Notices

Lump Sum Advice

Old 09-03-2015, 05:43 AM
  #21  
Senior MemberCaptains Club Member
PLEDGERPLEDGERPLEDGERPLEDGER
 
Snapper Head's Avatar
 
Join Date: Mar 2002
Location: Republic of West Florida - the ORIGINAL lone star state
Posts: 17,780
Default

Originally Posted by LI32 View Post
You are going to pay dearly for that success.
Assuming your regular income is $200k or more, that additional $750k will be taxed as ordinary income at 39.6% federal + Medicare at 2.35% and any state income taxes; and at close to $1m in income your tax deductions will be virtually zeroed out (you will still get $17,000 in 401k contributions and any charitable contributions, but that is about it) by the claw back rules, so your withholding on your regular salary, if it wasn't at least 30% federal will be low and you will owe even more at year's end.
Hope you enjoy the government bend-over as much as the rest of us who don't pay our fair share of taxes.
Yep.

Why the hell don't we march in the streets, burning and looting?

#incomeearnersmatter


Big Al
Snapper Head is offline  
Old 09-03-2015, 05:51 AM
  #22  
Senior MemberCaptains Club Member
 
Join Date: May 2005
Location: South Florida
Posts: 9,142
Default

Originally Posted by mikefloyd View Post
Welcome to ridiculous tax rates, the good thing is the government will spend your money wisely. Agree with a previous statement, this should have been looked at when the agreement was signed. Tax planning is done in the beginning not when you file.
I'd be surprised if the OP had any say in how the $ was disbursed.

Joe's suggestion of 50% on Dec 31 and 50% on Jan 1 might be a good one, but at best that's going to save the OP about 3%, but then he's got two tax headache years not just one, and could actually disqualify him from his mortgage interest deduction in both years etc.

Last edited by Flot; 09-03-2015 at 06:10 AM.
Flot is online now  
Old 09-03-2015, 05:58 AM
  #23  
Senior Member
 
Join Date: Oct 2006
Location:
Posts: 411
Default

Originally Posted by Sprockets View Post
Are you charitably inclined? If you are, you might consider funding a donor advised fund this year. If your tax bracket will be lower in the future, this would allow you to bunch future deductions in the current year.

I also assume you have already maxed out your retirement plan contributions.

Do you have a side business that generates income? If so, be sure you have a SEP or other plan there to maximize the deduction and deferral.

With the higher income, your itemized deductions will be more limited than in the past. You need to run the numbers to determine whether this advice fits your situation.
See above!
proine17 is offline  
Old 09-03-2015, 06:08 AM
  #24  
Admirals Club Admiral's Club Member
 
Join Date: Dec 2010
Location: Marina Bay on Boston Hahbah
Posts: 1,605
Default

Originally Posted by carribbean soul View Post
hookers and blow.
X2 resign a new W2 claim 1000 dependants and have a bad week in Vegas. You'll only regret it if you live through it.
2450CC is offline  
Old 09-03-2015, 06:12 AM
  #25  
Admirals Club
 
Ronn Burgandy's Avatar
 
Join Date: Oct 2010
Location: Where the wild things are
Posts: 15,108
Default

Originally Posted by joe.giuliano View Post
You said "end of year" can you them to cut two checks, one in 2015 and another a day later in 2016?
That may help, but only slightly. He's still going to be in the top tax bracket in both years. This is why one should always take a graduated payout.

As for the "reality" you speak of, you should still be looking forward to the lump sum of cash that will suddenly appear in your bank account. Letting the taxes paid "bother" you is your own choice. Choose to be bothered, or choose to be happy, its ultimately up to you.
Ronn Burgandy is offline  
Old 09-03-2015, 06:17 AM
  #26  
Admirals Club Admiral's Club Member
 
Join Date: Nov 2009
Location: Tarpon Springs, FL
Posts: 7,413
Default

Originally Posted by Flot View Post
I'd be surprised if the OP had any say in how the $ was disbursed.

Joe's suggestion of 50% on Dec 31 and 50% on Jan 1 might be a good one, but at best that's going to save the OP about 3%, but then he's got two tax headache years not just one, and could actually disqualify him from his mortgage interest deduction in both years etc.
I would be more surprised if he didn't. There has to be a reason they were willing to pay that amount to ensure he stayed. That would make it a negotiation.
mikefloyd is offline  
Old 09-03-2015, 06:24 AM
  #27  
Senior Member
 
Join Date: Oct 2009
Posts: 9,462
Default

Originally Posted by Ronn Burgandy View Post
As for the "reality" you speak of, you should still be looking forward to the lump sum of cash that will suddenly appear in your bank account. Letting the taxes paid "bother" you is your own choice. Choose to be bothered, or choose to be happy, its ultimately up to you.
Truer words never spoken.

Consider, even your after tax amount will be at least twice as much as 98% of families in the U.S. make in a year. About 10 times as much as 50% of people.
N2theblue is offline  
Old 09-03-2015, 06:35 AM
  #28  
Member
Thread Starter
 
Join Date: Jan 2014
Posts: 62
Default

We have discussed this as an option and the company seems agreeable to it.
B_EDWARDS is offline  
Old 09-03-2015, 06:51 AM
  #29  
Senior Member
 
Join Date: Mar 2010
Posts: 1,592
Default

Seems I heard of a Foundation which will help with these problems.

Thanks for your donation to the cause.

Good luck!
wezie is offline  
Old 09-03-2015, 07:03 AM
  #30  
Admirals Club
 
Ronn Burgandy's Avatar
 
Join Date: Oct 2010
Location: Where the wild things are
Posts: 15,108
Default

Originally Posted by B_EDWARDS View Post
We have discussed this as an option and the company seems agreeable to it.
Depending on your annual gross today, splitting it in half probably won't make much difference. You may need to defer it out to 7 years to make a real difference, but now you're talking time value of money.

The company should want to do this because the cash they keep today, even if invested in bonds, will make them money over the period.
Ronn Burgandy is offline  
Old 09-03-2015, 08:07 AM
  #31  
Senior Member
 
crazybeard's Avatar
 
Join Date: Aug 2013
Location: Tropico
Posts: 5,807
Default

Negotiate the lump sum to be paid out in increments. Move out of the country to the Bahamas. If you spend over 330 days a year out of the country you're an expat and first 98500 per year is tax free.

Also consider changing residency to a different state of your state has income taxes. Can we say 99% of Florida snowbirds? No personal state income tax. That can save 8-9% right there. Enough to pay for a rental house for 6+ months no problem.

Can you set up a company (c corp) and negotiate the payment to be made to that? Elect a fiscal year to begin the day before the payout. You have 12 months to do something with this company (and its money) before it is taxed.

Just some random ideas.
crazybeard is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are On
Refbacks are Off


Thread Tools
Search this Thread