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My spouse got the dreaded letter in the mail the other day...the one that tagged my spouse as a "highly compensated employee". I disagree with that designation, but I digress. What this means is a 10% cap on what can be funded into the 401K which falls well short of the $17000 allowed for everyone else thanks to average company contributions. My plan was already funded to the max. also. It appears that we also exceed the phase out limits for the Roth and we also lost the child tax credit. We also built a home last year and moved in in May which helped our tax bill a lot. But its looking like we still owe about $2K. The additional interest on the mortgage and the additional property tax bill will help fill the gap this year, but we lost a lot too because of the HEC letter. I've been searching for other methods of legally reducing our federal tax liability (no state income taxes here). Short of drastically increasing our charitable contributions or adding on a pool (which I DO NOT WANT), I'm coming up empty. I'm hoping some of you smart folks have some ideas.
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