Author Topic: Taxes in Early Retirement (GoCurryCracker Links)  (Read 84505 times)


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Re: Taxes in Early Retirement (GoCurryCracker Links)
« Reply #50 on: July 05, 2019, 12:20:34 AM »
Does anyone have any tax-wise ideas for me?  Here is what I have come up with so far:
1. Get a 2% cashback card to put all insurance premiums and medical expenses on (the cash rebate is tax-free, and I don't charge anything else on the card, so getting my total medical expenses for the year is very easy for taxes.) The card is in the mail.

Sounds like a fine plan. Cash back cards can really pay off.

2.  If I am figuring this correctly, I should be able to deduct my health insurance premiums from my self employment.  My hours are flexible. I am thinking I should increase my hours and then take as much of a self-employment health insurance deduction so I have zero earnings for my self-employment. (ie, earn $5000 and deduct most of that for self-employment health insurance) So, does that mean I can work more but not actually increase my taxable income at all this year by doing that "above the line" deduction?

Basically, yes. The half of your self-employment tax that you can deduct above the line can't be deducted again for health insurance premiums, but between those two deductions you should be able to earn up to the amount of your health insurance premiums without increasing your AGI. You'll still owe self-employment tax on this income though.

Also consider making traditional IRA contributions if that means lowering your AGI enough to get an ACA subsidy. If you sign up for an HSA-eligible plan and make HSA contributions this is another way to further reduce your AGI.

3.  I am considering moving more of the money in my brokerage account to a Schwab Total U.S. Market ETF. I already did this with a small portion of the brokerage account, to SCHB. I am still unclear as to when the dividends become qualified dividends (if it takes a year), and what percentage of the dividends are qualified. But I still need some emergency cash, so I cannot put all of it into the ETFs.

Are you selling appreciated assets to buy these ETFs? If so, the capital gains will count toward your AGI. If you're buying the ETFs with cash that was sitting uninvested this isn't an issue.

I sold some of my moneymarket shares at Schwab, and then used that cash to buy the SCHB. Dividends had been re-invested into the moneymarket. Is the moneymarket an appreciated asset?

Good thoughts on the IRA and the HSA. Unfortunately, my health plan is not going to qualify me for an HSA, and the IRA contributions would not get me down to ACA subsidies.
« Last Edit: July 05, 2019, 12:28:20 AM by LilyFleur »