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Old 02-16-2020, 06:35 PM   #21
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Well, I could do that all day long but my goal is to have massive capital gains not sell for zero and spend the money.
I'm happy to do Roth conversions in the "space" I have available for that.

I don't "fret about taxes" either, but don't kid yourself: Wishing for massive capital gains is another form of fretting about taxes, isn't it? And so is starting threads like this one.
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Old 02-16-2020, 06:39 PM   #22
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I'm letting my taxable accounts sit there and grow.... why sell and pay taxes on capital gains when that tax liability goes "poof" to nothing when we die because of stepped up basis?

If I needed to use them for spending then it would be a whole different story.

I plan to do both. Live on some massive capital gains and leave most to the kids. But I also know that sometimes you HAVE to sell if the stock is getting into trouble. I'd rather sell high than let the darn thing fall like a rock.
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Old 02-16-2020, 06:39 PM   #23
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I'm self employed and expect to make $14-15K/yr. I will pay nothing in Federal tax and nearly nothing in State tax. I will have to pay over $2K in self employment tax. That $2K tax is a killer. I hate paying that. If I had $150K in income I would have no problem paying up to $50K in tax. The more you make the less it hurts. If I was FIRED and could safely live on $150K/yr then trying to reduce taxes would not enter my mind.
I hope that you realize that self-employment tax isn't money down the tubes like income taxes are.... you get disability income, survivor and retirement benefits as a result of having paid that tax.... just like W-2 people who pay SS taxes and their employer's pay on their behalf.
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Old 02-16-2020, 06:45 PM   #24
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.... But I also know that sometimes you HAVE to sell if the stock is getting into trouble. I'd rather sell high than let the darn thing fall like a rock.
Agreed... all my taxable equities are broad based funds so I don't have that issue like one would have with individual stocks or sector funds.
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Old 02-16-2020, 06:45 PM   #25
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Currently choosing to maximize ACA subsidies until 65 y.o. to the tune of 23k for DB and I.
Then will most likely play around with when to take SS vs. pay down TIRA until 70.
Tax deferred TIRA at 33% rate many working years, so all in all still was a winning strategy, as retirement taxable income will be at a lower rate.
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Old 02-16-2020, 06:47 PM   #26
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I look at it like a coupon. I won't go out of my way to use a coupon, but if it's in my pocket, I'll save my 50 cents and be happy. Taxes are the same way for me. There's not much I can do to reduce them, but I certainly pay attention. I'm not going to leave easy money on the table. Most important to me is the tax brackets. I wouldn't want to be at the top of the 12% tax bracket and not know it and then draw out $10K for something like a roof if I had other options. Why pay 10% more in taxes if I can avoid it. I'd rather it be in my pocket than not.
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Old 02-16-2020, 07:09 PM   #27
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All of my retirement income is taxable and not a darn thing I can do about it.

c'est la vie.
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Old 02-16-2020, 07:16 PM   #28
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DW and I took advantage of 403b and 401K contributions during our working years, so I am quite stoic about paying taxes on the withdrawals. Currently we are at 0% withdrawal. I'm sort-of looking forward, in 2 1/2 years, when RMD for DW starts. In a sense we'll have to spend even more. Sounds like fun to me!
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Old 02-16-2020, 07:26 PM   #29
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Great thread. I don’t fret in spite of 22% effective rate for state and local, HCOL area, and high property taxes. I’m grateful for what we have leftover. Now I would very much like to keep our tax load from going any higher which is why I started the thread “Help with Property Tax Appeal”.
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Old 02-16-2020, 07:26 PM   #30
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Both qualified dividends and long term cap gains are Federal tax favored income streams and are the source of most of my income. Other than 16 grand a year from SS, my income is all from investments.
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Old 02-16-2020, 07:27 PM   #31
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For most of my w*rking life, I was in the 36% federal and 9.3% state tax brackets and had mainly tax-deferred contributions as my source of deferred tax relief. Once I retired in 2018, I had one glorious year of near zero taxes. But in 2019, I wised up. I ran my financials through i-ORP, and realized that unless I did significant Roth IRA conversions, my tax brackets would be as high or higher than my working years once RMDs started. So thinking about tax implications now and changing course will make a difference in my total lifetime spending.
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Old 02-16-2020, 07:35 PM   #32
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DW, wise lady that she is, said to me ,"Taxes are your rent for living in the US". In a sense she is right.
The thing I pay the most tax on now is my RMD, which pushes the taxable part of our SS up to 85%. It also pushed us into the IRMAA area for the first time.
I retired in 2009, and moved my 401K into a fund that is now worth 6 times what it was in 2009
To lessen the bite a little, I use part of my RMD for QCD's to charities I support. It saves me about 30% on taxes.
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Old 02-16-2020, 07:52 PM   #33
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Great thread. I used to be a worrier and complainer about taxes --not because of optimizing...but because I just didn't like paying so much (like everyone else). I recently made a tax estimator spreadsheet to get a better view of the drivers and help with tax planning and estimates, and realized that other than moving out of CA, about 95% of my taxes are outside of my control. So, worrying led me to investigating, which led me to no longer worrying. Can't promise I won't still complain....but I'm not worrying much.
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Old 02-16-2020, 08:07 PM   #34
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DW, wise lady that she is, said to me ,"Taxes are your rent for living in the US". In a sense she is right.
I understand that taxes are a necessary evil, but I consider minimizing what I pay to be my responsible and patriotic duty. Giving extra money to the gov't is like giving your 6 y.o. unfettered access to their Halloween candy. They have demonstrated time and again their inability to make wise decisions with it. So I dole it out as little at a time as I can, secure in the knowledge that it's the right thing to do.

Plus, it's fun. Some people do Sudoku, I minimize my taxes. I don't fret about taxes, I enjoy figuring out how to pay as little as I legally can. And not just on a year to year basis, but over my lifetime and into my progeny's lifetimes. It's just plain fun.
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Old 02-16-2020, 08:14 PM   #35
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Our AGI is not related to how much we spend, and we don't draw pension or SS or from IRAs at the moment. It's all income from our taxable investments which is way more than we spend. I've just been trying to make our investments more tax efficient. And maybe will do some Roth conversions, but our income is already so high anyway and mostly capital gains/qualified dividends.
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Old 02-16-2020, 08:26 PM   #36
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I have an AGI of approx. $150K. I could work that down to $85K and save a couple of grand in taxes or so but why? I like living on $150K and could probably go to $175K.


I don't let the tax tail wag my income dog.


I know Robbie is probably with me, but who else might be??
Agree. No sense in sacrificing a significant amount of income to save a lesser amount in taxes.
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Old 02-16-2020, 11:53 PM   #37
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OK, I don't like paying taxes anymore than the next guy. But I don't have a lot of leeway about it as most of my income is pension, stock and mutual fund dividends and capital gains and IRA distributions.


I have an AGI of approx. $150K. I could work that down to $85K and save a couple of grand in taxes or so but why? I like living on $150K and could probably go to $175K.


I don't let the tax tail wag my income dog.


I know Robbie is probably with me, but who else might be??
move over, i’m in the same boat. we’re living quite comfortably on pensions and SS. RMDs are about a year away and it’s money we don’t really need...at least not at this point in time. so regardless if we convert the trad IRAs to Roth or simply take the RMD taxes will occur. our net worth is substantial as it us and we have few beneficiaries so i see no point in converting. we have more spendable dollars now that we could ever spend...without getting silly.
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Old 02-17-2020, 05:44 AM   #38
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The majority of our portfolio is in tIRA, 401k, 403b and 457 accounts and will be taxable when withdrawn. I will manage our draws/Roth conversions so that our AGI stays just below the first IRMAA surcharge level (currently $174k AGI)

I don't fret about the taxes. I knew going in that we'd have to pay taxes when we took that money out. And $174k a year is plenty for our needs, even after the taxes. In general, I have always agreed with U.S. Supreme Court Justice Oliver Wendell Holmes, Jr., that taxes make civilization possible, so I don't mind paying them. However, I didn't get to retirement by being inattentive with my money, so I do take some efforts to make sure we don't pay more than we must.
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Old 02-17-2020, 07:08 AM   #39
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Since I'm self employed in Real Estate I have to write those quarterly tax checks. (Yes, I still write checks). I don't fret it because I'm enjoying making the money.
The new 20% tax deduction for SE income helps take the pain away.
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Old 02-17-2020, 07:15 AM   #40
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I'm a bit of a tax geek. I've already run my 2020 and 2021 taxes through TurboTax. Since we have very little taxable money and it's all in MM funds, it's pretty easy for me to estimate taxes for future years and plan my Roth conversions and IRA withdrawals.

I don't try to figure out the tax ramifications of my heirs. I have no idea of what tax bracket my 3 kids will be in 20-30 years down the line when they inherit what's left of our money.
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