Year of low income

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
MN Finance
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Joined: Sat Dec 22, 2012 10:46 am

Year of low income

Postby MN Finance » Wed Feb 13, 2013 11:40 am


Thanks in advance for all the collective wisdom here. 2013 will be an off year for income and I'm looking for any advice / feedback that might be out there.

Married, 4 young kids
Average retirement savings levels for our age
Emergency Fund: 12 months expenses
2012 and prior years AGI ~ $200k
2013 income to date ~ $15k, with another $15k expected

I recently left a corporate job and I'm in the process of starting up a business. I don't expect the business to make much, if any, profit for the year and am hopeful 2014 will be in the $100k range, then increase from there in future years. We might even have a small business loss for 2013. I'll be using about 1/4 of our EF to fund the business and will then be living off of savings for the next 9-12 months. I have about $30k in a 401k that I can move, and will likely convert to a Roth, but may hold onto it through most/all of the year in case the business cash flow is tight and I need to take a loan against the account (as a last resort). All other retirement savings are already in Roths and a cash balance pension plan that isn't mobile. We realized some capital gains in 2012 in non-qualified accounts to stock pile the current savings for living expenses, so no losses/gains are available for 2013. In the past we have itemized about $50k in deductions each year, but I'm not sure where we'll be for 2013 (I expect $12k in mortgage interest, $5k in charitable, $1k in state taxes, and medical expenses of $9k which is largely premiums and hopefully limited out of pocket costs). I have run some numbers in Turbo Tax (using 2012 tables) to see what taxes might look like, but I'm wondering if there are any general thoughts about how to best take advantage of our lower 2013 income levels. I'm not very familiar with some of the credits that might be available since we have been phased out of many of them in the past. I don't plan to make retirement contributions for obvious reasons, but if there's cash in early 2014 would probably try to contribute to an IRA or Roth for 2013 (if we qualify for a savers credit). If there's anything that comes to mind, it would be a huge help. Thanks!

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Re: Year of low income

Postby livesoft » Wed Feb 13, 2013 12:03 pm

Come back and ask again in December. :)
This signature message sponsored by sscritic: Learn to fish.

Posts: 3964
Joined: Tue Sep 22, 2009 7:56 pm

Re: Year of low income

Postby hsv_climber » Wed Feb 13, 2013 12:06 pm

I'd recommend to search the forum for livesoft's thread on how to pay $0 taxes in retirement, since all the same principles will apply to you.

MN Finance
Posts: 1462
Joined: Sat Dec 22, 2012 10:46 am

Re: Year of low income

Postby MN Finance » Wed Feb 13, 2013 10:27 pm

Thanks. Just wondering if there are deductions I might not be aware of and if I should save my son's lunch money receipts or records of his ice time payments. Don't want to get to Dec and miss something.

I read through the pay no tax idea. Since I'm not on SS and no non-qual losses, etc, doesn't quite apply.

Maybe nothing other the obvious to think about.

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