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Such luck

December 4th, 2018 at 12:51 pm

So, with the year's end approaching, I've been carefully tracking my gross income YTD, for a couple of reasons.

My income has tracked a bit lower than anticipated, and so my gross income from the job as of Dec 1 is only $32,000 with 1 more month to go. My gross would have been $,6500 higher, but I already made a traditional (tax-deductible) IRA contribution.

This is significant, since if I kept my total income (which also includes dividends, capital gains and interest) below $38,600, I will pay 0% on long-term capital gains tax and fall into the 12% federal tax bracket!

My hope was that by mid-December, with just 1 or 2 more weekly paychecks to go, I could have a pretty certain feel for whether I'd be far enough below that $38,600 figure, so that I could also do a small Roth IRA conversion which would not exceed the $38,000.

But alas, to muddy the waters, my boss today approached me and asked if I'd be willing to consider working close to full time starting probably next week through early January as we have a lot of work coming down the pike and he wants me to do quality control.

I'd really rather not, for the reasons just stated above and becus I value my free time, but it's kind of hard to say no when you just got a raise, so I tentatively agreed, provided I could carve out some blackout dates for things I've already planned.

Hopefully it will all work out. It's only a few weeks. If I have to, the first thing I'd forfeit is the Roth IRA conversion, but I'm still hoping I can remain in the 12% tax bracket and pay $0 capital gains. What a nice Christmas present to myself.

My cousin from Pennsylvania is coming out for a visit next week for a few days, weather contingent.(His trip was one of my blackout dates.) It's been about 6 or 7 months since we saw him and hopefully we can squeeze in this visit before the snow really starts to fly.

11 Responses to “Such luck”

  1. livingalmostlarge Says:

    Good work. How much longer at the job? Till you fully retire?

  2. lurker Says:

    You're a proofreader, right? And you write very well. So why do you always spell "because" incorrectly?

  3. Butterscotch Says:

    Can you do a deal with your boss to work a few days in December where you don’t get paid, and they can be used in 2019 as paid vacation days?

  4. PatientSaver Says:

    Livingalmostlarge: Due mostly to the high cost of health insurance, I would be inclined to keep working p/t at this job or some other one until age 65, when I can pick up medicare.

    Lurker: Becus it's shorthand.

    Butterscotch: That's an interesting always come up with helpful and creative suggestions...thanks.

  5. frugaltexan75 Says:

    Will going up a bracket affect your Obamacare subsidies?

  6. Dido Says:

    It is taxable income, not AGI, that determines tax bracket. You will have at least the 12k standard deduction and maybe more if you no itemize under the new rules that you can subtract from your gross income and still be in the 12% bracket.

  7. rob62521 Says:

    I understand you feeling pressured to work extra. Hope it works out.

  8. Petunia 100 Says:

    Does your employer offer a 401k or other retirement plan?

  9. PatientSaver Says:

    Petunia, my employer offers a 401k to its handful of workers who are employees. That was why I wanted to get on their payroll, not stay on the agency's payroll. I just sort of gave up asking about it because while he seemed perfectly open to doing it, it never happened and I'm tired of asking about it.

    While I would like to make further tax-deferred contributions beyond my IRA, my p/t work really only covers my ongoing expenses, by design. There's nothing left over for continued retirement contributions, and that was the tradeoff in choosing to work 20 hrs a week and begin an earlier semi-retirement.

    That being said, if i was an employee, i could make the 401k contributions and begin cashing out some of my taxable brokerage investments to cover living expenses. Though the timing might not be right with the current downturn, it would effectively reduce my taxable savings and increase my tax-deferred savings.

  10. PatientSaver Says:

    Thanks, Dido, for the clarification regarding earned income vs AGI. That will make it much easier to ensure I fall into the 12% tax bracket.

    I'll probably opt for the standard $12K deduction as last year my total deductions came to $11,375 and I don't think much has changed. The latter part of your last sentence was not clear to me. If IRS goes by gross earned income, that's before any deductions, correct?

  11. PatientSaver Says:

    However, I just remembered that 2018 was the year (in the spring) when I changed from f/t to p/t work, so it would be much easier for me to meet the threshold for medical expenses, which is 7.5% of AGI.

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