Author Topic: Windfall After Selling My Business (Help!)  (Read 465 times)

LifeGoals

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Windfall After Selling My Business (Help!)
« on: August 05, 2017, 01:43:20 PM »
Hello,

Quick background:
-Married
-Employed and annual income is about $90k
-Spouse income is $40k
-Sold a side business in 2017 for $60k
-Maxing out 401Ks

I was originally planning to contribute $5,500 to each of our IRAs, but found that we may not qualify for standard deductions based on IRS https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work

Next thought I had:
File separately and invest $5,500 into ROTH IRA for me and $5,500 for spouse in traditional IRA as I would not qualify for deduction.

My last idea:
I am still transacting under my LLC until the end of the year. I read that I can have both a standard 401k and a Solo 401k as I am also self-employed. If possible, I'd like to also contribute $10k to the Solo 401k.

My question then is this:
Assuming all of this is possible, would contributing to the Solo 401k reduce my taxable income? What would be the best way for me to reduce my taxable income for 2017?

I have only spent about an hour researching this, so forgive any incorrect assumptions I may have made.

Thanks!!


Heroes821

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Re: Windfall After Selling My Business (Help!)
« Reply #1 on: August 07, 2017, 09:51:16 AM »
Your Magi is what $190k?

Minus 36K for 401ks

So you are at $154k right there before any other deductions, looks like you can fully fund Roth IRAs for both of you.
https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work

If you can get your MAGI down to $119,000 you can get a partial deduction on Traditional IRA contributions.  Do you and your spouse have an HSA?  Jointly that is $6750 you can deduct this year too.