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Pmolsonmus

403b help with withdrawal amount -tax issue

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Hi,

My wife and I are both retired teachers on pensions.  We took a 403b withdrawal in January for home improvements. I was working FT in a non teaching situation but have been furloughed since April and receiving unemployment.  With the newly passed bill, we are about 2k over the 150,000 limit to have taxes waived on the first 10,200 of unemployment.  Do we have any options to lower our adjusted gross income by the 2k? The difference is almost $3,000 out of pocket.

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5 hours ago, Pmolsonmus said:

Hi,

My wife and I are both retired teachers on pensions.  We took a 403b withdrawal in January for home improvements. I was working FT in a non teaching situation but have been furloughed since April and receiving unemployment.  With the newly passed bill, we are about 2k over the 150,000 limit to have taxes waived on the first 10,200 of unemployment.  Do we have any options to lower our adjusted gross income by the 2k? The difference is almost $3,000 out of pocket.

If you have income from early 2020, you can contribute to a traditional IRA (not a Roth IRA) for 2020 and lower your AGI by that amount, up to 7k if you are over 50. You can do it for 2020 up until tax reporting day. Just call up Vanguard or Fidelity. 

There’s an income limit to deductibility of tIRAs, but if you were not covered by a retirement plan with your 2020 job, I don’t think the limit applies. https://www.irs.gov/retirement-plans/plan-participant-employee/2020-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-not-covered-by-a-retirement-plan-at-work

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