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Alexander vs. Fedex Willis vs. Fedex
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<blockquote data-quote="dmac1" data-source="post: 3339931" data-attributes="member: 60252"><p>If you had any losses in prior years, you'd be able to deduct even as an IC.</p><p></p><p>I did find another way to avoid taxes on the settlement- you can deposit into a retirement account, maybe all of it. Maybe even a 529 education account or an HSA. If you find that you are a few dollars(or even a few thousand) into a higher tax bracket including the award, you can deposit enough or all of the award to lower your income this year. If you are over a certain age, you might be able to contribute to a 401k or IRA to 'make up' for years prior. If you don't need the extra cash, this might be a good way to avoid the tax or to keep yourself in a lower bracket. That might have been in pub 525 or 536.</p><p></p><p>Honestly, I just skimmed over this because it didn't really apply to me. Technically, I could deposit $3000 into an iRA and save $300 in taxes, being in the 10% tax bracket this year. For me, not worth the trouble and inconvenience of tying up my money. </p><p></p><p>Maybe if you need the cash, it might be better to take out a second mortgage, or home equity loan and pay 5-6% interest, deposit your settlement into a retirement account, and save paying 10% or more in taxes on the settlement. If an emergency arises, you might be able to withdraw from the retirement account without penalty when you are in a lower tax bracket.</p></blockquote><p></p>
[QUOTE="dmac1, post: 3339931, member: 60252"] If you had any losses in prior years, you'd be able to deduct even as an IC. I did find another way to avoid taxes on the settlement- you can deposit into a retirement account, maybe all of it. Maybe even a 529 education account or an HSA. If you find that you are a few dollars(or even a few thousand) into a higher tax bracket including the award, you can deposit enough or all of the award to lower your income this year. If you are over a certain age, you might be able to contribute to a 401k or IRA to 'make up' for years prior. If you don't need the extra cash, this might be a good way to avoid the tax or to keep yourself in a lower bracket. That might have been in pub 525 or 536. Honestly, I just skimmed over this because it didn't really apply to me. Technically, I could deposit $3000 into an iRA and save $300 in taxes, being in the 10% tax bracket this year. For me, not worth the trouble and inconvenience of tying up my money. Maybe if you need the cash, it might be better to take out a second mortgage, or home equity loan and pay 5-6% interest, deposit your settlement into a retirement account, and save paying 10% or more in taxes on the settlement. If an emergency arises, you might be able to withdraw from the retirement account without penalty when you are in a lower tax bracket. [/QUOTE]
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