Senate Bill Deal to Expand EV Tax Credits (7/27/2022)

[dbsb3233]

It’s not just technically possible.

I work with many people purposefully doing it.

It’s fairly easy to do.

In your example above, if retired under age 65 and wanted free health insurance, you would just NOT take IRA distributions. You’d live on your non-qualified money or Roth money.

And in a year like this year (market down), you could control your AGI even more with some tax loss harvesting in your non-qualified accounts.

Another reason to consider delaying social security benefits while doing this too, to keep income down.

Get that $60k in income down to around $30k and POOF….. free health insurance. You do this until 65 then switch to Medicare and don’t worry about income limits until you with the 175k range where your Medicare premiums would go up.

Tons of tax strategies in there.

Fair point on Roth withdrawals if they have that much Roth money. But again, having years worth of after-tax cash sitting around not making gains is usually gonna come out worse.

However I agree that government handouts can really screw up the incentive for doing the right thing. If someone is on the cusp of getting $6000 worth of health care subsidy from the government by NOT investing piles of cash that would only otherwise gain $5000, then yes, it encourages taking the taxpayer subsidy instead.

I could see someone at the margin doing that. But if that pile of cash is half a million rather than 100k, they'd likely be losing way more by not investing it. Even a modest 5% gain on 500k invested is 25k.

But yeah, just depends on the situation. I thought about gaming the system like that, but just didn't seem right (nor a net positive).

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[Mach1E]

Fair point on Roth withdrawals if they have that much Roth money. But again, having years worth of after-tax cash sitting around not making gains is usually gonna come out worse.

However I agree that government handouts can really screw up the incentive for doing the right thing. If someone is on the cusp of getting $6000 worth of health care subsidy from the government by NOT investing piles of cash that would only otherwise gain $5000, then yes, it encourages taking the taxpayer subsidy instead.

I could see someone at the margin doing that. But if that pile of cash is half a million rather than 100k, they'd likely be losing way more by not investing it. Even a modest 5% gain on 500k invested is 25k.

But yeah, just depends on the situation. I thought about gaming the system like that, but just didn't seem right (nor a net positive).

Who said anything about not making gains?

Tax loss harvesting like I already suggested allows you to take losses, take gains and spend the cash.

Roth money will be invested and earning.

In the scenario I’m talking about, you could have a million dollars or more in non-qualified money invested and still get free healthcare.

You could make about $60,000 as a couple in dividends and interest. Take the standard deduction, and you’ll be right in the “free healthcare” range.

Oh, and in that range? Your capital gains tax rate? Also 0%.

This isn’t “gaming the system.” It’s straight tax strategy.

If you aren’t implementing things like this, you need a better financial planner.

 

[dbsb3233]

Who said anything about not making gains?

Tax loss harvesting like I already suggested allows you to take losses, take gains and spend the cash.

Roth money will be invested and earning.

In the scenario I’m talking about, you could have a million dollars or more in non-qualified money invested and still get free healthcare.

You could make about $60,000 as a couple in dividends and interest. Take the standard deduction, and you’ll be right in the “free healthcare” range.

Oh, and in that range? Your capital gains tax rate? Also 0%.

This isn’t “gaming the system.” It’s straight tax strategy.

If you aren’t implementing things like this, you need a better financial planner.

Well sure, you can create losses to offset the gains. But then you have losses. And yes, I know not all gains/losses get equal tax treatment. (And I as I said, Roth is a different matter altogether.)

Anyway, this is getting way beyond the topic for a car forum.

 

[Mach1E]

Well sure, you can create losses to offset the gains. But then you have losses. And yes, I know not all gains/losses get equal tax treatment. (And I as I said, Roth is a different matter altogether.)

Anyway, this is getting way beyond the topic for a car forum.

True. We definitely went down a rabbit hole. But at least it’s a hugely useful rabbit hole.

I’ll just leave it at this. It’s my job to know these things. It isn’t theoretical. It’s definitely doable if you know what you’re doing.

Just did a quick google for you if you want to learn more. *note it’s an old article from 2016, but the concept still works. They recently made it EASIER to get the subsidies since it’s no longer a tax torpedo hard line, now it’s a percentage of income limit.

https://www.cnbc.com/amp/2016/01/27/theyre-millionaires-and-they-get-obamacare-subsidies.html

Here is the info for 2022:

The income cutoff for a subsidy for a single person is around $100,000:

https://www.verywellhealth.com/no-asset-tests-for-aca-subsidies-1738965

 

[grao]

I was wondering if anyone who has taken delivery in Michigan and has received this $2000 point of sale state rebate that the governor is referring to?

https://www.michigan.gov/whitmer/ne...o-support-statewide-electric-vehicle-adoption

https://www.michigan.gov/whitmer/ne...04/21/whitmer-unveils-mi-healthy-climate-plan

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