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Old 04-16-2016, 04:11 PM   #61
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Originally Posted by N02L84ER View Post
So, after retiring and before SS (and RMD age), convert tax deferred monies to Roth IRAs. Fund HSAs when possible before Medicare age.
I did significant Roth converting although I did miss two years of opportunity before I woke up and got started. Never qualified for an HSA.
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These are the strategies I started using at age 53 and expect them to work well enough that I will not need to use LI or a reverse mortgage.
I won't need a reverse mortgage either, or at least it's highly unlikely. Don't have much cash value in LI. A couple of old whole life policies (where the divs more than pay for the premium) and will just leave those sit for DW to use to get me planted, etc.
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I believe at RMD age, using some or all of the RMD for direct to charity contributions will reduce taxes more than using schedule A.
Thanks for that reminder. When we start RMD's in 2017 I need to remember to restructure all charitable contributions so that they come directly from the RMD.

Thanks for your inputs!
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RMD to charity
Old 04-16-2016, 04:25 PM   #62
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RMD to charity

Just a reminder that the distribution from the IRA must go directly to the charity. What I ran into with Invesco was i needed a medallion guarantee on the withdrawal because the check was going to a third party as payee.
The QCD makes a tremendous amount of sense when over 65 and MFJ, standard deduction is $15.000
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Old 04-17-2016, 07:33 AM   #63
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Throw out a few of your best ideas for minimizing taxes in retirement........

In fact, anyone and everyone throw out their best ideas.

At 68 yo and with pensions, SS and investment income plus RMD's on the horizon, I just can't find anything (that isn't really complicated or that doesn't require active involvement like starting a sham business) to help. I did Roth conversions when it was appropriate, keep my investments in the right taxable or tax-deferred buckets and work hard to max my misc deductions by keeping good records, etc. Yet, no surprises about how low retirement income taxes are at our house.

I gotta be missing something!
If you still pay real estate taxes, consider paying ahead. It could push you out of standard deduction territory.

I did pay ahead one quarter, in the past. It was something, but of course less RE taxes paid the next year, so a kind of wash on the two years Fed 1040's.

However, if retiring this year, and taxable income drops substantially in the next year, I believe it would work to a greater degree.

Of course, it would hurt on state taxes to some degree, as I would have less to deduct for state return.
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Old 04-17-2016, 07:57 AM   #64
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If you still pay real estate taxes, consider paying ahead. It could push you out of standard deduction territory.

I did pay ahead one quarter, in the past. It was something, but of course less RE taxes paid the next year, so a kind of wash on the two years Fed 1040's.

However, if retiring this year, and taxable income drops substantially in the next year, I believe it would work to a greater degree.

Of course, it would hurt on state taxes to some degree, as I would have less to deduct for state return.
When I had both a mortgage and property taxes, this is what I did. One year I would have 11 mortgage payments and no property tax payments, and took the standard deduction. The other year I would make 13 mortgage payments, two property tax payments, and itemize.
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Old 04-17-2016, 11:16 AM   #65
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I volunteer for the VITA program too. It's really fun, if you enjoy talking to people and entering data in computers. It requires a little more brain power than most volunteer activities which is nice. You can volunteer through AARP, if you're interested. Training is in January.
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Old 04-17-2016, 11:47 AM   #66
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I volunteer for the VITA program too. It's really fun, if you enjoy talking to people and entering data in computers. It requires a little more brain power than most volunteer activities which is nice. You can volunteer through AARP, if you're interested. Training is in January.
I also do the same. The people are so grateful for the help.
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Old 04-18-2016, 08:06 AM   #67
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Yes, IIRMA is a pita and we're into it too. The fact that they do not / will not adjust the IIRMA income limits with inflation will just make it worse as we go along and more and more folks will find themselves paying this penalty.

SS uses the latest tax year they have at the time they calculate your IIRMA penalty. IRS apparently doesn't make the info available to them immediately. So, for example, when my letter came late in 2015 telling me my IIRMA penalty for 2016, it was based on my 2014 filing.

We're having the same experience you are. Our costs for med insur at 65 and older are actually higher than they were at 64 and younger. We hadn't planned for that and had to make a budget adjustment.

It's still good to be retired!

Yes it's still good (actually great) to be retired however, after being in the top tax bracket for so many years while I was working and of course paying the max into social security and the seemingly "never ending" medicare tax, I was looking forward to enjoying some of the benefits that I was forced to pay into all those years. Now that I'm retired, 85% of my social security payments are being taxed and I'm paying triple the base monthly premium cost for medicare.

I should be allowed to deduct these "added" cost as charitable contributions.
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Very good thread...
Old 04-18-2016, 10:12 AM   #68
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Very good thread...

So two stories, My wife's parents live with us and I do their taxes every year and they pay no taxes, so every year everything that has been withheld from them comes back to them in a nice check. The reason this occurs is because they have very, very little income, a trade off I do not want. No planning, little income.

My DW and I are both retiring soon, me in 2017, her in 2020, with virtually no debt and a retirement spent in the 25% tax bracket. I can complain about the taxes but I most certainly do not want the trade off. One of our greatest motivator's was seeing how tough life has been on my DW parents with very low income and we made sure we planned the SH*T out of our finances for the last 15 years so we can write a different ending to our story. So in essence, bring on the taxes, it means we did something right!
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Old 04-18-2016, 01:29 PM   #69
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Although I understand the principle, I've never looked at actual numbers.

It turns out that a married couple, with $36,000 of Social Security income plus $20,100 of ordinary income (pension, IRA withdrawals, taxable interest) for $56,100 of total income would pay only $5 of FIT.

Contrast that to a working couple with $56,100 of earned income. They would pay $4,393 of FIT. In addition, the "employee share" of FICA would be $4,292.

Putting it another way, the working couple would need $67,300 of earnings to generate $56,100 of after tax income.


Since most of the tax advantage comes from the SS treatment, this is very sensitive to the SS benefit. Here are some more examples.

...SS.......Reg......Total....Over65...Workers..FICA..
36,000 20,100 56,100 5 4,393 4,292
32,000 20,700 52,700 0 3,883 4,032
28,000 21,400 49,400 0 3,388 3,779
24,000 22,100 46,100 5 2,893 3,527
20,000 22,700 42,700 0 2,383 3,267
16,000 23,100 39,100 0 1,847 2,991
12,000 23,100 35,100 0 1,447 2,685
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Old 04-19-2016, 07:10 AM   #70
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I have been looking at the idea of "bunching" my itemized deductions so I could take the standard deduction in the years I was able to move some flexible deductions out of the SD years. The main deduction I was able to move from one calendar year into another was the large 4th quarter state estimated tax payment. I could pay it in late December or early January, so in some years I would make two payments while in other years I would pay zero.


I probably won't be able to do this going forward, though, because my OOP medical expenses will rise enough to enable me to itemize every year. [I had some medical issues in 2015 which require some extra doctor visits and drugs (copays).] These expenses aren't huge but are just enough to keep me itemizing my deductions even if I to bunch them using the state estimated tax payments.]
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