403(b) and other possible tax shelters

#4 01-17-2006, 01:07 AM

Thanks to all that replied! Have a great 2006!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

#3 01-02-2006, 04:38 AM

Patrick wrote:

- quote -

> Fortunately or unfortunately, we are going to have about
> $20,000 in the 25% tax braket. We are (in 2005) both
> employees, retired from other jobs, no business, no
> expenses, house paid in full, property taxes well below the
> standard deductions, no kids, no state taxes, etc. I was
> planning in putting the max in IRAs but we are in 2005 both
> working for companies that have a "pension" system, and thus
> we cannot put any pretax money in an IRA since our income is
> too high.
> In December, we put the max in my 403(b). As best as I can
> understand it, one can only put payroll deduction in the
> 403(b).
> Is there any other way to shelter some income?

Not in the way you want. However, you may want to consider
a Roth-IRA. It won't lower your taxes now, but when
properly used, its earnings will not be income taxable. So,
if you're going to get taxed now, may as well make it so any
earning you have won't also be taxable.

- quote -

> In the past it used to be that one could average out one's
> income over 3 years, is that still possible?

Income averaging: No. Repealed 2 decades ago.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#2 01-02-2006, 04:19 AM

Thanks Phil, for the prompt and detailed reply. We are
indeed fortunate.

May 2006 be a peaceful and meaningful year for you, your
family and all that read this reply.

Have a GREAT YEAR!

Pat

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#1 12-29-2005, 01:20 AM

"Patrick" <patrizio[at]canada.com> wrote:

- quote -

> Fortunately or unfortunately, we are going to have about
> $20,000 in the 25% tax braket.

I'll vote "fortunate" since I'd gladly trade financial
places with you.

- quote -

> We are (in 2005) both
> employees, retired from other jobs, no business, no
> expenses, house paid in full, property taxes well below the
> standard deductions, no kids, no state taxes, etc. I was
> planning in putting the max in IRAs but we are in 2005 both
> working for companies that have a "pension" system, and thus
> we cannot put any pretax money in an IRA since our income is
> too high.
> In December, we put the max in my 403(b). As best as I can
> understand it, one can only put payroll deduction in the
> 403(b).

Correct

- quote -

> Is there any other way to shelter some income?

None that I can think of.

- quote -

> In the past it used to be that one could average out one's
> income over 3 years, is that still possible?

No. That wen't away in the 1980's, except for farmers.

It wouldn't affect your 2005 taxes, but if your joint AGI
is under $160,000 you could contribute to Roth IRAs.
Although there's no deduction, there's no tax on the
earnings if you wait and take "qualified" distributions.
Details are in IRS Publication 590.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

12-28-2005, 11:40 PM

Patrick wrote:

- quote -

> Fortunately or unfortunately, we are going to have about
> $20,000 in the 25% tax braket. We are (in 2005) both
> employees, retired from other jobs, no business, no
> expenses, house paid in full, property taxes well below the
> standard deductions, no kids, no state taxes, etc. I was
> planning in putting the max in IRAs but we are in 2005 both
> working for companies that have a "pension" system, and thus
> we cannot put any pretax money in an IRA since our income is
> too high.
> In December, we put the max in my 403(b). As best as I can
> understand it, one can only put payroll deduction in the
> 403(b).
> Is there any other way to shelter some income?
> In the past it used to be that one could average out one's
> income over 3 years, is that still possible?

That "income averaging" has not been available since 1986.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#-1 12-28-2005, 07:40 PM

Greetings,

Fortunately or unfortunately, we are going to have about
$20,000 in the 25% tax braket. We are (in 2005) both
employees, retired from other jobs, no business, no
expenses, house paid in full, property taxes well below the
standard deductions, no kids, no state taxes, etc. I was
planning in putting the max in IRAs but we are in 2005 both
working for companies that have a "pension" system, and thus
we cannot put any pretax money in an IRA since our income is
too high.

In December, we put the max in my 403(b). As best as I can
understand it, one can only put payroll deduction in the
403(b).

Is there any other way to shelter some income?

In the past it used to be that one could average out one's
income over 3 years, is that still possible?

Thanks!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

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