Tax deductions in retirement

[audreyh1]

Quote:

Originally Posted by Midpack I'm retired and DWs employer plan is not eligible, so we'd have to find another angle to restart HSA contributions. Thanks...

You have to get eligible health insurance first. As long as you both are on a plan that is not eligible, you can't fund an HSA.

[daylatedollarshort]

We have some of the same deductions as this article from the WSJ on how not to pay any federal income taxes -

ROI: How to Avoid Paying Income Taxes - WSJ.com

[jebmke]

Most of this is not applicable to the truly retired.

[Katsmeow]

Up until now our deductions were much higher while both of us were working full-time. That is because we had a very large house with an expensive mortgage and it had high property taxes.

Since then we've move to a smaller house with a tiny mortgage and much lower property taxes so the last couple of years we couldn't even itemize.

We do get an education credit that we couldn't get in the past due to income too high.

However, 2014 is looking to be interesting. We are paying our property tax twice in 2014 and should get to itemize. The big wild car is medical expenses. Our insurance premiums are very high this year (about $16000). Adding in any medical expenses and we have a nice deduction. In the past getting over the 7.5% was challenging (DH is over 65).

However, for 2014 we plan to mostly live off some taxable money and DH's SS income and what I make from very part-time work. Basically we won't have to withdraw from the IRA at all. If we left it there all those deductions wouldn't help us since we wouldn't have any taxable income.

However, we anticipate high expenses in 2015 (kids in college) and we can avoid being in the 25% bracket in 2015 if we could withdraw some money from the IRA in 2014 (or Roth convert it). Basically with the deductions we will have we could withdraw a significant amount and pay no taxes or pay some up to some point in the 25% tax bracket. What I will have to figure out later in the year is whether we are better off doing that to minimize 2015 taxes or whether we are better off keeping our AGI very low so DS could get more financial aid. Right now it seems a bit of a toss up so we'll see how it looks middle of 2014.

[lemming]

My income went down so it was easier to meet medical floor -plus the 5k of health insurance that was once employer paid. Mortgage is almost low enough to be no help-about even with standard deduction. Must be time to pay it off-or not.

[daylatedollarshort]

Quote:

Originally Posted by jebmke Most of this is not applicable to the truly retired.

Maybe just not for you.

Hobby job income, deductions + expenses, hobby job retirement savings, HSA, college expenses, SS taxes on hobby income, property taxes, state and local income taxes, health insurance, capital loss deductions, mortgage interest, personal exemptions, Lifetime Learning Credits, business travel, home office, HELOC interest to pay for home improvements, green energy credits - I am not sure what is mutually exclusive to being retired from full time work.

The hobby business could be photography or a travel blog.

[Sirka]

Quote:

Originally Posted by REWahoo None of the poll options are applicable to our situation. Our deductions went up initially after retiring primarily due to significantly higher HI premiums. That changed once we both reached Medicare age - we no longer have enough deductions to itemize.

+1
We had no mortgage deductions before retirement, so there wasn't enough to deduct. Very high HI premiums after retirement made us to itemize again. I hope that Medicare in 2 years will help me with HI premiums cost.

[whitestick]

Deductions are higher for a couple of reasons. When working, employer paid for health insurance, when retired, although I get it at the same rate, I have to pay for it now. Also medical costs significantly higher due to health problems for DW when living, and myself now. Charitable deductions higher to consolidate and reduce clutter (long line of packrats). Different income sources change deductions now allowable, which when drawing paycheck are not available. Also kinds of deductions have changed, when working it was mostly mortgage interest costs that were deductible, now with house paid off, it's other type of opportunities. According to my tracking program, largest category of expenses now are medical costs and taxes. If you don't count "entertainment" for "vacations" and travel.
Have to maintain some balance.

[jIMOh]

Quote:

Originally Posted by Independent When I followed the link, I got the home page at "Retirement Cafe". I couldn't find the word "deductions" anywhere on that page. Maybe you could link to the specific article.

The blog which is emailed links to that site, yet I found no mention of the blog on the site.

The Retirement Cafe: Saving Excess Tax Deductions at the Last Minute