Retirement buyout

[Woody500]

In 2023 I will obtain a large sum (>$1M) from a leveraged work buyout.  I live in MD.  Any aadvice for how best to minimize the tax hit on this payment.

[OmM1]

Hello Woody,

Thank you for reaching out with your question.

It looks like you have a business that you will be selling, if this is so, it could be a long term capital gain, which are taxed at lower rates. 

You may also evaluate and explore the option of selling on installment, this all the gains are not taxed in one year itself and thus lowering your effective tax rate and payments over multiple years.

In addition to making sure that your gains will qualify as long term capital gains, you may also look at possibilities of maximizing your retirement contribution as a self employed business owner. Various types of retirement plan accounts offer you an opportunity of contribution between 7K to upwards of up to 250K, thus deferring your tax liability to future year. 

Further please review 7 Best Tips to Lower Your Tax Bill from TurboTax Tax Experts It is worthwhile to here that the Inflation Reduction Act is now offering lot of new tax credit for Electric Vehicle, Solar Panels and Energy Efficient homes.

Hope this helps,