Tax Law (Questions About Taxes)/Pension as extra income

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Question
Hi John, I am not sure what to do with my situation. I am a divorced female in my mid 50's that works full time but only earns about 25,000 a year. I have recently started to draw a pension of about 1,000 a month as part of my divorce settlement. This will continue until he or I die. In the meantime I have all this extra income of which I do need towards some small medical issues at the time plus some much needed home repairs to catch up on. My biggest problem I think I face is the taxation on the combined income. I might add that I do also contribute to a 401k plan at work of which I recently increased my contribution as I thought this was one of the best ways I could decrease my tax bite. I also have an IRA of about 20,000.
What are some other things I could do to lesson the tax blow at income tax time?  I had thought about buying some bonds or some other kinds of investments to help in my retirement years. I'm not a very investment savy person at all and any advice given would be most appreciated!  

Thanks,
Terri
Any kind of advice would be most appreciated.

Answer
Terri,

Thanks for your question.

There's not a lot you can do - you get the income, you pay the tax.

Buying bonds or other investments would provide future income, but would do nothing about your current tax situation.  

You can contribute to an IRA (to the extent you are eligible) or increase your 401(k) contribution even more.

Rental property providing positive cash flow and a tax loss would be beneficial. Making tax deductible expenditures such as charitable contributions; buying a house and getting a mortgage payment and property tax deduction would help.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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