Do you remember the old Wild E Coyote vs Road Runner cartoons? The series of cartoons featured a coyote intent on capturing the road runner with endlessly elaborate traps, tricks and tactics and sadly, he was never successful, the road runner always got the best of the coyote.
I feel like that coyote.
A few years ago I had to pay Uncle Sam $15,000 due to excessive medicare taxes caused by multiple income streams that pushed me into higher tax brackets. This was a combination of double salaries, stock grants, bonuses, and other income.
My genius tax plan was to defer some of my compensation this year and pull it out some time down the road in 2028 or beyond when ideally I would be in a lower tax bracket after being retired.
Well, the unfortunate turn of events was I got laid off. I spoke to the firm holding my deferred comp and they confirmed all of that money will be coming back to me toward the end of this year in 2025 so it will be like I never deferred any compensation at all this year.
To make matters worse, I may be eligible for up to $15,000 in unemployment benefits which is taxable income. Oh, and I am receiving a severance package which will put my income over the next tax bracket.
But wait there’s more! If I end up getting another job this year, the income will likely propel me into the highest tax bracket!
If I do end up getting another job I’ll likely have to request a large portion of it be deducted for additional income taxes.
I feel like I’m running fast right off the cliff just like the coyote. Here’s a collage of all my tax tricks so far!
Share The Wealth
Any tax tips out there for this coyote? Let me know in the comments below.
When all else fails, remind yourself that this is a good problem to have. No one wants to pay taxes if there is a legal way around it, but not earning the income is worse.
Thanks, it’s not lost on me how fortunate I am even during my misfortune.