The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: jcrites2 on February 28, 2016, 12:19:23 AM
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Guten Abend,
I am married but will be filing my taxes as married but separate this year because I am on a income based student loan repayment program. On top of that I am a government employee and in five years the rest of my loans will be forgiven. I have already paid for 5 years so I am getting close. My big problem is this:
I want to get my taxable income as low as legally possible this year so what I do pay on my student loans is the least amount possible. I am already maxing out my 457b government retirement account at $18,000 a year. I don't think I am allowed to do a traditional IRA but I could be wrong. We don't have a HSA at my employer and my insurance is really good. Is there any other way I could invest money that would bring down my taxable income? Are municipal bonds an option? I am willing to take a lower return rate depending on the situation. For example, if I could invest another$10,000 pre tax that could lower my monthly payment by $250-$350 a month which I could then just simply invest. Any ideas or should I just take my lumps for the next five years? I have zero debt outside of loans.
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You can do both a 457b and a 401k or 403b, so check to see if you have either of those available. If so, that's another 18k.
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In addition to investments, have you looked at tax credits at all? My state gives a dollar-for-dollar credit when you donate to schools and certain charities. It ends up being a wash on the state, but we lowered our federal taxable income by about $2k by doing this.
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Why do you think you can't contribute to a tIRA? Research that seriously before dismissing it.
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Government worker here with loans as well. I also work very hard to lower my AGI as much as I can each year. I have the government retirement, deferred comp, HSA, and traditional IRA contributions. Student loan interest is deducted to also lower AGI. At work, I take advantage of whatever I can that is deducted from my paycheck pre-tax and makes sense for me financially.
Good luck!
NDQ