How to reduce Taxable Income from RMD"s without Charitable Deductions

[chuckcobb]

My wife will turn 73 next year which will require her to begin taking RMD's.  That will increase our taxable income, and we're concerned about the impact of that on our taxes.  What can we do to reduce the impact of RMD's on our taxable income aside from charitable contriibutions.

[AmyC]

You may want to upgrade your home or vehicle with a tax credit (like an energy efficient door). Look for more at Credits and deductions. 

You may need to increase withholding or make an estimated payment if you will owe more than $1,000.

[chuckcobb]

Thanks for your response, but we don’t qualify for itemized deductions and those particular deductions wouldn’t make a big difference anyway.

[DawnC]

Energy credits are not itemized deductions.  So, if you spent anything on energy upgrades (see qualifying products below), you may qualify for a tax credit in addition to your standard deduction.  And the energy credits are credits, not deductions, so they reduce your tax bill dollar for dollar and could even eliminate it.  

These expenses may qualify if they meet requirements detailed on energy.gov:

• Exterior doors, windows, skylights and insulation materials
• Central air conditioners, water heaters, furnaces, boilers and heat pumps
• Biomass stoves and boilers
• Home energy audits

The amount of the credit you can take is a percentage of the total improvement expenses in the year of installation:

• 2022: 30%, up to a lifetime maximum of $500
• 2023 through 2032: 30%, up to a maximum of $1,200 (heat pumps, biomass stoves and boilers have a separate annual credit limit of $2,000), no lifetime limit

Get details on the Energy Efficient Home Improvement Credit.

[chuckcobb]

Thanks, I'll look into that.

[DawnC]

Thank you for participating in our Ask the Experts event today, @chuckcobb!