Author Topic: Newly FI: Capital Gains Harvesting vs Roth Conversion vs Affordable Care Act  (Read 2116 times)


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Hi there My Future Tax Accountant!  My name is Lance, I hit FI and quit my job in the middle of 2016 so 2017 will be my first year filing as a FIGuy.  I'm single, renting, no dependents any more, and will be 49 at the end of 2017. 

I'm 60% Stocks, 35% Bonds, and 5% Cash, about 60% of my portfolio is in a taxable Vanguard account (the other 40% is in a Traditional IRA) and the interest, dividends, and some VTSAX sales make up my most of my ~$50k/yr income so I have about $22k of Long Term Cap Gains on a roughly $2MM portfolio.  I will also earn about $6.6k this year as a 1099 contractor.  That will be about $30k next year, fingers crossed. 

Anyway, I keep seeing these FIRE articles about Capital Gains Harvesting, Roth Conversion, and the ACA Subsidy Cliff but how on earth does one optimize all three of these?  I think that Cap Gains are tax free up to the 15% tax bracket and don't count as ordinary income but a Roth Conversion does so you can take the 15% cap gain AND convert some traditional IRA money to Roth up to the standard deduction without paying any taxes BUT both count against you when it comes to ACA subsidies, right?  I know you will have to read that again, it's a terrible run on sentence but this is what the tax code has done to me.

In other news, my business is an LLC and I have personal umbrella insurance but what else can I do to protect my nest egg from soul sucking lawsuits?  I'm a Chemical Engineer, a fairly careful guy, and my business is teaching workshops on how to optimize gasoline blending to other nerdy engineers so it's hardly high risk, but I am concerned about it. 

Ugh, SO complicated.  That's where you come in.  I'd LOVE to find a KeithClone, a TaxYoda and I'm perfectly willing to pay for your services, provided you are at that level.  I'm looking for someone in the top 10%, seriously.  These are very difficult questions and I expect to get it right the first time.  If you are up for it, please respond with answers to the following:

1. Your formal and informal education, certifications, etc.
2. How many years have you and your fellow team members been doing taxes?
3. Why do you think you are in the top 10%?
4. How many people LIKE ME have you helped?  References?  May I call them and have a chat?
5. Fess up: how many returns that you have done have been audited by the IRS?  What were the outcomes?  I'm proposing unusual, complicated and aggressive tax minimization strategies so getting audited isn't a deal breaker, I just want a feel for your experience with it.
6. Your fees and a rough estimate of what it may cost to set this up and do my 2017 taxes (I have excellent records, btw).
7. Do you know any good Accountant vs Engineer jokes? 

Thanks so much for your time,