Overview

When setting up your Settings & Assumptions in MaxiFi, you’ll see a section called “Assumptions About Income from Regular Assets (Apart from munis).” This article explains what MaxiFi is asking, what these percentages mean, and how to think about them when deciding your inputs.

QUICK USE GUIDE

Why does MaxiFi ask for this information?

MaxiFi models your financial life over decades, not just the next year or two.

To do that accurately, the software needs a long-run assumption about how your investments typically generate returns, because different types of income are treated differently for tax purposes.

Importantly, this section is NOT asking:

  • What happened last year

  • What your 1099 shows line by line

  • What your current portfolio mix looks like today

Instead, it’s asking:

Over the long run, how do you expect your annual investment returns to typically break down across the three categories below?

What is Total Return?

Everything on this screen is about how to account for each year's Total Return. Total Return is simply all the ways your investments grow each year. It includes money you receive and growth you don’t immediately see on a tax form.

Your taxable annual total return is always attributable to one or more of these three sources: 

  1. Capital Gains & Qualified Dividends

  2. Unrealized Capital Gains (Market Appreciation)

  3. Interest and Other Ordinary Asset Income

Together, these three sources account for your entire Total Return (100%).

The Three Categories

1. Capital Gains & Qualified Dividends

This represents the portion of your returns that come from:

  • Qualified dividends;

  • Realized (distributed) capital gains

How it shows up in real life:

These amounts typically appear on a 1099 and are taxed for the year when received.

How MaxiFi uses it:

MaxiFi treats this as taxable investment income that can affect:

  • Your tax bracket

  • Medicare surcharges (IRMAA)

  • Roth conversion outcomes

2. Unrealized Capital Gains 

This represents market growth – the part of your return that shows up as a higher account balance, not as taxable income for the year you receive it. Unrealized gains are simply account growth that hasn’t yet been realized. It could be thought of as a "paper profit", meaning your investment is worth more on paper than what you paid for it, but you haven’t actually turned that gain into cash yet.

How it shows up in real life:

  • You don’t see it on a 1099

  • It’s not taxed until assets are sold and thus "realized." 

How MaxiFi uses it:

MaxiFi still counts this as part of your total return, because it:

  • Increases your wealth and future spending capacity

  • Affects future taxes when assets are sold

  • Creates long-term tax gains that you carry forward into future years

  • Influences estate and legacy outcomes

3. Interest and Other Ordinary Asset Income

This includes returns like:

  • Interest;

  • Non-qualified dividends;

  • Other ordinary investment income

How it shows up in real life:

These amounts are usually taxable as ordinary income reported to you on a 1099 form for the year received.

How MaxiFi uses it:

This income is treated similarly to wages or other taxable income when modeling taxes and spending.

An Example

Let’s walk through a concrete example.

Imagine you have $100,000 invested and earn $5,000 in total return this year, a 5% total return:

  • $500 came from distributed capital gains

  • $3,000 came from market growth

  • $1,500 came from interest or non-qualified dividends


That breaks down for tax purposes as:

  • 10% capital gains & qualified dividends

  • 60% unrealized gains

  • 30% interest & other ordinary asset income


Please note that those percentages describe how the $5,000 was generated, not how your portfolio is allocated. In other words, $1,500 is 30% of 5,000; $500 is 10% of 5,000, and $3,000 is 60% of 5,000. 

How Do I Choose the Allocation? 

These inputs do not need to be precise or necessarily match last year’s tax return. They simply give MaxiFi a reasonable long-term framework for modeling taxes and spending in your plan. Overall, we recommend using educated estimates here based on your portfolio’s Total Return. 

In fact, in practice, most users find that:

  • Small changes here don’t materially alter results

  • The model is resilient to imperfect assumptions

  • Directionally reasonable inputs based on your Total Return are sufficient

Need More Support?

Need help while using MaxiFi? Click the green Help button in the bottom-right corner of any screen to open our support popup. From there, you can:

  • Search our full Knowledge Base for step-by-step guides and FAQs
  • See suggested articles based on where you are in the software
  • Contact our Support Team by filling out a quick form—most responses come well within 24 hours

We’re here to help you feel confident as you build and explore your plan!