Stuck between ACA, AGI, and capital gains tax

[TeeNixx]

Hi gang,

I'm stuck in the crosshair between ACA, AGI, and capital gains tax. Didn't expect the house prices to be that crazy!

The scenario;
- Just sold our house and after-sales expenses, basis, adjusted basis, and $500k capital gains deduction I will have a gain of $72k.
- Will get a W-2 for $27k for this year.
- Likely some profit from a side business of ~$18k.

I can;
- Contribute another $3.1k to HSA before it's maxed out.
- Contribute $14k to IRA (for me and DW).

I'm trying to avoid the ACA cliff and would like to keep the AGI to $64k or less.

Any suggestions?
One idea was to offer the home buyer a delayed down, $36k, to be paid in January next year.
Did anyone try something like that?

Edit: corrected $64k from $34k

[terran]

Do you have a workplace retirement plan available? If you don't have any employees you could open a solo 401(k) for the side business. Neither of those is getting you down to $34k AGI though.

[TeeNixx]

My wrong. The AGI I'm trying to stay at or below is $64k.

[nalor511]

There is no cliff in 2021?

[Omy]

No cliff in 2021 or 2022. I will be contributing to a solo 401k which will shield almost all of my 1099 income.

[MDM]

If you haven't used it (or something similar) already, the case study spreadsheet could show you how various options would play out tax-wise.

[TeeNixx]

I'm checking it out. Thanks for the tip @MDM

[MDM]

I'm checking it out. Thanks for the tip @MDM

Might seem daunting at first glance, but reading lines 1-70 of the Instructions tab (particularly 53-57 for your interest) may help. :)  Questions welcome.

[nalor511]

Easier to just use real tax software download versions from last year, and mock in this year's tax changes

[secondcor521]

Easier to just use real tax software download versions from last year, and mock in this year's tax changes

You have a point for the general case.  For the specific case of this year and ACA-related questions, MDM's spreadsheet may very well be the better choice given the number and magnitude of ACA-related changes in the American Rescue Plan Act.

[jpdx]

You actually timed this perfectly. There is no ACA cliff this year, and Congress is right now considering making this change permanent going forward. Also, if you have any unemployment income during the year, you will receive the maximum premium tax credit no matter your AGI.

[nalor511]

Easier to just use real tax software download versions from last year, and mock in this year's tax changes

You have a point for the general case.  For the specific case of this year and ACA-related questions, MDM's spreadsheet may very well be the better choice given the number and magnitude of ACA-related changes in the American Rescue Plan Act.

You can easily mock the ACA premium etc changes into tax software using field overrides, at least in HRB. I did it.

[MDM]

People can and should use what is easiest and best for them.  If everyone were the same, Basking-Robbins wouldn't have bothered with 31 Flavors. :)

Can't get inside others' heads to tell what is best for them, but exposing folks to options of which they weren't aware seems a reasonably good thing.