Originally posted by @Andrew Gingerich:
@Rocco Swinney This is a great question for a CPA. Which I am not. A couple thoughts come to mind. It may be worth filing separately even though you are married. My understanding is it is normally not worth it but there are a few cases where it might be useful to do this. Or, have you considered reducing your AGI through IRA's. You and your wife can each contribute 6000 a year for a total of 12,000. Is she employed with an employer that offers additional tax deferred accounts (401K? Health savings? Cafeteria plan?). Between the standard deduction for married filing joint (24,000) and two IRA accounts (12,000) I can get your AGI down to 124000 pretty easily. (80K+ 80K = 160K - 6,000 - 6,000 - 24,000 = 124K). If the game is to get under 100K you can probably find a way to do it. You can use the money in the IRA to buy more real estate as long as you are not actively managing it. Do you have a business like and LLC for your REI? If so you can probably open up a Solo IRA where the limits are much higher than 6K and you can invest in RE through it. There are other strategies as well that can keep your bucks in your pocket rather than giving them to Uncle Sam.
Congrats on the marriage! Way to be proactive in your planning. Very few do this and it fantastic that you are thinking about this.
Best, Andrew
Hi Andrew! I greatly appreciate your detailed response. You bring up a few great points about - You can use the money in the IRA to buy more real estate as long as you are not actively managing it
As that was kind of my concern... i currently contribute to get the company match on my 401k, but increasing my contributions once married or having a roth in my view kind of seems like storing money away i cant use on (rentals, stocks, etc.) for 30 or so years. Since you mention about you can open an Ira and use on real estate then thats a great idea. We both works for different companies and the rentals are in my name (no llc)
Ive looked into filing seperately, as thats another issue. Essentially i itemize slightly over the 24k today as im single with owning a home, donations, etc. This works out great as 12k (single) vs. 24k (married) works as single. However, once married... 24k vs.about 24k essentially means i cant write the house off anymore. So we basically need to either buy a larger home or buy a smaller home where the standard works since mfs doesnt fix either
What a mess lol, but looking forward to getting married. I hope all is going well with your rentals and all is staying healthy during this time too :-)
