I added another calculator to the Taxes spreadsheet. The sheet is call “Withdrawals”. It is a simple calculator, but someone might find it helpful. I was asked by a friend (over 59 years old) how much he would need to withdraw from his IRA to pay for his monthly rent, net of taxes. So I decided to make a calculator.
The formula is simple,
Withdrawal = Amount Required/(1-Effective Marginal Rate)
but you do need to have your marginal tax brackets. This is usually a guess for the current year compared to last year, because there may be changes in your income and deductions or changes in the tax code. You need to know if nondeductible contributions were made to the account, and how much. Also, if there were nondeductible contributions, you need to know the market value of the account at the end of the previous year.
It is also important to know that if you don’t itemize on your tax return, you won’t get the benefit of deducting state and local taxes from federal taxes, which could increase the amount of taxes you will pay.
As usual in my spreadsheets, the light yellow cells are the only input cells. The rest should be self-explanatory: