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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 577
Experience:  10 years experience
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I am 64 years old. My husband is 66, collecting SS and

Customer Question

I am 64 years old. My husband is 66, collecting SS and working a bit. I have an annuity worth 180K that is untouchable for 6 more years. I have my own IRA currently worth 100K. I have an inherited IRA worth 80K. I have about 70K in cash, invested.
I just received cash inheritance of 270K. I owe 46K on a mortgage with 4.25% interest rate and I owe 40K on student loan at 3.6% interest. No consumer debt balance carried month to month. No other monthly debt payments.
My husband and I have a taxable income of about 70K. Is it better to keep our mortgage and loan payments so we can deduct the interest? Or is it better to pay them off and be debt free? Our investments don't seem to be paying higher interest than we pay on the loans, so that isn't the question. They are all fairly low risk. My current plan is to work until age 70 when the annuity begins to pay and the house is paid off, but who knows?
We live in Washington state, so there is no state income tax.
Submitted: 4 months ago.
Category: Tax
Expert:  Mark Taylor replied 4 months ago.

Hi, my name is Mark. I would be happy to help you with your questions.

Expert:  Mark Taylor replied 4 months ago.

Are you able to itemize?

Expert:  Mark Taylor replied 4 months ago.

Both interest rates are fairly low. Based on your income taxable income you are right on the edge of the 15% tax bracket. If you adjust the student loan by the 15% tax bracket you are actually paying a rate of 3.06. The mortgage rate drops to 3.61% when you considered the tax impact. If you are not receiving a tax benefit for the mortgage interest it may be a good idea to pay this amount off. For the student loan, my guess is you are able to make a return that would exceed the 3.06%.