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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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I am trying to figure out how to minimize my tax burden in

Customer Question

I am trying to figure out how to minimize my tax burden in the coming year.
Current 2 family income: $250,000. taxable last year was $187,000.
This year I will be selling property and will have extra $63,000 - on which I will have to pay capital gains taxes. AND total income will go up.
My possibilities for tax shelters are: 501 college savings account, health savings account, and increasing 401K contributions. I need to do these things before the end of the year, because the sale will happen this year.
I wanted to discuss these options to make sure I am making the right decision.
Submitted: 1 month ago.
Category: Tax
Customer: replied 1 month ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  emc011075 replied 1 month ago.

Hi. My name is ***** ***** I will be happy to help you.

501 college savings contribution is not tax deductible and will not reduce your taxable income. Your total income is too high for IRA contribution so your options are maximizing your 401K (check with your employer - benefit department) or HSA if you qualify ( you have to have high deductible medical insurance plan). In addition if you itemize your deductions you can prepay your January mortgage (pay in December) and prepay your next year property taxes. You can also increase your charitable donations or if you have some under-performing investment, now would be a good time to sell. In you tax bracket there are not many opportunities to reduce your taxable income in the next 3 month.

What are you selling? Would the buyer consider an installment agreement, maybe?

Customer: replied 1 month ago.
I am not currently maximizing my 401 K, so can't I do a one time $50,000 contribution. Also, I do have a high deductible plan, so how much can I contribute pre-tax? My mortgage is $3200, and my property tax is $2000, so that would help. Why would it be good to sell an investment, wouldn't that just increase my taxable income?I wonder how much $$ I would need to move into a pre-tax area in order to save significantly on taxes.Can't do an installment agreement.
Expert:  emc011075 replied 1 month ago.

Maximum contribution to 401K is 18K, 24K if you are 50+. Maximum contribution to HSA is $6750 for a family plan. $5200 (mortgage interest and property taxes) is not enough to itemize your deduction but if you include your state taxes, you may have enough to itemize. If you sell an underperforming investment with a loss, the loss (up to 3K) will reduce, not increase you income.

In 28% tax bracket, every $1000 deduction will reduce your tax liability by $280.

Customer: replied 1 month ago.
I already itemize - because I have 2 children. I just turned 50, so can I contribute 24K? Also my husband is 50, so should be able to do that for him too correct?I want to be able to figure out just how much to contribute, to a relatively exact number. I don't want to over contribute because my son will be going to college next year, and I will need money for that.I think I am already near the max contribution for the HSA.My concern is that this extra money will put me into a higher tax bracket..Thanks!
Customer: replied 1 month ago.
Is there some on-line calculator that I can use to figure out just how much to contribute to the 401K to prevent from getting into a higher tax bracket? Or do you know if an online calculator that I could use to figure out how to have enough money to pay for my daily expenses between the time I contribute to the 401 K and the time I get the money from the sale?
Expert:  emc011075 replied 1 month ago.

Yes, but you will need to check with the plan administrators if your plan allows lump sump contributions.

There are several online calculators but none of them is perfect and none of them will account for 401K or HSA contribution. You will have to improvise and reduce your salary by the contributions instead.

If you want a relatively accurate result you will need an access to a professional tax preparation software used by CPAs or other tax professionals. The retail versions like turbo tax will not be released until late December.

Customer: replied 1 month ago.
I should find a CPA or tax professional. Is this the type of service that you provide on this platform? That's kind of what I was looking for..
Expert:  emc011075 replied 1 month ago.

Yes, there are some CPAs here who has access to current professional software but I do not know what would be their fees. Let me opt out and allow another expert send you an proposal.

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