I’ve reached an agreement with my current employer that will include a severance payment of 55K. Departure is amicable and planned for 11/30/2022.
2022 regular income through data of separation is around $250K, not including severance payment.
As finances allow it, expenses are low and home is paid off, I plan on taking 6 months off and doing some traveling before jumping back in so expectedly, 2023 income will be significantly less than that.
As the end of the year approaches, I am for some advise as to how to best structure this to reduce income tax hit on the 55K payment. I’m filing single.
Here are some thoughts I had for starters:
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delay severance payment of 55K to January of 2023. While I would likely drop into a significantly lower tax bracket, I would restart my FICA contributions as I have reached the limit for 2022.
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max out 401K for 2022 - including catchup.
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use part of separation agreement payment and ask employer to fund an IRA on a pre-tax basis to maximize investments and lower my taxable income for 2023?
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I have no HSA at work.
What would be the best way to structure this. As mentioned, separation is amicable and employer would be willing to assist, within reason.
Submitted November 16, 2022 at 06:28AM by arno14 https://ift.tt/SrlUuik
