SIPS Advanced offers nine Tax Calculation Options for Incomes:
To ensure accurate tax calculations, you must correctly configure the Tax Calculation Option for all income sources. This how-to article provides a detailed walkthrough, using a structured income plan example to show how to correctly model income streams and their taxability.
The hypothetical income streams we'll be working with are detailed below.
- W-2 employee: annual income of $150,000 at a 2% inflation rate
- Social Security (SS): starting at 67 at $24,000 with a 2.5% COLA
- Pension: starting at 67 at 12,000 2%
- Hobby Income: $6,000 with a 1%
- Yearly Gift: $10,000
To learn about Tax Calculation Options see articles:
- Tax Calculation Options for Accounts
- Tax Calculation Options for Incomes for a W-2 Employee/Traditional Worker
- Tax Calculation Options for Income for a 1099 Worker/Multi-Stream Earner
Step 1: Approx Income Tax: Note the amount and percentage in this column.
Step 2: Edit: Click on the green Edit button under the Structured Income Planning heading.
Step 3: Manage: Click on the green Manage button within the Wages column.
Step 4: Tax Calculation Option Dropdown Arrow: Select the dropdown arrow located in the Tax Calculation textbox, and select Wages.
Step 5: Save: Click on the green Save button under the Manage Income heading.
Step 6: Approx Income Tax: You will automatically be taken back to the Structured Income Planning page. Note the amount and percentage changes (if applicable) in this column.
Step 7: Manage: Click on the green Manage button within the SS column.
Step 8: Tax Calculation Option: Since this is the Social Security Income, by default the setting will already be adjusted to Social Security (line 6a of the tax form).
Step 9: Save: Click on the green Save button under the Manage Income heading.
Step 10: Approx Income Tax: You will automatically be taken back to the Structured Income Planning page. Note the amount and percentage changes (if applicable) in this column.
Step 11: Manage: Click on the green Manage button within the Pension column.
Step 12: Tax Calculation Option Dropdown Arrow: Select the dropdown arrow located in the Tax Calculation textbox, and select Pension (line 4 of the tax form).
Step 13: Save: Click on the green Save button under the Manage Income heading.
Step 14: Approx Income Tax: You will automatically be taken back to the Structured Income Planning page. Note the amount and percentage changes (if applicable) in this column.
Step 15: Manage: Click on the green Manage button within the Hobby Income column.
Step 16: Tax Calculation Option Dropdown Arrow: Select the dropdown arrow located in the Tax Calculation textbox, and select Other Taxable Income (line 4 of the tax form).
Step 17: Save: Click on the green Save button under the Manage Income heading.
Step 18: Approx Income Tax: You will automatically be taken back to the Structured Income Planning page. Note the amount and percentage changes (if applicable) in this column.
Step 19: Manage: Click on the green Manage button within the Yearly Gift column.
Step 20: Tax Calculation Option: Leave the selection at the default setting "Not Taxable."
Step 21: Save: Click on the green Save button under the Manage Income heading.
Step 22: Approx Income Tax: You will automatically be taken back to the Structured Income Planning page. Note the amount and percentage changes (if applicable) in this column.
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