While that's all true, it's important to keep in mind, that absent some edge cases like income cliffs for subsidies, you will always have more money keeping it and paying tax than giving it away.I agree. Hopefully you can retire a few years earlier. You did not specify how the inherited IRA was distributed, but if it was all to you, and you are not an eligible designated beneficiary, then you could be in the 35% tax bracket over 9 years, or the 37% tax bracket for one year. Since TCJA may expire in 2026, and your tax bracket might go up to 37%, or 39.6%, plus 6.3% state income taxes. You may want to try to avoid the 39.6% tax bracket, Medicare IRMAA if you will be age 63, Net Investment Income Taxes of 3.8%, and any other related taxes. There may be other solutions involving trusts or charitable contributions, but that may require more professional help.
Not being flippant: the first thing that comes to mind is "stop working: that will reduce your gross income by approx $180-$200K/yr."
Even a 50% effective tax bracket still leaves you with $0.50 more in your pocket per dollar. Even a 99% tax rate still means you have more money than if you donate it.
If I said that I would give you $10,000,000 with the caveat that $9,000,000 would be lost to taxes, you'd still be better off taking the money than passing on it because you don't want to pay the tax.
Statistics: Posted by exodusNH — Tue Jun 04, 2024 10:39 pm