Range Calc

Jump To:

   - 18.5% - Purple (Social Security)
   - 22.2% - Purple (Social Security) 
   - 27.0% - Red (0% to 15% Long-Term Capital Gains Rate)
   - 23.3% - Teal (Phaseout of Enhanced Senior Deduction)
   - 27.8% - Brown (Net Investment Income Tax - NIIT)
   - BONUS: Why adding more income may lower the effective rate on the next $1,000
   - BONUS: Roth Conversion Effective Rate Explained

   Capital Gains Graph:
   - 8.5% - Purple (Social Security)
   - 12.0% - Light Blue (Using up Allowable $3,000 Capital Loss)
   - 15.0% - Red (Long-Term Capital Gains - LTCG)
   - 16.6% - Teal (Phaseout of Enhanced Senior Deduction)
   - 18.8% - Brown (Net Investment Income Tax - NIIT)


Advanced Settings

Accessing Range Calc:

To access Range Calc, click on the ellipsis (three dots) to the right of any editable scenario title, and you will be taken to a new screen that illustrates the tax impact of the next $1,000, both for Ordinary Income and, separately, for Long-Term Capital Gains.



 

Range Calc Layout

The $0 value on the horizontal axis represents not $0 of taxable income, but the taxable income of the given scenario being analyzed. Moving to the right of the $0 point is the equivalent of adding ordinary income or qualified income (depending on which graph within Range Calc you are looking at) to the baseline. Below is an outline of some of the key controls within Range Calc and what each of them does.

• Range Low End - Outlined in blue, this point serves as the origin of the x-axis on your graph. Reset this number by clicking on the "Rewind" button circled in blue. This will return the figure for the low end range of the graph to be equal to negative taxable income minus $10,000. This ability to enter a negative value is highlighted as well in the note outlined in orange beneath the graph.
• Range High End - Outlined in red, this sets the far range of the x-axis on the graph.
• Step Width - outlined in green, this is the step interval of additional income (set to $1,000 by default) along the x-axis.
• Update Chart/Summary Chart - Select Update Chart to reflect changes to the range bounds and step width. Click on the Summary Chart button to access a chart of the effective rates for various amounts of income.
• Medicare IRMAA (Income Related Monthly Adjustment Amount) Thresholds - The vertical dotted lines outlined in pink above represent the MAGI (Modified Adjusted Gross Income) thresholds at which a client will cross into the next IRMAA threshold. The value indicated as a label on these dotted lines represents the annual increase per person for Medicare Part B/D Premiums beyond the base Medicare Part B/D premiums.
  
  Firm Admins can customize the default behavior for those IRMAA lines to show up for all clients, no clients, or only for clients age 63 or older, when income first impacts those potential IRMAA surcharges, by navigating to Settings > Features & Tools, and then to the Tax sub-menu on the left navigation menu options. Scroll down to the Medicare Parts B and D Behavior section seen below, and make the adjustments as desired to that default behavior.
  
  

Colors! What Do They Mean?

The key to understanding Range Calc is that you’re looking at the effective marginal rate of adding $1,000. If there is no change in the effective rate, you’ll see a flat line.

Range Calc will also illustrate the attribution of the total tax rate using a color coding system. Depending on the scenario in question, the Range Calc chart may include some combination of the following:

• Black Line - Total Federal tax impact
• Light blue - Taxes on ordinary income (i.e., marginal brackets)
• Red - Taxes on long-term capital gains and qualified dividends
• Brown - Net Investment Income Tax (NIIT)
• Purple - Social Security becoming taxable
• Teal - Phaseout of enhanced senior deduction
• Gray/black - Refundable child tax credit phase-out
• Green - Credit phase-ins
• Light purple - Qualified Business Income Deduction (QBID) phaseout
• Violet - Non-refundable child tax credit phase-out

Common Range Calc Spikes

Here are some quick 3-5 minute videos where we cover some of the more commonly seen spikes within Range Calc, both in the Ordinary Income graph and Capital Gains graph.

Ordinary Income Graph:

• 18.5% - Purple (Social Security) - 10% (Ordinary Income) + 8.5% (Social Security)
  
  

   

• 22.2% - Purple (Social Security) - 12% (Ordinary Income) + 10.2% (Social Security)
  
  

   

• 27.0%- Red (0% to 15% LTCG Rate) - 12% (Ordinary Income) + 15% (LTCG)
  
  
  
  
  
• 23.3% - Teal (Phaseout of Enhanced Sr. Ded.) - 22% (Ordinary Income) + 1.3% Enhanced Senior Deduction phaseout
  
  
  
  
  
• 27.8% - Brown (Net Investment Income Tax - NIIT) - 24% (Ordinary Income) + 3.8% (NIIT)
  
  
  
  
  
• BONUS - Why adding more income may lower the effective rate on the next $1,000 
  
  
  
  
  
• BONUS - Roth Conversion Effective Rate Explained
  
  

Capital Gains Graph:

• 8.5% - Purple (Social Security)
  
  

   

• 12.0% - Light Blue (Using up Allowable $3,000 Capital Loss)
  
  

   

• 15.0% - Red (Long-Term Capital Gains - LTCG)
  
  
  
  
  
• 16.6% - Teal (Phaseout of Enhanced Senior Deduction)
  
  
• 18.8% - Brown (Net Investment Income Tax - NIIT)
  
  
  
   

Advanced Settings:

Click on the Advanced Settings link, located at the top-right of the Range Calc screen.


Here, users can select the type of income - Ordinary Income & Capital gains, Incentive Stock Options, or the Marginal/Total Tax Rate. Check/uncheck the box to make the Medicare IRMAA Part B/D Annual Increase lines visible or not, and check the box to add the state tax impact on top of the federal impact as income is added.