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Personal Finance and Investing

cilla4progress

(26,075 posts) Mon Apr 11, 2022, 07:18 PM Apr 2022

Does this tax strategy make any sense? [View all]

I have a small sole propretorship with widely varying income from year to year. Last year I did well - for me.

I did not pay any income tax, ie, quarterly during the year, and it is now biting me in the a##! 😰

Could I shelter 7k in my IRA that is a money market, and then withdraw it during the year in case of emergency? I know I will have to pay taxes if I withdraw. I'm 67 yo.

My state has no income tax.

TIA!

10 replies

= new reply since forum marked as read

Highlight:

Does this tax strategy make any sense? [View all] cilla4progress Apr 2022 OP

I think IRA's have a 5 year rule. Gains can be taxed underpants Apr 2022 #1

Good point. Thanks. cilla4progress Apr 2022 #2

I have some very strong advice: SCantiGOP Apr 2022 #3

I see what you did there! cilla4progress Apr 2022 #4

There's a 10% income tax penalty for early IRA withdrawals, see the IRS webpage on this... PoliticAverse Apr 2022 #5

Not if you are cilla4progress Apr 2022 #6

Seems to me it would be a wash. A HERETIC I AM Apr 2022 #7

This is consistent with my research - cilla4progress Apr 2022 #8

They can't keep you from your money. A HERETIC I AM Apr 2022 #9

Wow, so helpful, Heretic! cilla4progress Apr 2022 #10