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Under the wire

December 12th, 2019 at 09:44 pm

Just a note here: Its a shame about the lost blog entries from this summer. Oh well, life goes on...

As a reminder to myself they included "99 bottles of Beer on the wall", "My extra Max savings plan - 457 Catchup" and "Financial Oracle" . Sigh (UPDATE: I found saved texts to myself with each of these - I may be reposting them soon - yay).

And now on to the wire (No, not that "The Wire").

In my never ending efforts to keep my lifetime taxes to a minimum given my current profession and maximize spending potential (or at least see how high I can make my pile 'o cash stack when I am really old), I am trying to keep my earnings subject to taxes below certain thresholds. For now that is to keep my marginal taxes on the federal taxes no higher than 22%. In the past that was never a problem, but now, its becoming an issue.

I've estimated my future tax hit given SSI, pension, & RMDs (i.e. when I am 70+ y.o.) that will require taxes and they are already going into the 24% range. Yes, only a small slice will hit 24%, and yes, for me RMDs won't start until 2032 at the earliest (could be 2033 if the new bill affecting retirement accounts is signed into law), but the earlier you start on adjusting your finances to handle situations like this the easier it will be. Also there is the issue of IRMAA surcharges may be in my future if I don't work on my future taxes (The IRMAA is effectively an excess tax, so lets treat it as it really is).

Anyway, this past month I estimated the upcoming federal tax hit for 2019 and I estimated I am going to be right up against the top of the 22% tax band this year. I guess this is good, it shows I am taking advantage of all the room I have for this tax rate.

Nice to be under the wire this year. Next year I may sell a loser or two out of my brokerage account to try and get me back under the wire - we'll see how it all plays out next year.

Posted in Finance | 4 Comments »

4 Responses to “Under the wire”

  1. creditcardfree Says:
    December 12th, 2019 at 11:36 pm 1576193800
    1576193800

    Good to be proactive! I know my husband is likely to get a raise in 2020, so I will have to see if that moves us into a new tax bracket.

  2. Lucky Robin Says:
    December 13th, 2019 at 04:55 am 1576212952
    1576212952

    Interesting. This is not something I've really thought about, though I know my husband has mentioned it a couple of times.

  3. LivingAlmostLarge Says:
    December 13th, 2019 at 07:41 pm 1576266107
    1576266107

    Good to be making more to pay more I always say. I am curious what our new salary is too. Yes I know we should know but my DH got promoted mid year and so he didn't get the stock comp bump he should have from being promoted. we know he go 10% base plus bigger cash bonus of 10% and I'm sure the stock is the same. But it depends.

  4. rob62521 Says:
    December 14th, 2019 at 10:20 pm 1576362045
    1576362045

    It's good you are on the ball and proactive!

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