forward and perhaps fall back into the 22% tax bracket in 2024.
With my 401k to rollover IRA conversion in 2023, I closed the option to do backdoor Roth IRA conversions tax efficiently. We made direct Roth IRA contributions in 2024 and will continue those going forward as long as MAGI stays beneath the joint filing Roth IRA income limit. Mrs. Dress Pockets can still do backdoor Roth IRA conversions if income limited as long as her traditional IRA balance remains zero.
| Federal Tax Stats | 2020 | 2021 | 2022 | 2023 |
| Interest Income | $2,644 | $1,142 | $970 | $1,333 |
| Dividend Income | $1,368 | $2,274 | $4,701 | $6,995 |
| Net Investment Tax | $0 | $0 | $192 | $62 |
| Effective tax rate (tax / taxable income) | 15.32% | 18.80% | 16.77% | 15.03% |
| Marginal tax rate (tax on last dollar earned) | 24% | 24% | 24% | 24% |
