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kwoodya6
New Member

For 2017, we are $3,000 shy of moving to the next tax bracket ( 28%). we will be in that next bracket for 2018. What should we do to offset the tax difference?

 
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For 2017, we are $3,000 shy of moving to the next tax bracket ( 28%). we will be in that next bracket for 2018. What should we do to offset the tax difference?

Firstly, the tax brackets have completely changed, there is no 28% bracket any more.  See this comparison. https://www.cnbc.com/2017/12/29/heres-where-you-stand-in-the-new-2018-tax-brackets.html

Second, even if you go into the next bracket, only the income in that bracket is taxed at the higher rate, not all of it.  For example, if you are $1 over the 22% bracket into the 24% bracket, then only that $1 is taxed at 24%.

Third, there are lots of things you can do to lower your taxable income, but they generally involve putting money where you can't touch it or spending it in certain ways, such as contributing to a 401(k), IRA, HSA, or making extra charity donations.  They lower your taxable income but also lower your cash in pocket. For example, if you put $5000 in an IRA, you get a tax deduction, but you also don't get to spend the money.  There are many good reasons to donate to charity or invest in your retirement of course, but the tax savings should really be a minor consideration at best.

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