In a couple of weeks I will be receiving an education teaching award in the amount of $25,000. Any ideas on what I can do to minimize the taxes I will need to pay?
In a couple of weeks I will be receiving an education teaching award in the amount of $25,000. Any ideas on what I can do to minimize the taxes I will need to pay? Unfortunately, the first idea I have means that you have to give away the award...probably not what you had in mind.Otherwise, you can make charitable contributions but remember (in general) you have to give away $3 to reduce your tax by $1.You could use the proceeds to fund a deductible IRA that you couldn't otherwise fund - assuming you meet the rules for deductible IRAs.If you or your spouse are (also) self-employed you might be able to fund a SEP-IRA, Simple IRA or other qualified plan. Maybe someone else has some other ideas.Gail
Don't know if this would fly, but gift $10,000 to your wife. That would reduce things a little. (Remember that from a sceen in "Shawshank Redemption").JLC
Don't know if this would fly, but gift $10,000 to your wife.Sorry Gifts to your spouse or anyone else for that matter do not reduce your taxable income. Gifts reduce your assets that may reduce your estate tax. In other words, gifts may only help if you are dead. I don't think this was an alternative the recipient of the award was considering.
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