For those of you that are leaving, what is your strategy do to reduce your taxable income for tax year 2019 payable in 2020? I'm maxing out my wife's 401K contribution and will max out mine when I find employment. I was going to pay off my mortgage, but I decided to wait until January 2020 so I can take advantage of the mortgage interest deduction for tax year 2019.
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Unemployment. I'm going to take the pittance offered with the target of being hired towards the end of that timeframe. I'm taking the year to build out any skill gaps on paper and frolic in the daises (aka Networking).
"Remember that the standard deduction goes way up this year. Your mortgage interest could be way less than that which may not make it worthwhile to keep your mortgage. Consult your financial planner."
Yes, and the limitation of SALT deductions (to $10K) makes it less likely that total deductions will be greater than the standard. (And while the standard doubles, individual exemptions were removed, so for a family it can be wash or worse)
Residency for tax purposes does not go by what address you put down on a form. Most go by some sort of time period test, like it you lived there for six months or something. Also, if you lived in two states during the year, you may have to do a return for each state; one a resident return and the other a non-resident return. Consult a tax advisor. You can go to the library and check out a great book called JK Lasser’s income tax guide. I used it years ago to amend several years returns. Easy and understandable.
@oev how can we go about moving our home address before the end of the year so it reflects in the lump sum payout? I am also moving to a no income tax state...
Is it as simple as changing my home address in "about you"? Or do I have to talk to HR?
I vote for the "catch up contribution" mentioned below and max out for the next few checks (company match is company match). I also agree with checking on a financial advisor on the mortgage. I certainly wouldn't pay it off now. Sock it away for now and make a decision after talking to a tax and/or tax advisor. Yeah. They both cost money but, in this unique scenario it is worth a couple hundred bucks to get advice from professionals.
Remember that the standard deduction goes way up this year. Your mortgage interest could be way less than that which may not make it worthwhile to keep your mortgage. Consult your financial planner.
Changing my rezidency state is going to net me $10k in avoided state taxes. I'm practically getting paid by the state to move to my new job!
I plan on requesting before EOY a “catchup contribution” of the max amount to my 401k to drive as much of my pay into that tax-deferred vehicle that I can. And if I’m held-over until next year then I’ll do it again as well.
I max 401k at the start of each year in anticipation of a RIF. VZ allows you to contribute up to 50% to 401k so depending on your pay it may not take long at all to get your $19k. In my group almost everyone elected for VSP, so I expect to be around for 1Q or even 2Q.