Share Your Tax Minimization Results!

[AnotherEngineer]

I'm still blown away that at a solid six figures I get almost $2000 from the government each year. I'm not talking a overpayment refund, but a -2% tax rate. I'm MFJ with three kids, standard deduction. I didn't buy an EV or the like, but did tax loss harvest.

In 2022, I was ~$115k in gross income.
Maxing out 401k and HSA go be down to $82k for W2 income plus some dividends. Throw in $3k in tax loss harvesting and two Trad IRAs and AGI is down to just under $68k. After standard deduction, I'm at $42k taxable and $4500 in tax. But there is more: with three kids, I get $6k in credit and by being under $68k AGI, I get $400 in the Saver's Credit. So my total owed tax is -$1800.

I realize I could have gone with Roth IRAs with a low (12%) tax bracket. However, I got an instant 15.3% return on my $12k (12% plus getting below $68k AGI for a $400 Saver's credit).

Share your story!

[Zamboni]

^Well done!

I have no such miraculous story. However, I am thinking of switching all of my 403b contributions so that they are Roth 403b. At this point I feel like I have enough that will be taxed when I old . . . I'd love to have a bigger pot taxed now and growing tax free after that!

With my employer contribution it would be over $40K a year going into a Roth after it is taxed . . . seems almost too good to be true.

Has anyone done this? Thoughts?

[Finances_With_Purpose]

Nice @Zamboni  and @AnotherEngineer !

You're making me wax nostalgic here. 

@Zamboni - I haven't tried that, though we thought about it, but it didn't make sense for us at the time.  You probably did this, though I would check that you're within the limits with the employer contribution (which may count towards whichever cap you're aiming for). 

You all are reminding me of that brief season of life where DW and I had access to 4x tax-deferred accounts to max plus Roths, which gave us over $100k of tax-deferred space per year if/when we used it all.  Glorious times.  It made taxes more fun when you could move things around to lower your tax rate.

Now, taxes are just annoying.  The best I can do is find an extra expense to deduct or knock a few bucks out of our top marginal rate.  Not nearly as fun as what you guys are doing. 

[Archipelago]

^Well done!

I have no such miraculous story. However, I am thinking of switching all of my 403b contributions so that they are Roth 403b. At this point I feel like I have enough that will be taxed when I old . . . I'd love to have a bigger pot taxed now and growing tax free after that!

With my employer contribution it would be over $40K a year going into a Roth after it is taxed . . . seems almost too good to be true.

Has anyone done this? Thoughts?

I'm doing something somewhat similar but more of a mixed tax-advantaged profile to try get the 'best of both worlds'. Maxing traditional 401(k) + company match, plus maxing Roth. This way we get some tax deductions now, but also another bucket with Roth money. This way we can always have Roth available but also dial in a Roth conversion ladder using traditional 401(k) funds. I couldn't decide between just Roth vs. Traditional because I was worried about constantly overthinking like I'm missing out on one or the other. Decided to go safe with both.

[MaybeBabyMustache]

We have a bit of niche tax filing situation, but we filed separately vs jointly this year, to save about $3k. We're in California, and they have additional taxes at the highest bracket, but are avoided by filing separately. I did have to pay TurboTax for another filing, so I've factored that in to the savings. Should have bought the software directly, and skipped that cost, but was too far along by the time I realized it was an option.

[EchoStache]

Wife and I had total gross earnings of around $260k last year.

Filing taxes now.  Maxed 401k's and IRA's.  About $1200 in traditional and the rest in Roth.  Our youngest is 18 so we only got $500 child tax credit.  MFJ, standard deduction.  My estimation was a bit off and actually recharacterized $3700 from tIRA to Roth IRA to raise our income a bit so that we wouldn't lose any of the non-refundable tax credits.

$0 paid in federal taxes.  :)

One time, unusual tax credits included an EV for $7500, heat pump water heater for $300, and EV charger for a $220 credit.

Otherwise I would have done all tIRA and still had some tax liability.

We are planning a solar install this year, which will give us another year of 0 federal tax.

[AnotherEngineer]

$0 paid in federal taxes.  :)

Nicely done!

[cool7hand]

Wow. Thanks for sharing!

[RetireOrDieTrying]

I'm single and make ~$220k/yr. I have no children, no home mortgage interest, no EV, no nuttin'.

I do max out my HSA and 401k (including catch-up as I'm over 50), but other than that I'm being taxed to ever-livin' death.

One saving grace is that my domicile address is Texas, which has no state income tax nor personal property tax. I try to hold off on anything I need until I'm visiting family in e.g. Montana or Delaware, neither of which have sales tax. I also stop paying Social Security when I bang my head into the ceiling each year, usually around September.

[secondcor521]

I'm still blown away that at a solid six figures I get almost $2000 from the government each year. I'm not talking a overpayment refund, but a -2% tax rate. I'm MFJ with three kids, standard deduction. I didn't buy an EV or the like, but did tax loss harvest.

In 2022, I was ~$115k in gross income.
Maxing out 401k and HSA go be down to $82k for W2 income plus some dividends. Throw in $3k in tax loss harvesting and two Trad IRAs and AGI is down to just under $68k. After standard deduction, I'm at $42k taxable and $4500 in tax. But there is more: with three kids, I get $6k in credit and by being under $68k AGI, I get $400 in the Saver's Credit. So my total owed tax is -$1800.

I realize I could have gone with Roth IRAs with a low (12%) tax bracket. However, I got an instant 15.3% return on my $12k (12% plus getting below $68k AGI for a $400 Saver's credit).

Share your story!

You perhaps could have optimized a bit more by recharacterizing part of your and your spouse's traditional IRA contributions to Roth up to the point at which your AGI rose to $67,999.  You still would have received the full $400 in the Saver's credit.  Yes, you would have owed income taxes at 12% on the recharacterized amount, but most people would say that would be a very smart thing to do, because your tax rate when withdrawing those funds from the traditional IRA will very likely be higher than 12%.

As a broad generalization, it's pretty easy in FIRE to not pay any taxes in any given year.  But this is often suboptimal because deferring taxes for long enough eventually results in very high taxation once RMDs and SS start, resulting in lower lifetime after-tax funds.  I could pay zero taxes in any given year and probably get to a negative effective tax rate if I wanted to.  Instead I voluntarily pay some taxes now at lower rates to reduce the number of dollars that get taxed at a higher rate later.  The effectiveness of this strategy depends on one's overall tax situation throughout FIRE.  What is a "lower" rate and a "higher" rate varies based on overall wealth, but the principal will probably apply to most MMMers.

[Sanitary Stache]

MFJ with 3 kids.
We earned $55,000. After pension contributions, health insurance premium, FICA and partial 457b and tIRA contributions our AGI was $36,000. Standard deduction and taxable income of about $10,000.
Total federal tax of about $200. 
$9,000+ in credits with three kids, savers credit and EITC. 
Effective federal tax rate of -25.9%

Similar state tax situation. 
Total cash subsidy of about $12,000.  (We received other subsidies for the year as well.  Approximately $5,000 in SNAP and WIC. Approximately $6,000 in insulation weatherization. Some amount near $700 in property tax subsidy. $600 rebate for ebike. $360 in internet subsidy.)

[Dicey]

Go Curry Cracker has covered this topic extensively. Probably plenty of good tax tips to harvest there.

[EliteZags]

single no kids in CA, IRS is buying a new Tesla each year with my taxes

what I need is tips for tax evasion not minimization

[cannotWAIT]

I'm getting almost $3000 back this year and next year it will be even more. I should have been using this strategy all along but was too oblivious. I know we are down on financial planners around here but it was money well spent for me.

401(a): This is a  mandatory fixed percentage of my salary, comes to $12,000
457(b): $10,000 (I can actually make this closer to $19,000, I'm about to fix it with HR)
403(b) Roth: $30,000
HSA: $4,650
Roth IRA: $7,500
Tax loss harvesting: $3,000

I only make $75K a year so I feel like this is not too shabby.

[secondcor521]

I'm getting almost $3000 back this year and next year it will be even more. I should have been using this strategy all along but was too oblivious. I know we are down on financial planners around here but it was money well spent for me.

401(a): This is a  mandatory fixed percentage of my salary, comes to $12,000
457(b): $10,000 (I can actually make this closer to $19,000, I'm about to fix it with HR)
403(b) Roth: $30,000
HSA: $4,650
Roth IRA: $7,500
Tax loss harvesting: $3,000

I only make $75K a year so I feel like this is not too shabby.

I'm not sure what a financial planner did for you that was worth the money.  All of the things you listed are things you could learn about here or on other FIRE forums for free.

As an aside, $12K + $10K + $30K + $4.65K + $7.5K = $64.15K.  If you're making $75K a year, then you're living on less than $11K.  You should be retired very soon since you're saving about 5 1/2 years of spending every year.  Congrats!

[JLee]

I'm single and make ~$220k/yr. I have no children, no home mortgage interest, no EV, no nuttin'.

I do max out my HSA and 401k (including catch-up as I'm over 50), but other than that I'm being taxed to ever-livin' death.

One saving grace is that my domicile address is Texas, which has no state income tax nor personal property tax. I try to hold off on anything I need until I'm visiting family in e.g. Montana or Delaware, neither of which have sales tax. I also stop paying Social Security when I bang my head into the ceiling each year, usually around September.

Same here, except I'm in NJ so I have income tax and insane property tax (and a 2.5% mortgage that's a tiny bit of deduction).  A bit envious of all the 6-figure people here who aren't paying anything in taxes, but I guess someone's gotta fund the government :P   I did scoop a couple EV credits though, which helps.

[EliteZags]

I'm getting almost $3000 back this year and next year it will be even more. I should have been using this strategy all along but was too oblivious. I know we are down on financial planners around here but it was money well spent for me.

401(a): This is a  mandatory fixed percentage of my salary, comes to $12,000
457(b): $10,000 (I can actually make this closer to $19,000, I'm about to fix it with HR)
403(b) Roth: $30,000
HSA: $4,650
Roth IRA: $7,500
Tax loss harvesting: $3,000

I only make $75K a year so I feel like this is not too shabby.

I'm not sure what a financial planner did for you that was worth the money.  All of the things you listed are things you could learn about here or on other FIRE forums for free.

As an aside, $12K + $10K + $30K + $4.65K + $7.5K = $64.15K.  If you're making $75K a year, then you're living on less than $11K.  You should be retired very soon since you're saving about 5 1/2 years of spending every year.  Congrats!

kinda along what I was gonna say but thought I was missing something with those numbers, if the planner is helping him somehow invest almost 90% of earnings then proceed

[ATtiny85]

Some serious badassity going on here. We are in the fortunate position of making pretty high wages, and the tax authority gets theirs. Between fed and state it's..., well it's a lot. We max all the normal things out and have TLH carry-forward for a couple more years. So I guess within our sphere we are minimizing what we can. I'll take what we got over a whole lot of other situations.

[cannotWAIT]

I'm getting almost $3000 back this year and next year it will be even more. I should have been using this strategy all along but was too oblivious. I know we are down on financial planners around here but it was money well spent for me.

401(a): This is a  mandatory fixed percentage of my salary, comes to $12,000
457(b): $10,000 (I can actually make this closer to $19,000, I'm about to fix it with HR)
403(b) Roth: $30,000
HSA: $4,650
Roth IRA: $7,500
Tax loss harvesting: $3,000

I only make $75K a year so I feel like this is not too shabby.

I'm not sure what a financial planner did for you that was worth the money.  All of the things you listed are things you could learn about here or on other FIRE forums for free.

As an aside, $12K + $10K + $30K + $4.65K + $7.5K = $64.15K.  If you're making $75K a year, then you're living on less than $11K.  You should be retired very soon since you're saving about 5 1/2 years of spending every year.  Congrats!

kinda along what I was gonna say but thought I was missing something with those numbers, if the planner is helping him somehow invest almost 90% of earnings then proceed

The only thing you're missing is that I also have a pile of cash (from the tax loss harvesting) that I'm using to supplement what doesn't get saved. I did actually live on $12K in 2020, but my budget is for $18K. My actual fixed living expenses are $10,100 (which is possible due to WFH, paid-off house, paid-off car that I never drive, etc.). But then on top of that I have variable or semi-optional things like pet insurance, Spotify, Peloton, painting & music lessons, etc., plus I budget my OOP max of $5K into that $18K.

Also yes I *could* have learned it for free, but I didn't, because I have paralyzing financial anxiety. So the planner was more along the lines of a therapist for me, someone I can pay to alleviate anxiety. I could work out without the Peloton app too, but it gets me to actually do it. Same thing. I'm pretty sure I still qualify as a reasonably frugal person . . .

[secondcor521]

I did actually live on $12K in 2020

actual fixed living expenses are $10,100

I'm pretty sure I still qualify as a reasonably frugal person . . .

Uh, yeah, I'd say so!

[EchoStache]

I'm getting almost $3000 back this year and next year it will be even more. I should have been using this strategy all along but was too oblivious. I know we are down on financial planners around here but it was money well spent for me.

401(a): This is a  mandatory fixed percentage of my salary, comes to $12,000
457(b): $10,000 (I can actually make this closer to $19,000, I'm about to fix it with HR)
403(b) Roth: $30,000
HSA: $4,650
Roth IRA: $7,500
Tax loss harvesting: $3,000

I only make $75K a year so I feel like this is not too shabby.

Wow.  Very impressive.  I think it's safe to say, with certainty, you win!  I *spend* what you make.  :(

[Shuchong]

I'm single and make ~$220k/yr. I have no children, no home mortgage interest, no EV, no nuttin'.

I do max out my HSA and 401k (including catch-up as I'm over 50), but other than that I'm being taxed to ever-livin' death.

One saving grace is that my domicile address is Texas, which has no state income tax nor personal property tax. I try to hold off on anything I need until I'm visiting family in e.g. Montana or Delaware, neither of which have sales tax. I also stop paying Social Security when I bang my head into the ceiling each year, usually around September.

Yup, having kids seems to be the key tax hack here.  I don't have them, and I paid over $100k in taxes this year despite maxing my 401k, tax loss harvesting, using an FSA, itemizing, deducting mortgage interest, and getting a state tax deduction for 529 contributions.  I did move out of NYC a few years ago, so at least I'm no longer paying local income tax on top of everything else.  Does that count as tax minimization?

[Sanitary Stache]

Kids make the negative tax rate more likely, but the real tax minimization is less income and less property ownership.

[Car Jack]

I have no kids under 20, so none of that, DW quit working so no 401k on her side, we do a full boat insurance plan as we do spend a lot on chronic conditions.  I do tax loss harvesting with a twist.  That twist is that in taxable, my goal is to get rid of all of my dividend spilling funds which at this point are VTI and SCHB.  So when the market drops, I'll sell off any losers of those and buy BRK/b (Berkshire b shares).  The goal is to get closer to zero dividends by retirement which is at the end of June, so likely not going to happen.  But going forward, I'm looking forward to big market drops (bet you don't hear that often).

I'm not good at figuring out other tax avoiding techniques as taxes are totally illogical to me.  They make no sense and are vague.  People in the know often talk about their interpretation of opinion.  I'm an engineer.  There's none of that BS in my field.  I put the numbers into equations and come out with a single answer.  Not true with taxes.  Anyways, end of rant.  I'll continue to be happy paying my tax calculator person.

[Psychstache]

I'm single and make ~$220k/yr. I have no children, no home mortgage interest, no EV, no nuttin'.

I do max out my HSA and 401k (including catch-up as I'm over 50), but other than that I'm being taxed to ever-livin' death.

One saving grace is that my domicile address is Texas, which has no state income tax nor personal property tax. I try to hold off on anything I need until I'm visiting family in e.g. Montana or Delaware, neither of which have sales tax. I also stop paying Social Security when I bang my head into the ceiling each year, usually around September.

Yup, having kids seems to be the key tax hack here.  I don't have them, and I paid over $100k in taxes this year despite maxing my 401k, tax loss harvesting, using an FSA, itemizing, deducting mortgage interest, and getting a state tax deduction for 529 contributions.  I did move out of NYC a few years ago, so at least I'm no longer paying local income tax on top of everything else.  Does that count as tax minimization?

Really just cutting off your nose to spite your face. Any tax savings would be wiped out and then some by the expenses of....you know....having a small child.

[EliteZags]

  That twist is that in taxable, my goal is to get rid of all of my dividend spilling funds which at this point are VTI and SCHB.  So when the market drops, I'll sell off any losers of those and buy BRK/b (Berkshire b shares).  The goal is to get closer to zero dividends by retirement which is at the end of June, so likely not going to happen. 

if there was a preferred time get dividends wouldn't it be.. after retirement?

[Shuchong]

Kids make the negative tax rate more likely, but the real tax minimization is less income and less property ownership.

Ha!  Excellent point.  And chalk another benefit up for LCOL areas, I guess.  Make less, spend less, be taxed less. 

[Shuchong]

Yup, having kids seems to be the key tax hack here.  I don't have them, and I paid over $100k in taxes this year despite maxing my 401k, tax loss harvesting, using an FSA, itemizing, deducting mortgage interest, and getting a state tax deduction for 529 contributions.  I did move out of NYC a few years ago, so at least I'm no longer paying local income tax on top of everything else.  Does that count as tax minimization?

Really just cutting off your nose to spite your face. Any tax savings would be wiped out and then some by the expenses of....you know....having a small child.

There are many reasons I don't have kids at this point, but I'll bear in mind that tax savings is not a great reason to have them:)

[Arbitrage]

Really just cutting off your nose to spite your face. Any tax savings would be wiped out and then some by the expenses of....you know....having a small child.

Right.  My best 'tax move' was when we recently voluntarily dropped our household income by 50%.  Taxes, and our tax rate, went down a ton!  Those who think they pay too much in taxes, feel free to try my tax hack.

Or, since the real goal is to maximize your post-tax income/assets, not just to minimize taxes, I suspect none of the rich people who are complaining about their taxes will do so. 

[Sanitary Stache]

Really just cutting off your nose to spite your face. Any tax savings would be wiped out and then some by the expenses of....you know....having a small child.

Right.  My best 'tax move' was when we recently voluntarily dropped our household income by 50%.  Taxes, and our tax rate, went down a ton!  Those who think they pay too much in taxes, feel free to try my tax hack.

Or, since the real goal is to maximize your post-tax income/assets, not just to minimize taxes, I suspect none of the rich people who are complaining about their taxes will do so.

Nicely put!

[AnotherEngineer]

I'm still blown away that at a solid six figures I get almost $2000 from the government each year. I'm not talking a overpayment refund, but a -2% tax rate. I'm MFJ with three kids, standard deduction. I didn't buy an EV or the like, but did tax loss harvest.

In 2022, I was ~$115k in gross income.
Maxing out 401k and HSA go be down to $82k for W2 income plus some dividends. Throw in $3k in tax loss harvesting and two Trad IRAs and AGI is down to just under $68k. After standard deduction, I'm at $42k taxable and $4500 in tax. But there is more: with three kids, I get $6k in credit and by being under $68k AGI, I get $400 in the Saver's Credit. So my total owed tax is -$1800.

I realize I could have gone with Roth IRAs with a low (12%) tax bracket. However, I got an instant 15.3% return on my $12k (12% plus getting below $68k AGI for a $400 Saver's credit).

Share your story!

You perhaps could have optimized a bit more by recharacterizing part of your and your spouse's traditional IRA contributions to Roth up to the point at which your AGI rose to $67,999.  You still would have received the full $400 in the Saver's credit.  Yes, you would have owed income taxes at 12% on the recharacterized amount, but most people would say that would be a very smart thing to do, because your tax rate when withdrawing those funds from the traditional IRA will very likely be higher than 12%.

As a broad generalization, it's pretty easy in FIRE to not pay any taxes in any given year.  But this is often suboptimal because deferring taxes for long enough eventually results in very high taxation once RMDs and SS start, resulting in lower lifetime after-tax funds.  I could pay zero taxes in any given year and probably get to a negative effective tax rate if I wanted to.  Instead I voluntarily pay some taxes now at lower rates to reduce the number of dollars that get taxed at a higher rate later.  The effectiveness of this strategy depends on one's overall tax situation throughout FIRE.  What is a "lower" rate and a "higher" rate varies based on overall wealth, but the principal will probably apply to most MMMers.

In specific, my AGI was right at the Saver's cutoff, so no room for optimization there.

Bigger picture, your Roth vs. pre-tax points are valid and compelling for many. Personally, I'm happy to pay no taxes now and risk higher taxes later, if, say, my 401k has grown so much that RMDs are very high. There are many unknowns, chief of which is future tax policy and the associated retirement age, etc. At relatively low incomes, my average tax rate is likely to be lower than the last dollar 12% rate. Also, the 12% tax savings can be invested and make up a potentially higher tax rate in the future. I find Go Curry Cracker's approach of zero taxes post-FIRE compelling on this one (https://www.gocurrycracker.com/roth-sucks/), but can't argue with folk's investing in a ROTH at low tax rates for diversification and other reasons. We all need to understand the tradeoffs and make our own decisions.

[billygoatjohnson]

Two trad IRAS? I'm confused, please explain.

I haven't had any epic tax min recently. But a few years ago I did over 80k in tax advantage accounts. I can't remember the exact figure but I maxed out i401k, 457b, HSA.

[ditheca]

DW and I donate low 5-figures to charity and church each year. From a tax perspective, that is wildly inefficient! Since the standard deduction is so high, 87% of households can only write off the first $600 in donations each year.

If you make significant donations, consider combining them into a single year by creating your own charitable foundation. This isn't just a tool for the fabulously wealthy. A donor-advised fund with fidelitycharitable took about 20 minutes to set up.

In 2021, we postponed our usual donations until Jan 1 2022. In Dec 2022, we pre-donated for 2023. We moved a large chunk of money from our taxable brokerage into our charitable fund. As a result, our itemized deduction for 2022 was almost equal to our total income for the year! Over the next few years, we'll claim the standard deduction while our fund makes our usual donations for us.

In the meantime, all the money in our fund is invested in the stock market and growing tax free.

[secondcor521]

DW and I donate low 5-figures to charity and church each year. From a tax perspective, that is wildly inefficient! Since the standard deduction is so high, 87% of households can only write off the first $600 in donations each year.

The $600 separate donation thing has gone away.  It was in place (and slightly different in implementation) only on 2020 and 2021 tax returns.

Agree with your larger point about DAFs.  For those over 70.5, QCDs offer even better tax minimization.

[EliteZags]

DW and I donate low 5-figures to charity and church each year.

I save 5-figures each year by not donating

[billygoatjohnson]

DW and I donate low 5-figures to charity and church each year.

I save 5-figures each year by not donating

Wow... what was the point of this?

[Arbitrage]

DAFs are an excellent tip for those who have plans of donating at any point, especially bunching the contributions as noted (or even less frequently than just every other year) with itemized deductions now being unattractive for 90+% of people. 

Prior to the SALT limit, bunching property taxes was another useful strategy at times if your state allowed it.  You could pay 3 half-year payments in one calendar year, then just a single one in the next, and alternate which years to itemize.  That strategy was largely killed off by the Trump tax changes, but could still be applicable in some fringe cases. 

[Finances_With_Purpose]

DAFs are an excellent tip for those who have plans of donating at any point, especially bunching the contributions as noted (or even less frequently than just every other year) with itemized deductions now being unattractive for 90+% of people. 

Prior to the SALT limit, bunching property taxes was another useful strategy at times if your state allowed it.  You could pay 3 half-year payments in one calendar year, then just a single one in the next, and alternate which years to itemize.  That strategy was largely killed off by the Trump tax changes, but could still be applicable in some fringe cases.

Yeah, I did that with charitable donations for the same reason: it let you itemize every other year.  I'm continuing that strategy now. 

[TomTX]

Well, like the OP, I have a nominal 6 figure salary and had $2100 in 1099 interest for 2022. However, after pension deduction, health insurance, maxing 401k, maxing 457, maxing 2x IRA, EITC, child tax credit, saver's credit, etc..... let's see.

Looks like I netted $1,613 in negative taxes. Total refund was about $4k.

[AnotherEngineer]

Well, like the OP, I have a nominal 6 figure salary and had $2100 in 1099 interest for 2022. However, after pension deduction, health insurance, maxing 401k, maxing 457, maxing 2x IRA, EITC, child tax credit, saver's credit, etc..... let's see.

Looks like I netted $1,613 in negative taxes. Total refund was about $4k.

Nice work! I think I'd need access to to 457 to qualify for the EITC again...

[Car Jack]

  That twist is that in taxable, my goal is to get rid of all of my dividend spilling funds which at this point are VTI and SCHB.  So when the market drops, I'll sell off any losers of those and buy BRK/b (Berkshire b shares).  The goal is to get closer to zero dividends by retirement which is at the end of June, so likely not going to happen. 

if there was a preferred time get dividends wouldn't it be.. after retirement?

Some people believe this because dividends come magically every quarter.  But if I want cash every quarter, I can sell off one of my holdings in the amount I need and generate a taxable event when I want it.  With dividends, they get paid out and you get the tax liability whether you need the dividend money or not.  What about clicking the re-investment box for dividends?  Well, what's going on then is the same as selling off some shares, generating tax liability and re-buying with a new buy date, so you have to now wait a year with these shares to have long term gains. 

I'll be retiring now in 4 weeks.  For this year, my 1/2 year income is high enough that I won't be doing any Roth conversions.  For next year, I will.  Dividends from taxable still exist as I still have "too much" in VTI and SCHB.  So I have to estimate a couple grand in dividends to push me up into the tax bracket with respect to what I'll pay for LTCG.  But in addition, I'm going to be on medicare and too high of an income means higher premiums.  But wait....DW will be on ACA which has subsidies to a pretty high income.  But of course, those subsidies are lower with higher income.  So added dividends, if I'm not carefull can push me over a cliff for Medicare and ACA costs and literally eat entirely those dividends and then some.  My plan at the moment is to convert $80k to Roth.  That gives me a good margin for the Medicare and ACA front and quite a bit for LTCG, still in the 0%.  I've been hoarding cash for a while and can easily use the cash for our normal spending and for paying taxes for a few years.

Over the past few years, I've grown more and more against dividends from an "unwanted tax" perspective.  In tax advantaged, it doesn't matter.  But in taxable, I really want nothing to do with dividends at all.