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year end tax advice for newly retired
Old 12-18-2020, 02:26 PM   #1
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year end tax advice for newly retired

Okay I'm embarrassed to be asking this now but...I will anyway.
DH retired last day of Sept and has received a couple of lump sum extras that will significantly increase our income for the year.

Is there any obvious thing we should be considering to reduce tax burden before year end? Yes I am cringing that I'm throwing this out so late.

First tax accountant fell through and have a call in to another one referred to us.

I know you can't give specifics but I'm walking in unfamiliar territory.

Thanks for any thoughts you might have...
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Old 12-18-2020, 03:32 PM   #2
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Don't be embarrassed. I had the same thing happen when I retired because I decided 3 months of my sanity was worth more to me than the tax liability.

If you are feeling charitable, you could make 2 or even more years worth of donations to charities to reduce your taxable income this year. You also may still have time to set up a donor advised fund (there are several threads on this topic here). That would let you sock away a lot of money, take the charitable deduction on it all this year, and give it away as you see fit.
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Old 12-18-2020, 04:00 PM   #3
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Thanks MBAustin. It's actually been a crazy, irregular past 3 months and this just snuck up on us. I'm about ready to throw in the towel and say "whatever" and set my sights on 2021.

I had looked at the Charitable Giving account through Fidelity a couple of days ago (good idea) but my eyes glazed over with administration fees and investment fees...
We've made other inefficient mistakes and we still retired so maybe it just "is what it is."

I was just not wanting to kick myself over this one.

Thanks for your suggestion, I appreciate it.
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Old 12-18-2020, 04:18 PM   #4
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Are you eligible to make deductible contributions to an IRA? Are you still working and able to put more money in a 401k/403b/457? Do you have any stocks in a taxable account that are losers and that you could sell?
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Old 12-18-2020, 06:30 PM   #5
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No, not eligible and not still working.

I did sell a substantial amount of company stock (at a loss) but aren't the deductions on those losses capped at $3,000 a year?

Thanks, Gumby.
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Old 12-18-2020, 07:14 PM   #6
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Yes, you can only set off capital losses of $3000 against ordinary income and then must carry the balance of the capital loss forward. However, if some of your income this year is from mutual fund capital gains distributions, you can offset all the way up to the full amount of the CG distribution or the amount of the loss on the sale of your company stock, whichever is less.
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Old 12-18-2020, 08:02 PM   #7
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We don't have any mutual funds anymore, but that is good to know.
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