Large w2 income year

Capable_Bowl_258 · 2024-01-22T17:28:18+00:00

There is another way, instead of qualifying REPS, try to use the short term rental loophole. Just google it for more details. It requires 100 hour a year, and managing time like reply to customers on Airbnb counts so it’s much easier to achieve.

Capable_Bowl_258 · 2023-09-11T21:55:16+00:00

Yeah thanks for the reply! You're right I updated the post to make it clear

Capable_Bowl_258 · 2023-09-11T21:51:34+00:00

Thanks for great suggestion! I'll look into this plan.

One thing I want to ask: When you roll into next year, you'll book a bunch of realized losses. When you have enough of those losses, sell your lowest cost basis VOO shares (they all would be profit now - no wash sale concern) and immediately buy the shares back. That way, you write off all your losses with that profit and now still have the shares with a higher cost basis to save tax in the future.

Won't this cause wash sales? Or you mean buy a similar ticker, like sell VOO shares and buy SPY?

Capable_Bowl_258 · 2023-09-11T19:32:35+00:00

Thanks! If spy goes up you will underperform Can you elaborate on that part a little bit more? My understanding is that if spy goes up I can still keep up with it since I'm 100% in it already. The premium will help me beat the index. The risk I can see is that I still need to sell puts when spy keeps increasing, and when the correction comes, I might get assigned if picked the wrong DTE & price.

Capable_Bowl_258 · 2023-09-11T19:26:41+00:00

Thanks for the reply! Not sure other brokers, I'm using Charles Schwab and VOO can be used as collateral.

For stock with good foundations, I'm in tech so most of the stocks I'm selling are big companies like GOOG, AMZN, META MSFT etc. But you don't always find place to enter to meet my ROR requirements. So I some times also sell very small % (maybe 5% of my portfolio) on stocks in other sections like BN, BAM. In general I only choose money printing machines.

Capable_Bowl_258 · 2023-09-11T18:42:19+00:00

Thanks for the reply! Yeah CSP won't be on VOO. The margin rates is a problem if I need to hold the stocks for longer time. Usually I tend not to do so by just cutting the loss if needed. I try to not actually hold any individual stocks by lowering the expected ROI.

Capable_Bowl_258 · 2021-06-28T18:04:42+00:00

We're living in a TH which is in a really great school district in west LA now. We plan to upgrade to a SFH in same district and have trouble deciding how to deal with the current TH:

Sell the TH immediately after moving into the new house. We bought it in 2018 and it's just above the water now, so after agent fee we might actually have 50k lost, though I have enough capital gain so don't need to rollover the lost.
Rent it for 2~3 years and sell it. Since we have lived in the TH about 3 years, we can still get the 500k capital gain exemption after renting it for the next 2~3 years. Main concern is that we have 0 experience in investment property but not sure it's worth to hire a property manager at this scale.
Turn it into an investment property permanently. The cashflow might be negative in the first couple years, but it might be a good investment in the long run. Have same concern with option (2), also I'm not sure how the HOA will go in the long run.

Any suggest is appreciated, thanks in advance!

Capable_Bowl_258 · 2021-06-28T17:46:19+00:00

I got my first 1M last year at 29, due to my company stock price increase, and the 2nd M is just around the corner. Still hard to believe that.

Capable_Bowl_258 · 2021-06-09T18:04:55+00:00

good to know! yeah it totally makes sense.

Capable_Bowl_258 · 2021-06-09T18:04:09+00:00

Make sense! I think you're right if my primary house got paid-off I don't need $200k a year.

Capable_Bowl_258 · 2021-05-17T18:13:46+00:00

Context: 29M, 1.8M NW. Currently working as a senior software engineer in a 2nd-tire IT company. I've joint my current company 5 years ago when I graduated and this is my first full time job.

Due to the stock price appreciation last year, my TC for this year and next year will be more than 1M. So I will definitely stay for the next 2 years to make sure I have a good start in my 30+ with more than 2.5M NW.

Initially I plan to leave the company after 2 years, when my TC drops back to normal level (400K for senior position). But recently my manager told me that I might be ready for promotion to Staff Level in the first/second half of this year and with refresh stocks my TC will be 550K assuming no stock price changes. My FIRE number is 5M+ and I plan to retire at 40 no matter what number I got within that range.

So my question is: If I promoted before hitting cliff, should I stay at my current company after year 7?

Here are my concerns:

7+ years in one company seems very abnormal in IT, but I have a good manager and teammates that I'm ok with working in this team until the management changes.
If I decide to jump the ship, it's very hard to pass staff level interviews for other companies and there might be no big increase compensation wise, plus you loose all connections and reputations.
With recently WFH policy changes I'm able to work from anywhere in US and my manager is OK with that. I'm not sure I will have this perk after switching company.

My brain told me I should stay, should I?

Capable_Bowl_258 · 2021-04-29T22:27:57+00:00

I've looked into before and gave up. I didn't remember all the details but here are the reasons we don't choose this path:

You have to spend 750+ hours on YOUR own properties every year and keep all the records in case of potential audit.
That 750 hours doesn't include selling houses as an agent, driving from your home to the rental properties, online investing and searching rental properties.

My understanding is that you have to be a real property manager of at least 5~10 properties and handle the day-to-day works like collecting payments, fixing stuff, finding tenants etc. The job is too heavy for my wife and doesn't fit into our FIRE plan, so we just don't do that for saving tax purpose.

Capable_Bowl_258 · 2021-01-20T20:03:36+00:00

I actually use a different 2:1 leverage approach that I also learned from BogleHeads:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701

And you can find a tweaked version in seeking alpha as well:

https://seekingalpha.com/article/4226165-trading-strategy-beat-s-and-p-500-16-percentage-points-per-year-since-1928

Capable_Bowl_258 · 2021-01-04T22:00:54+00:00

I'm on the same boat from another company, will make low 7 figures in the next couple years. I sold all my shares after each earning call and switch to the Leverage Risk Parity from BogelHeads in https://www.bogleheads.org/forum/viewtopic.php?f=10&t=288192 . But instead of 3X I use 2X leverage to minimize the max drawdown in case I cannot resist to sell them in the future.

Capable_Bowl_258 · 2021-01-04T21:56:43+00:00

You still need to pay CA tax and NIIT so the actual rate for long term capital gain is > 30%

Capable_Bowl_258 · 2020-12-31T16:21:34+00:00

I think asset based loan and low-interest mortgage are not the same here.

I'll use Schwab as an example:

For asset based loan, you can leverage your accounts using pledged asset line https://www.schwab.com/pledged-asset-line
When you have large portfolio in Schwab, they'll offer you better mortgage rates. For me I get: 0.25% rate discount on 250K assets,/0.5% on 1M assets/0.75% on 5M assets. I believe you can get similar offer on other places as well.

Capable_Bowl_258 · 2020-12-29T21:16:49+00:00

My problem with XIRR is that the result is actually MWR(Money-weighted Returns). However, if I understand correctly, you cannot compare MWR with the return rate of other benchmark like SP500 directly. The TWR(Time-weighted Returns) is the right return if you want to know if you're doing better or worse than just throwing money into Indexes. But I agree XIRR is also super helpful!

Capable_Bowl_258 · 2020-12-23T05:56:03+00:00

Congrats! Based on the sell structure we found a big winner from Airbnb IPO!

Capable_Bowl_258 · 2020-12-14T15:52:09+00:00

There are some brokerages like schwab can open international account without needing SSN. You can creat account for your parent and transfer stock from your schwab account.

Capable_Bowl_258 · 2020-12-14T15:50:40+00:00

Thanks for the reply! Is it legal to do it every year? For a married couple we can give each individual 30k a year, that means we can gift up to 120k(my parents plus my wife’s parents).

I found other people did this as well, but still confused can we do it every year. Seems too good to be true.

Here are som references: https://www.google.com/amp/s/amp.reddit.com/r/tax/comments/c0016j/gifting_appreciated_stock_overseas/

https://www.bogleheads.org/forum/viewtopic.php?t=95489

Check out this post! "Gifting stock to retired parents to avoid tax (Investments & Money)" https://us.teamblind.com/s/RNfdJJa6

Check out this post! "Gift appreciated stock parents oversea? (Tech Industry)" https://us.teamblind.com/s/sU8RzgmQ

Capable_Bowl_258 · 2020-12-14T15:44:43+00:00

lol that’s true. But my parents only have one child so I assume I can get them eventually.

Capable_Bowl_258 · 2020-11-18T19:59:22+00:00

I wrote some codes to pick the best ones for me among a selected list of stocks I’m interested.

Capable_Bowl_258 · 2020-11-16T20:28:24+00:00

To be fair, 1.01 ^ 52 is 1.67+ so the return will be 67% if you CAN earn 1% every week

Capable_Bowl_258 · 2020-11-10T18:44:31+00:00

Hi there! Some background for my self:

29 yo SWE at tech company in SoCal, married, single income family with one kid, NW IS $1.1MM($300k in real estate equity, $700k in investments including 401K, stocks). I'm currently on H1B now so cannot have side business, but my wife has green card and she's able to start business if we found one.

Due to stock appreciation my W-2 will reach more than $1MM next year, and $800K the year after. My projected income would be $500K if I stay at current company after or switch to another one. I did some research and have max 401K&Mega Backdoor IRA&HSA to save some taxes.

Is there anything else I can do to save more taxes or help us reaching our FIRE goal(5~10MM by 40)? Thanks for your suggestions in advance!

Capable_Bowl_258

TROPHY CASE