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Old 01-24-2023, 06:59 AM   #21
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Originally Posted by retire48in2018 View Post
How much scenario planning do you do?

There are different actions that I would take depending on what (if any) of the 2017 tax changes remain after 2026.

For example - the difference in standard deduction and rules on deductions - from 2017 to 2026 shifts strategy away from a high mortgage and property tax. How much of a new home (and/or mortgage) is a consideration when we move to our retirement location - especially from a budget planning perspective.

Another example - the 0% capital gains tax rate strongly pushes towards resetting cost basis each year in brokerage account vs post 2026 a push towards Roth conversions.

There are other strategies as well.

Many are typical tax minimization strategies.

However - some are larger decisions that go beyond a 1-year tax minimization horizon (like $ amount of new home to pursue and/or mortgage with tax implications). This might be a $400k home vs $800k home, for example.

Generally, we have tried to take the most conservative path - not depending on certain tax changes. But, then you might miss on real long term opportunities (like a home, brokerage capital gains vs Roth conversion, etc)

So, how do you scenario plan and make these type of decisions?
Preparing for 2026 Tax Law Changes?
1. Roth Conversions? Minimal since we're into the 22% bracket now. For those staying in the 12 (15 later) it makes sense. But the 22-25 difference doesn't scream out for me.
2. No mortgage now and no desire to go there.
3. Muni fund, etc. makes sense. Get back in gradually.
4. Equity cap gains yeah. Value stocks maybe.

Tax prep this year will tell us more.

I'll have to bounce the question off my tax cpa S-I-L.
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Old 01-24-2023, 09:17 AM   #22
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Originally Posted by Texas Proud View Post

Now, I did do deduction stacking... where I would pay property taxes in Jan of year one and Dec of year one to double my tax deduction, but nothing in year two so standard deduction... stacked again in year 3...
Before the 2017 change, I engaged in deduction bunching, such as making three real property tax payments in one year and one in the next (we have two payments due each year, one in January and one in July, but the bill comes in June) or making two yearly church pledges in one year, alternating with a year of no payment. I have been preparing for the change back ever since - right now all my charitable deductions are paid in January, so that I can resume stacking in year one of the restored tax regime.
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