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Old 06-23-2010, 09:37 AM   #21
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I am open to advice on how to save on taxes. I deduct business mileage about 24,000 miles at .58 per mile. We deduct some software, subscriptions, charitable giving, and state income and property tax. Along with an occasional business dinner that is about it. Maryland income tax is very high.

Maybe it will be a little lower than I figured. This is the first year with my spouses reduced income. Last year with her severance we were well over 200k, and before that around 130k. I guess we could do a projection for 2010.
Tax knowledge is very general, but tax problems are always very specific. Meaning I see a problem based on some high level numbers, but it might not be a problem, or it might take a professional to truly diagnose what the issue is.

Who does your taxes? It just appears high (to me) to pay 15k of taxes on 85k in income. Ohio is one of 17 states with above average tax burdens, and Maryland might be on that list too, but even I won't pay 15k in taxes and my income is north of 120k. No one single tax in Ohio "gets you", but add them all up and its quite high, especially in suburbs and urban locations. For example I pay a 5.5% state income tax, which is not really high, but high enough when combined with $5500 of property taxes and 7% sales tax... your problems will be similar but different, so feel free to remind us of what issues Maryland presents. I used to live in Potomac, so somewhat familiar with the state, but that was a long time ago.

Look for your tax liability on both state tax forms and fed tax forms.
If you pay your own SS, add that as a separate line item.

I am looking for two issues or problems to appear:

1) is taxes while working- you might find more money to save by not paying as much in taxes
2) is taxes while retired- some taxes (like FICA) go away in retirement, so understanding what taxes you will not pay in retirement is important too.


Lines on tax form to focus on

1) Income
2) Adjusted gross income
3) Tax liability
4) Taxes paid
4a property tax
4b tax withheld from paychecks
4c state income tax

There are probably other more specific issues, but without knowing above, not sure where to spend time to focus on issues specific to you.
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Old 06-23-2010, 09:46 AM   #22
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My job is in printing sales, and I am being constantly micro managed, since the recession took hold in 2009. I have weekly meetings with the sales manager (owners brother in law) and the owner, which I dread. They are always going over everything in my call log asking why I am not getting more sales. Now they want me to do vast cold calling, when I already have a book of sales from over 30 years in the business. When I have an appointment, I always hit the businesses directly next to my appointment. I have not found cold calling to be very effective and I don't have a lot of time to devote to it. I guess we are a loggerheads and I just want out.
A suggestion from a former small business owner. Since you are pretty much FI in my opinion, and since you are burned out and ready to quit anyway, before you quit why not put the screws to the owner/sales manager and tell them what you have to have to stay. They may think they have you over a barrel and you NEED this job really badly, but you actually have the leverage since you are FI, and if you tell them that you are going to retire unless they do X you might be surprised what you get. I think it's worth a shot. They probably have no idea you are FI.


What would make you happy at work? An assistant to handle your crap work so you can make more sales calls? Extra commission per sale? Work from home? I ran a car dealership for many years and when one of my top salespeople was unhappy I almost always worked with them to try to keep them.

Just a thought.........
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Old 06-23-2010, 10:36 AM   #23
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...burned out at work and want to get out asap.
Since I think the pleasures of being retired outweigh the displeasures from minor deprivations, my suggestion would be to retire soon and cut costs.

For example, move to a small house in a small city (save $7,000/year on condo fees, utilities, prop taxes...)

You'll probably pay a lot less in taxes when you retire.

Is your taxable account total $8K?
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Old 06-23-2010, 10:56 AM   #24
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Since I think the pleasures of being retired outweigh the displeasures from minor deprivations, my suggestion would be to retire soon and cut costs.
One class of problem in engineering is "Optimal Control".

Contrary to what a layman would think, there are infinitely many optimal solutions. How so?

One has to first define what optimum is, and to assign relative values to each of the many parameters of the system, and also to the relative costs of the controls at one's disposal. Because of the infinitely many ways one can assign values and costs, there are infinitely many optimal solutions.

What this boils down to in real life, particularly ER, is what we already know. It depends on the individual's circumstances and preferences.
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Old 06-23-2010, 11:10 AM   #25
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Since I think the pleasures of being retired outweigh the displeasures from minor deprivations, my suggestion would be to retire soon and cut costs.
I think there in room in your budget to cut around 3200 month though you have to make some small compromises like $50 cash/week, eating out.

You have to decide what is the price of freedom and you are close to getting free.
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Old 06-23-2010, 08:33 PM   #26
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TromboneAl you are correct in your assumption 8k taxable, but we are adding 1k a month.

jIMOh Maryland income tax including county tax 7.58%.

cardude I like your idea of reversing it on my boss.

I feel better that we are either FI or real close. One question if we do pull the plug in the next year, we will need to withdraw using the rule of 72t. How much can one take out without incurring the 10% penalty?

We really appreciate all the help given on this forum.
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Old 06-24-2010, 10:01 AM   #27
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I feel better that we are either FI or real close.
You are already there if you are prepared to cut spending and live modestly. I.e., you have less than is probably desirable for a comfortable retirement, but more than is strictly necessary to get by on.

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We could sell our home and downsize, but there are 4 homes on my court already for sale. Some have been for sale for over a year. Terrible real estate market.
In the absence of (highly unusual) problems such as toxic waste, crack house next door, etc., virtually any property will sell quickly if reasonably priced. The houses that aren't selling in your court are overpriced: probably because the would-be vendors are determined to get back the amount they paid, or some such consideration that is irrelevant to potential purchasers.

If you are realistic and prepared to accept what Mr. Market is willing to pay, you shouldn't have any difficulty selling, if that's what you want to do.

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My job is in printing sales, and I am being constantly micro managed, since the recession took hold in 2009. I have weekly meetings with the sales manager (owners brother in law) and the owner, which I dread. They are always going over everything in my call log asking why I am not getting more sales. Now they want me to do vast cold calling, when I already have a book of sales from over 30 years in the business. When I have an appointment, I always hit the businesses directly next to my appointment. I have not found cold calling to be very effective and I don't have a lot of time to devote to it. I guess we are a loggerheads and I just want out.
Oh, great. No wonder you are stressed. "These are the new leads. These are the Glengarry leads. And to you they're gold, and you don't get them. Why? Because to give them to you would be throwing them away. They're for closers."
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Old 06-24-2010, 11:08 AM   #28
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Oh, great. No wonder you are stressed. "These are the new leads. These are the Glengarry leads. And to you they're gold, and you don't get them. Why? Because to give them to you would be throwing them away. They're for closers."
"put down that coffee...coffee is for closers!" great movie

I agree with others. The nice thing is that you are not forced to work for these stressed out bro in laws if you don't have to. MD taxes are terrible. Lived in Annapolis for 9 years. There are ways to cut your monthly budget it appears. Best option might be to reverse engineer to the boss, as was suggested, and hang on till 59.5 and then move on.

Good luck
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Old 06-24-2010, 12:00 PM   #29
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Best option might be to reverse engineer to the boss, as was suggested, and hang on till 59.5 and then move on.
I agree. Just be careful in how you go about the proposed discussion.

If they are not entirely happy with your current performance (which appears to be the case, although perhaps I am reading too much into your description of the weekly meetings) and you present what amounts to an ultimatum, they may seize the opportunity to "accept your resignation", and you'll be out of a job before you know what happened.

That's not necessarily a bad outcome; but don't play the FI card unless you really are prepared to walk away.
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Old 06-24-2010, 12:08 PM   #30
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I just watched that clip from Glenngary Glenn Ross with Alec Baldwin's speech. Wow it is classic. I will have to see that video. I think that is what my place would be like if the sales manager (brother-in-law) took over operations.

My wife and I had a long talk last night. With the strict rules under the revised 72t withdraw rate, we are going to try to stick it out to 59.5, but if I get canned before that date, at least I will stick it to the boss with unemployment relief. I will not going to use the ultimatum approach. I think I will not be as upset after the meetings, because whatever they do we should be fine.
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Old 06-24-2010, 03:19 PM   #31
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My wife and I had a long talk last night. With the strict rules under the revised 72t withdraw rate, we are going to try to stick it out to 59.5 ... I will not going to use the ultimatum approach. I think I will not be as upset after the meetings, because whatever they do we should be fine.
Makes sense to me.
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I just watched that clip from Glenngary Glenn Ross with Alec Baldwin's speech. Wow it is classic. I will have to see that video.
For those unfamiliar with the scene, here it is:
While obviously overstated, it is (unfortunately) an otherwise accurate depiction of the pressures many employees are at least implicitly subjected to.
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Old 07-01-2010, 03:16 PM   #32
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I got bad news today. In the weekly sales meeting with the owner, brother in law and I, they in effect let me go. Basically the organization of 37 employees is between 20-40 years of age and they feel that they will get more bang for the buck with a younger more focused person. Now they did not put it into those words, but that was the feeling I got. Best case scenario I might be able to service my accounts as a freelancer. We have another meeting on Tuesday morning. My income in that case would go from 55-60 k down to 25-35 k, and that is best case. I might just be canned. I put a lot of effort into my job (help out with daily operations in my shop, service house accounts, go to various networking events, make cold calls, and log call backs along with servicing my personal accounts from my old family printing company.

Of course it could not be a worse time for this. As the market is tanking, our emergency fund is down due to paying off the house 3 months ago. We have about 10k in the fund along with 70+ in a roth ira. I guess I got what I was asking for, but I wanted it on my terms at least a year from now.

I am in shock today, a little sad and a lot confused about what to do next.
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Of all tyrannies a tyranny sincerely exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies, The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for own good will torment us without end, for they do so with the approval of their own conscience.
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Old 07-01-2010, 03:50 PM   #33
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So sorry to hear of this, Crispus. What a shock.
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Old 07-01-2010, 04:11 PM   #34
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Sorry to hear this. Be sure to apply for unemployment as you've been let go--you can probably do so online. That would defer using the IRA money.

Remember that only a week ago there was agreement that although it might be tight and working a little longer might be better, you could retire now as you have a nice nest egg. Hang in there.
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Old 07-01-2010, 08:20 PM   #35
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Sorry to hear this. Be sure to apply for unemployment as you've been let go--you can probably do so online. That would defer using the IRA money.

Remember that only a week ago there was agreement that although it might be tight and working a little longer might be better, you could retire now as you have a nice nest egg. Hang in there.
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+1 what she said....................

It seems to me like you were close anyway, so I wouldn't sweat it too much.
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Old 07-01-2010, 09:02 PM   #36
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So sorry to hear of this, Crispus. What a shock.
+1 - Hope you get this all sorted out. The recession has been a real strain on everyone, I am sure that contributed to this. Hang in there.
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Old 07-01-2010, 10:08 PM   #37
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I got bad news today. In the weekly sales meeting with the owner, brother in law and I, they in effect let me go. Basically the organization of 37 employees is between 20-40 years of age and they feel that they will get more bang for the buck with a younger more focused person. Now they did not put it into those words, but that was the feeling I got. Best case scenario I might be able to service my accounts as a freelancer. We have another meeting on Tuesday morning. My income in that case would go from 55-60 k down to 25-35 k, and that is best case. I might just be canned. I put a lot of effort into my job (help out with daily operations in my shop, service house accounts, go to various networking events, make cold calls, and log call backs along with servicing my personal accounts from my old family printing company.

Of course it could not be a worse time for this. As the market is tanking, our emergency fund is down due to paying off the house 3 months ago. We have about 10k in the fund along with 70+ in a roth ira. I guess I got what I was asking for, but I wanted it on my terms at least a year from now.

I am in shock today, a little sad and a lot confused about what to do next.
Life works in mysterious ways

go to doctor and get checked up while you still have insurance

analyze spending and only spend what you need or truly want (right now), then focus on a long term retirement budget.

Lots of good people here. You can retire, you just need to make many decisions to make it smooth relative to income, expenses, assets and similar already discussed above.
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Old 07-01-2010, 10:12 PM   #38
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I will hang in... feeling better. We will face Tuesday's meeting and then move forward.

My spouse has mentioned that she is not ready to retire, but may want to find a different job. I am definitely ready to leave the grind. However I am not sure that my spouse will come around to me not working and her working.

I have a lot of odd jobs to do around the house, and I don't mind keeping the house clean. I already cook every meal, and with more time I can find ways to save on groceries. Our car expenses will go way down with me not working. The hardest thing will be living under a strict budget, and being able to do some fun things that do not cost much.

I love the support and advice given on this forum.
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Old 07-01-2010, 10:14 PM   #39
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Many on the forum have stated its better for one spouse to stop before the other- something about adjusting to no job is better than adjusting to no job and being around spouse 24/7 (if both are retired at same time).
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Old 07-01-2010, 10:22 PM   #40
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Many on the forum have stated its better for one spouse to stop before the other- something about adjusting to no job is better than adjusting to no job and being around spouse 24/7 (if both are retired at same time).
Amen....

You'll do just fine crispus.....
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