Here are the ways I've been considering to increase our taxable income:
- Earn some income. I'll be doing some part time jobs in 2008. However, because the work is seasonal and part time, the earnings will be less than the amount necessary to completely offset the deductions and credits. Of course, this is to be expected since I am retired:-)
- Increase taxable interest. Part of our fixed income investments pay tax exempt interest. By changing to investments that pay taxable interest, we will increase our taxable income. Again this will provide some but not enough additional income to offset our expected deductions and credits.
- Take capital gains on stock investments. Selling stocks which have increased will create income. For 2008 to 2010, stock long term gains will create zero percent federal tax liability for those with in the 15% tax bracket ( $65,100 for Married Filing Jointly, $35,550 for Single in 2008). Unfortunately, if the market continues as it has for the beginning of 2008, I may not have may not have many stocks with gains later this year :-(
- Convert regular IRAs to Roth IRAs. Taxpayers (not including Married Filing Separate)with an AGI (before the Roth conversion) of less than $100,000 are eligible to make conversions from a regular IRA to a Roth IRA. The funds of the regular IRA that would have been a taxable distribution are considered taxable income when doing a conversion.
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This is not financial or tax advice. Please consult a professional advisor.
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