Please explain this to me

[frugal-one]

IL mentioned mitigating taxes in retirement. I am good with money management but lack greatly in understanding taxes. A discussion of options would be greatly appreciated. There are only federal taxes to deal with here so that is a help, I guess. I’ve transferred traditional IRA monies to Roth only up to the amount I would not have to pay taxes on for years. That accounts to way less than half. I understand charitable or qualified charitable contributions to reduce taxes but not sure what else would qualify?

[kib]

One thing discussed elsewhere is mitigating taxes on RMD. I believe money directly sent to a charity from an eligible account that requires RMD is lopped off the remaining distribution requirement, and is not taxed. In other words if you have to take out $30,000, and pay income tax on that, you can send $10,000 directly to a charity, and only pay tax on the $20,000. I'm looking into this for my mother, who sends a monthly tithe, which is never quite enough to exceed standard deduction ergo not enough to justify itemizing. This way, if I understand correctly, it is deleted from her taxable income before the standard deduction is applied, so itemizing becomes a moot issue.

Been mulling over Bae's thoughts on using money to hire people. Can I open my wallet wide enough to retire from being the family accountant? Might not be the worst thing ever.

[iris lilies]

Yes, kib is right, when you have an RMD whatever percentage of that RMD you donate to a qualified charity it’s not taxed. There is a limit of $108,000 annually to go to qualified charities to not count on your taxes so be aware of that.

I do not know of any other vehicle that allows one to remove money from IRA and not have it be taxed, but I don’t know much about taxes.

I will point out that for anyone taking money out of their IRA that will count as additional income to be taxed, also keep in mind that your Medicare cost may go up. Your Medicare charge is based on income.

as for hiring people oh hell, yes even though it doesn’t always work like I wish it did. In the past couple of years we have hired:

1. Someone to design landscape plan for the front of our house and install plants. It was not a good experience.

2. someone to put up Christmas lights on our roof line. They did a nice job at a price I thought was reasonable.

3. someone to clean my house twice a month. She’s a nice girl, she does a decent job, and I like putting money into the local economy. Housekeeping is a good gig for her because she has occasional sick children when she can’t come to my house to clean, and that’s perfectly OK because I can go without a cleaning session.

4. today I booked for the first time ever in my life a massage. I’m proud of my record of never having my nails done or never having a massage or not having my hair cut by anyone but me for the past 40 years, but maybe that era is coming to an end.

[frugal-one]

Search Assist

From AI

Medicare has specific income limits that can affect premiums, particularly for higher-income beneficiaries. For 2026, individuals with a modified adjusted gross income (MAGI) over $109,000 and married couples over $218,000 may face higher premiums for Medicare Part B and Part D coverage.
rrb.gov Social Security Administration

[frugal-one]

My DH had an inherited RMD that we used for years to stay south 4-5 months a year. Now we can reverse if we find a place. The biggest drawback is that we don’t want to drive there but need a car for the duration. Have yet to figure that out since we don’t want to own 2 places… otherwise we would just leave a car in each location.

[iris lilies]

Search Assist

From AI

Medicare has specific income limits that can affect premiums, particularly for higher-income beneficiaries. For 2026, individuals with a modified adjusted gross income (MAGI) over $109,000 and married couples over $218,000 may face higher premiums for Medicare Part B and Part D coverage.
rrb.gov Social Security Administration

yeah, one year we had an unexpected forced stock sale that turned an asset into taxable income. Not only did we have to pay an enormous amount of income tax on it thereby losing a big percentage of its value, we had increased Medicare costs. Ugh.

When our RMD’s start in a few years that will add an additional $60,000 to our annual income, but I can’t see that’s enough to bump us up into the next level of Medicare cost.

Using an RMD as a QCD is an excellent way to keep money out of the hands of the government. I’m all for that.

[iris lilies]

My DH had an inherited RMD that we used for years to stay south 4-5 months a year. Now we can reverse if we find a place. The biggest drawback is that we don’t want to drive there but need a car for the duration. Have yet to figure that out since we don’t want to own 2 places… otherwise we would just leave a car in each location.

you mean, you go further south in Texas? That must be pretty far south.

[rosarugosa]

you mean, you go further south in Texas? That must be pretty far south.

I think she means to get a second place up north?

[iris lilies]

I think she means to get a second place up north?

oh doh, right. She lived North, visited the south until a few years ago.

[frugal-one]

I think she means to get a second place up north?

Yes, or a place that has nicer summers….