Since it's been a year since my dad passed I am fully into managing my mom's finances.  I let her use her tax person one more year.  I may even let her use him another year.  He's a nice guy and I'm not sure I'm up to doing it.  That being said we had a little scare today about it.  

Since my dad passed in March 2024, tax planning was a bit weird.  It was hard to estimate things and I did a small conversion from his IRA to a roth because my parents had space in their bracket.  They were in the 22% bracket.  I spent the last few years converting their money in this bracket because of the upcoming scenario.  I'm sharing because I'm sure there are a lot of people around this age probably not thinking about it and they too will be hit with this.

My mom being widowed and suddenly being hit with an RMD and income as a single person.  My mom is a retired state worker.  But because of that her pension is large.  With SS and her pension she starts her income at $105k.  Then add in an RMD and she's looking at $125k.  Then add in dividends or interest and she's closing rapidly on the second level of IRMAA $133k.  

Fortunately for my mom her state medical covers the medicare premiums.  So she can have irmaa and not worry about the extra premium.  But for most people it's a big deal.  Fortunately I had a few years of being able to shift things around and get my mom out of a larger RMD by taking advantage of my parents MFJ status and converting more money out of the IRA into a Roth.

That being said my mom is now stuck with a couple of homes, which she fortunately inherited at a partially stepped up basis.  That will help ease the capital gains if she happens to sell.  But when that happens, unless she passes in the house and my kids fully inherit the house and condo stepped up, my mom will be slammed with massive capital gains.  

How do I view that? Well I figure I'm fine.  My kids are set (either which way).  So if my mom wants to sell her house and buy a different condo then we'll cross that bridge when it comes to it. 

But for many people who are MFJ, perhaps look at your RMDs, pensions, SS, and determine if one of the couple happens to pass, what happens to the other surviving spouse tax wise.  Will you leave them in a bind?  Or will they have enough to sustain themselves? Or will they be in a cycle of draining more of an IRA to get out of the tax predicament caused by becoming single.  

I will admit my mom went from being married and not worrying about money to being single and not worrying about money.  She now freely admits to my aunts and the tax guy (he asked her if I really paid her taxes by CC and gave her a monthly allowance on top of the pension and SS).  The answer is yes.   Money comes in and she doesn't see the taxes or investments.  She gets $x like she wants and if she wants more I give her whatever she wants.  The tax envelope comes in and she tosses it in the box still and I told her give it to the guy.  I also uploaded her estimated payments to him.  Like I said I am not sure I'm ready in doing her taxes too.  I figure she can go see someone and sign it at least.  

Although he tried to roll her refund (i made sure to give her the same amount that she's used to getting back), to next year.  But she was a bit upset so I told her to turn around and drive back and tell him to give her the normal refund.  Like I said my mom likes to see the same amount come in.  She even turned off withholdings because she wants the same amount of money as before my dad passed and I told her I'd cover the taxes from her investments, which I do.  

I wonder if I'll let my kids pay my bills?  Next up automating her payments by check and CC. I've gotten some done (like water, electric, cable, phone) and I got her an amazon CC to only use for amazon.  

DH got a very large raise and a very large bonus. 20% bonus and a 35% raise.  Quite a shocker.  His first year at the startup he got 15% raise (2022).  Then the next year it was 2% (2023).  Then the next year it was 2% (2024).  He got small bonuses as well more like 10%.  I think in 2021 when they started the company he was really, really underpaid and low even for the area. 

This sort of brings him more in line with the area. He's not making what he made.  Nor is he making what he could be making.  But we are now making about double what he started at in 2021.  Yeah that's a bit insane.   But inflation has been crazy.  

As for me, I started my business in 2021. I didn't make money but lost money that year with setting it up, filing LLC, business licenses, etc.  I had a negative number.  Let me tell you it was sort of stressful for both of us to be wondering if we were throwing away good money after bad for me.  And for DH if he was going to regret missing out on his normal income for years.  We certainly didn't expect it to be 4 years and he's still slogging along.

Then in 2022 I made double what I made in 2020 working for the big tax company, then in 2023 I increased my revenue by 26.7%.  Then in 2024 I increased my revenue by 21%.  This year I think i'll increase my revenue by 18%.  But I'm starting to think i'm leveling out and I may not increase my workload by much after this year.  I may start turning away clients.  

Part of it is that DH is making more.  Part of it that we're back to being normal after covid with kid activities.  Part of it is that I think I grew the business rapidly but I'm not sure I have the bandwidth to handle much more.  I've nearly doubled my revenue in 3 years so 100%.  And i'm making 5x what I made on a w2 and I get to stash it a solo 401k.  The question now is what do we do?

I'm waiting for the bonus and raise to hit.  Because I've already earmarked it for a new roof, braces for kids, and taxes.