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A close friend of mine has a unique tax situation for 2011. Long story short his itemized deductions plus exemptions exceed his taxable income on his Federal 2011 return. Therefore he has a -0- tax liability. He has no money withheld from his pension and SS, so there is no problem with under withholding. However, he has a TIRA and I wanted to advise him that IMO he may missing a tax saving strategy .

He is 68 files MFJ and his combined deductions & exemptions exceed his taxable income by roughly $10K for tax year 2011 and will probably be the same for 2012. All of his taxable income is derived from his pension and SS benefits. For the 2012 tax year why could he not estimate and calculate what his net negative taxable income will be and withdraw that amount from his TIRA? He will still have a Federal -0- tax liability and he would be able to make a net tax free withdrawal from his TIRA. In addition his future RMD's would be less. This seems to me like a no brainier (but I've said that before and ate crow). I realize this does not address State income tax issues and I will get further info from him regarding PA state taxes.

Phil, Ira, Peter et al... what the heck am I missing guys?


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