Tax Strategies

Roth distribution and taxes

Hi ChooseFI community, I am struggling with a tax issue and thought I would see if anyone has additional thoughts. I will try to explain succinctly. In October of 2024 I received a notification from the IRS that I underreported on my 2022 taxes and owe taxes on a Roth IRA distribution ($35,000 I used towards a down payment on a home) and penalty and interest. I did miss reporting this on my taxes so made an honest mistake. However, I don't believe I owe the $15,000+ dollars the IRS claims I owe....

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abbrenner5

5 minutes ago 3 Share

S Corp

My husband and I both run our own small businesses (both single member LLCs) in two different industries farrier and personal trainer. Our CPA has recommended electing as a S Corp to help with self employment tax and that would should combine our businesses into one so we only need to file once instead of two separate filings. I'm curious if anyone has any experience or thoughts on this and then does that put both businesses at risk unnecessarily by combing them? I've also heard that I could sta...

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SpiceSorcerer

5 minutes ago 6 Share

457 rollover

Hello, I will be leaving a teaching career shortly after this semester. I have money in a 457 retirement account which I can use to draw on after I leave my employer. I am pretty sure I know the answer but want to be certain that I should leave the money in the 457 custodian rather than roll it over so I have the ability to withdraw earlier than 59 years old. Thanks

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Turizmo23

5 minutes ago 3 Share

Full Traditional IRA Deduction vs. Low Effective-Tax Roth IRA

I feel pretty settled on my FI strategy overall, but one area I can’t quite reconcile is whether I should take the full Traditional IRA deduction (which I am eligible for) or instead accept a very low effective tax rate (~6%) and contribute to a Roth IRA. What feels paradoxical to me is that in order to qualify for the full Traditional IRA deduction, your AGI must already be relatively low — which often means you are paying low effective tax, a situation that (by non-FI conventional thought) usu...

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NickCincyFI

6 minutes ago 12 Share

How to minimize taxes and taxable income on RMD from inherited IRA?

My mother passed away and left me her IRA. Now I have to withdraw the account to zero in ten years, but I have two more years to pay off my federal student loans on an income-based repayment plan. How do I minimize my income to keep my monthly student loan payments from exploding while also trying to spend down the IRA?

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Anonymous

6 minutes ago 10 Share

𝘾𝙡𝙪𝙢𝙥𝙞𝙣𝙜: 𝘼𝘾𝘼 𝙄𝙣𝙨𝙪𝙧𝙖𝙣𝙘𝙚 𝙋𝙧𝙚𝙢𝙞𝙪𝙢𝙨

Some of you may be aware of a tax strategy known as 𝗖𝗹𝘂𝗺𝗽𝗶𝗻𝗴. Clumping is where you intentionally pay a bill in December that isn't technically due until January. The IRS allows clumping for an expense like interest payments or property taxes if you have already been billed and you choose to pay the bill before the due date. You cannot deduct expenses paid early that are not yet considered due. (Paying too early can result in you not being able to deduct that payment at all!) This definition can...

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Joel Corley

6 minutes ago 0 Share

Don't Forget to Claim State Tax Exemption for US Gov Securities

Filing your 2025 taxes? Don’t forget to claim the state tax exemption for interest and ordinary dividends earned from US government securities. Interest and ordinary dividends from US gov securities like treasuries and T-bills are taxable at the federal level but are exempt from state tax in most states. Many money market funds, ETFs and mutual funds derive some of their ordinary dividends from US gov securities. You’ll need to calculate the portion of your total ordinary dividends that came fro...

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BostonFI

6 minutes ago 1 Share

Tax on Tip Income

Hello, Is tip income that qualifies under the new tax bill considered above the line or below the line? ChatGPT, Copilot, and Gemini says it's above the line while Perplexity says it's below the line. I haven't found a clear answer going to the IRS. Thanks

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PizzaFiGuy

6 minutes ago 2 Share

Standard Deduction

Does standard deduction apply to dividends and interest?

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CreatingMarina

6 minutes ago 3 Share

Tax Loss Harvesting....

With current market volatility, I would like to capture losses with recent investments to offset my dividends/income. Where can I get more information on TLH (within Vanguard), documenting the losses for tax reporting purposes for the year, forms needed for 2026 tax prep to show losses for accountant and moving the losses forward should they exceed the $3,000 yearly limit? Thank you for any information I can get.

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Anonymous

6 minutes ago 9 Share

ADP Withdrawal 401 (k)

Hi everyone, long time lurker to the ChooseFI group and now I have my first personal question in regards to my finances. So last year I fully funded my 401 (k) for the first time and was really proud about that accomplishment. However, last week I noticed a large withdrawal from my 401 (k) - which is with Fidelity if that matters. I called right away in regards as to why that might be. I was told my corporate employer failed ADP testing and I would have to take forcible withdrawal from my 401 (k...

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Badger6117

6 minutes ago 5 Share

Spreadsheet from Cody & Sean's book?

Hi everyone! In their book "Tax Planning to and through Early Retirement," Cody Garrett & Sean Mullaney mention creating a spreadsheet in chapter 36 to track cap gains/losses for EOY tax planning, deciding whether to do a Roth conversion, etc. Has anyone already created a spreadsheet like this that they would be willing to share? They also mention current year tax planning software for this same purpose. Any recommendations? We are retiring in May and this part of retirement feels foggy to m...

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Charlotte

6 minutes ago 9 Share

529 unused funds and taxes for non qualified WD

I have 1 child who is no longer going to use the funds for college. I have transferred some of the account over to her ROTH and was going to take the rest and put in my individual account with Fidelity but would be paying taxes on $7,000 (and the 10% penalty). Wondering if there any work arounds or suggestions for this? Thanks.

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wendyneal1

6 minutes ago 7 Share

Tax Loss Harvesting with M1 Finance

After reading Brad's weekly update about tax loss harvesting I am considering taking advantage of the recent market downturn in my brokerage account. I hold my brokerage at M1 Finance, which uses "pies" to automate deposits and dividends etc. Currently, my pie is 100% VTI. I would like to sell some of my shares to lock in a loss to utilize for my 2026 taxes, but I am unsure how to do with with M1's platform. Does anyone have any insight into how to accomplish this? One potential solution would b...

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Patrick Gilbert

6 minutes ago 3 Share

Do we have a network of tax pros?

I have several self-managed investment properties, several LLCs and an S-corp from a partnership. Taxes and accounting are really my weakness, do we have a network of professionals I could research/ engage? I'm in Atlanta. Thank you!

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debic27

1 month ago 1 Share

Untitled Thread

I'm curious if anyone has used a Donor Advised Fund (DAF)? And if so, how are the contributions to it treated on ones taxes. Are DAF contributions counted as an additional deduction beyond the standard deduction? For example, we are married filing jointly. Standard decution is $31,500. If we give another $10,000 to a DAF, would that reduce our MAGI by a total of $41,500? Thank you for any insight! Jon

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JonB

1 month ago 6 Share

Tax planner in Los Angeles (or more broadly California)

Hi, My wife and I have grown increasingly frustrated with our super obnoxious tax accountant. He does give us a great deal, but we're about done with the condescending tone and unwillingness to help us plan for taxes in advance. It's the same issue I believe others experience, where he's just happy doing a post analysis and file our taxes instead of helping us plan for tax-efficiency. Does anyone have recommendations of a tax planner/tax accountant combo, who is FI-oriented, in California?

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Sampers

1 month ago 6 Share

Giving one huge lump-sum…what to do with lowered taxable income

Traditionally, our annual giving+SALT (house is paid off, so no mortgage-interest to include on Sched A) has come out to just under the standard deduction (since the standard-deduction was considerably raised somewhat recently). So that means that we're taking advantage of the standard deduction, but not getting any tax benefits from our charitable giving. However, if we give N≥3 years worth of charitable giving in advance (e.g. to a DAF), we only lose out on one year worth of standard deduction...

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TimChase

1 month ago 5 Share

Small Business Credit Card

Been scouring the internet, but have come up empty, so opening the question to my FI friends. I am looking for a small business credit card, with the following attributes: - No personal guarantee - No direct bank link (i.e. I push payments, they don't pull) - Credit Card (not a charge card) Other notes: looking for a small limit for office purchases (like $500/month). Revenue is multiple magnitudes larger than that. This should make it low risk for a bank (in my mind) Nice to have: - Phone numbe...

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J0e

1 month ago 6 Share

IRS posted 2026 Retirement Contribution Limits (13 Nov 25)

The IRS just announced the new 2026 contribution limits, and it’s your chance to get ahead. Here’s what’s new: IRA: up to $7,500 IRA Catch up: $1,100 401(k), 403(b), 457, TSP: up to $24,500 Catch-up (50+): now $8,000 Super catch-up (60–63): stays at $11,250 These changes may look small, but over time they add up to real money — especially when you’re consistent. The key is to adjust your contribution settings now so you start 2026 already on track. I wrote a quick post on this topic if you want...

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Coach Holdren

1 month ago 0 Share