Graphic by: CKongSavage.com
Taxes are our largest ongoing liability. As a result, it behooves us to optimize our taxes as much as possible.
The good thing about having multiple income streams is the financial security it provides. The bad thing about having multiple sources of income is that taxes are a little more cumbersome to file.
My main income sources come from stock dividends, bond income, real estate rental income, occasional 1099 income, venture debt income, private equity income, and real estate crowdfunding income.
Before I had a family, my old goal was to shield as much income from taxes as legally possible and keep my Adjusted Gross Income to no greater than $200,000 a year. After ~$200,000 per person, the Alternative Minimum Tax used to really start to kick in as deductions were also phased out.
Thanks to lifestyle inflation and the need to support a family, I’ve decided to shoot for and limit our household income up to $350,000. The marriage penalty tax has all but disappeared after the Tax Cuts and Jobs Act was passed in 2017. Therefore, it’s OK to earn more money now. Besides, after $200,000 per person and $350,000 for a family of up to four, I’ve noticed there is no incremental increase in happiness.
The majority of actions to reduce your taxes must take place during the calendar year unless you’re filing as a business entity on a fiscal year. So if you want to pay less taxes, it’s worth setting aside some time during the holidays and wrestle this beast to the ground.
Charitable Donations
Being able to give your time and money away to worthy causes is one of the best benefits of being financially independent. No longer will you always feel conflicted about whether you should save and invest your next dollar versus helping someone in need. You just tend to give more because you can.
Just keep in mind there are guidelines you have to meet in order to claim deductions on charitable donations. Here are several things to keep in mind:
- You’ll need to itemize deductions and file Form 1040.
- The charity organization must be qualified with the IRS and be actively tax exempt. This excludes political candidates and organizations, as well as individuals.
- Used items such as housewares and clothing must be in good condition or better for them to be deductible.
- Donated vehicles can be deducted at fair market value if you meet certain requirements. For example, the charity must sell your car well below market price to a person in need, or the organization must make major repairs to increase the car’s value. Alternatively, you could qualify if the charity will use the car for purposes such as delivering meals to needy individuals.
- If the total of your non-cash contributions is greater than $500, you’ll need to file Form 8283.
- You’ll need a written record of all cash donations with the date, amount, and charity name. So keep your cell phone bills for text donations and any relevant bank statements.
- If you donate $250 or more in property or cash, you’ll need a statement from the charitable organization detailing your gift and if any services or goods were given to you in exchange.
- And if you receive goods or services for a donation, you can’t deduct your entire contribution. The value of what you received must be less than your donation, and you can only deduct the difference.
- If you are volunteering and performing services for a charity using your car, you can deduct mileage.
- Travel expenses can be deducted if you go on a trip with a qualified charitable organization and you’re “on duty in a genuine and substantial sense throughout the trip” per the IRS.
- Donations of property are generally deducted at fair market value based on what they would sell for on the open market.
- You can avoid capital gains on appreciated stocks held over a year if you donate them to a charitable organization. The amount you can deduct is determined by the stock’s fair market value on the contribution date.
Giving Percentage Rates By Income
Here are some interesting statistics on average charitable contributions based on income for individuals claiming itemized deductions.
It is great to see the sub-$20,000 group give away such a high percentage of their income. I remember when I was working minimum wage service jobs, those who also worked in minimum wage service jobs tended to tip the best.
At lower income levels, it’s all about giving and helping each other survive.
Here’s another giving by income chart from the National Center For Charitable Statistics. It’s interesting to see the income groups that give the least earns between $200,000 – $1,000,000.
Perhaps the main reason is due to the higher taxes paid through regular W-2 income. After all, paying taxes is a form of charity since your tax dollars get redistributed to help others.
I’ve written a lot in the past about how households making $300,000 and $500,000 a year in expensive cities are just living regular middle-class lifestyles. Part of the reason why is because a huge percentage of their income is going towards taxes.
Once you get over $1 million a year in income, a greater percentage of income tends to come from investments, which are taxed at a lower rate.
Capitalize Losses On Bad Investments
If you own securities or property that have been declining and you’re below your cost basis, consider liquidating before year end if you don’t anticipate a recovery.
Losses on property held for personal use can’t be deducted however, only investment property losses can be written off. And you’ll also need to look at the net of your capital losses and gains, because if your gains are higher than your losses, you’ll owe money on the difference.
Under the tax code, an individual may deduct up to $25,000 of real estate losses per year as long as your adjusted gross income is $100,000 or less and if you “actively participate” in managing the property. The deduction phases out as an individual’s income approaches $150,000. Individuals whose adjusted gross income exceeds $150,000 are not eligible for this deduction. This income threshold hasn’t changed for a while.
Note that you cannot deduct rental losses to your active income (e.g. day job income). Rental losses can only be deducted from passive income. You report your rental income and deductible expenses on IRS Schedule E. The IRS reports that roughly half of the filed Schedule E forms show losses.
Unfortunately for stock investment losses, you’re still only allowed to deduct $3,000 a year in capital loss deductions. I’ve had losses of $50,000 or more before that will take over a decade to deduct! At least you can carry over unused losses into the next year and so on. $3,000 isn’t a huge tax break for the year if you qualify, but every bit helps when you’re on a mission to pay fewer taxes.
Deferring Income And Itemized Deductions
It’s good practice to anticipate and prepare for changes to your income in the upcoming year. If your income is likely to go down next year, you’ll want to take as many deductions in the current year as possible and vice versa.
Individual Tax Moves
You can make additional contributions to your 401k before year-end if you haven’t already maxed it out.
You can make current year IRA and Roth IRA contributions until April 15 the following year. You can wait to see what your modified AGI will be and then contribute accordingly.
You can also accelerate your charitable contributions to the current year. One way to give is to strategically use your credit card when making a donation because deductions are based on the date your card is charged, not the date you actually pay off your credit card bill. In other words, you can make a donation via credit card on December 30, 2019, and not have to pay it off until January 2020.
If you’re not subject to AMT, you can also consider paying property tax installments and state taxes in the current year that aren’t due until next year. Accelerating these payments may help you benefit every other year and lower your tax burden for the current taxable year.
You can also try asking your employer if they can pay your year-end bonus in the following year if you want to defer income. Back when I was working in finance we had the option to defer our entire year-end bonus until some later date by 1 – 3 years.
Finally, you can consider reinvesting some proceeds into Opportunity Zones, which may end up being tax-free if you hold for the required period of time.
Business Tax Moves
A business which is cash-based, not accrual-based, can defer taxable income to the following year by sending December invoices at the very end of the month. The reason this can work is the business won’t receive payment for those invoices until January or later, and the business’ taxable income isn’t captured until the date the cash comes in.
Companies and sole proprietors can also reduce taxable income in the current year by charging business related expenses in 4Q that they’d normally take in Q1 of the following year. If you expect your business to grow rapidly in the following year, then wait until the following year to load up on capital expenditure.
If you’re having a great business year, simply wait until the new year to cash your November and December checks in January. Although, there’s always a risk the vendor might disappear or go bust before you can cash your check. Make sure you know what the time limit is for cashing in a check as well.
If your business needs a vehicle and also is having a great year, consider buying a 6,000+ SUV or truck by 12/31. Let’s say you buy a $70,000 Range Rover Sport and use it 100 percent for business. Tax law allows you to deduct $70,000 (or a lesser amount if you would like – in this case, you use Section 179 expensing).
If the Gross Vehicle Weight is 6,000 pounds or less, your first-year write-off is limited to $10,000 ($18,000 with bonus depreciation as limited by the luxury auto limits). You can learn more about the tax rules for writing off a vehicle here.
Finally, a great private business strategy to hire a close friend or relative who is in a lower tax bracket than your business tax bracket. For example, you could hire your high school son for $3,000 to redesign your website. His $3,000 in earnings is tax free. Meanwhile, you reduce your taxable income by $3,000 and hopefully get a slick new website while teaching your son about work.
Related: 10 Reasons Why Starting An Online Business Is A No-Brainer
Review Your Flex Spending Account (FSA)
Make sure you don’t lose any money in your flex spending account if you haven’t yet spent as much as you anticipated this year. Check with your employer if your plan is eligible for a rollover of unused funds until March 15 of the following year.
On the other hand, if you’ve already run out of funds in your flex spending account but have things like medical work or fillings to do at the dentist, try to postpone them until next year if they aren’t urgent. That way you can save on taxes by allocating enough funds in next year’s FSA to cover those expenses.
If you’re planning on leaving Corporate America next year, get your physical done this year (usually free under preventative care). Also consider going to specialists to treat specific injuries. Maybe you need an MRI for a bum knee. Maybe you should finally see a pulmonologist for your asthma or COPD.
Try and get your money’s worth when it comes to healthcare. Don’t neglect physical ailments that are bothering you, for they might get worse and more difficult to fix in the future.
Consider Revising Your Withholding
Even though you probably submitted your W-4 form to your employer ages ago, you can still file a revised form to make adjustments to the remaining pay periods left in the year. If you anticipate you haven’t withheld enough taxes so far this year, you can increase your withholding to help reduce penalties and fees when you file your taxes.
Check if you’ve already paid 100% of your current tax liability this year. If so and your AGI is less than ~$150,000, you should be able to avoid being charged a penalty. But you’ll need to have paid 110% of your current tax liability in the year to avoid getting dinged if your AGI is above ~$150,000.
This safe harbor method is generally the easier option to avoid paying a penalty because the alternative is to have withheld 90% of your tax liability, which can be difficult for freelancers and independent contracts to calculate.
If you are earning both W-2 wages and 1099 income, bumping up your January 15th estimated tax payment to compensate for having underpaid in previous quarters doesn’t work. Each quarter is treated separately with estimated taxes. However, withheld taxes on paychecks are treated as if they were paid throughout the whole year.
Review Your Retirement Contributions To Date
The maximum 401k contribution limit increases to $19,500 for 2020 from $19,000 in 2019. You should max out your 401(k) if you are in the 24% marginal federal income tax bracket or higher to save on taxes.
Even though this is the season of giving, don’t forget to pay yourself first. Take a look at how much you’ve contributed to your retirement accounts so far to date, and make additional contributions to the maximum.
If you only have one retirement account and it is already maxed out, check if you’re eligible to take additional deductions by opening additional accounts. You may not qualify if you have a high AGI, but it’s always good to know what your options are, especially if your income is likely to decrease in the future.
Know The Tax Rules
We all need to spend several hours each year reviewing and understanding the latest tax rules. Given the tax code is tens of thousands of pages long, spending several hours a year is the least we can do.
Below are the 2020 federal income tax rates for individual taxpayers and married individuals filing joint returns.
Based on the latest federal income tax rates, the optimal gross adjusted income for an individual is about $163,300 and about $326,600 for married couples with up to three children. At these income levels, you’re paying at most a 24% marginal federal income tax rate. Every dollar above requires you to pay a 32% marginal income tax rate.
If you’re making more, but your lifestyle is terrible, consider cutting back on your work hours or change jobs or professions. At the very least, stop stressing about having to be the best employee possible to get that raise and promotion.
We don’t know exactly how much more or less we’ll make the next year, but we can all make an educated guess and plan accordingly.
If you want to save more on taxes, start a business or a side business. You can either incorporate as an LLC or S-Corp or simply be a Sole Proprietor (no incorporating necessary, just be a consultant and file a Schedule C and 1040.
Every business person can start a Self-Employed 401k where you can contribute up to $57,000 ($19,500 from you and ~20% of operating profits) for 2020. All your business-related expenses are tax deductible as well.
The first step is to launch your own website to legitimize your business. The next step is to obviously go try and make some income! Most expenses related to the pursuit of such income should be considered a business expense. Below is an income statement example from a sole proprietor.
Start a simple business to pay less taxes and contribute more to pre-tax retirement accounts
Pay Your Taxes With Pride
For those of you who are paying more in taxes than the median household makes a year (~$63,000), feel proud that you are contributing a lot to society.
Taxes are used to pay for defense, healthcare, infrastructure, food and shelter assistance programs, public schools, and more. If these things are considered good, then paying taxes is absolutely a form of giving.
It’s understandable that some people want to raise taxes on others without having to pay more themselves. If you are one of them, I encourage you to start contributing more yourself before going after other people who already are.
Readers, what other tax moves do you recommend making before year-end? Disclaimer: I’m not a tax professional, so please consult one before making any tax moves.
Could purchase a vehicle weighing over 6K lbs for business by 12/31 to get a huge write-off. For example:
Say you buy a $47,000 crossover vehicle that tax law classifies as a truck. Say further that you use the crossover truck 100 percent for business. If the GVWR is 6,001 pounds or more, tax law allows you to deduct $47,000 (or a lesser amount if you would like—in this case, you use Section 179 expensing).
Spreading the tax deduction. If the GVWR is 6,000 pounds or less, your first-year write-off is limited to $10,000 ($18,000 with bonus depreciation as limited by the luxury auto limits).
In this example, the combination of (1) truck status and (2) GVWR of 6,001 pounds or more produces a potential $47,000 first-year tax deduction, whereas failing either truck status or GVWR threshold limits the first-year regular depreciation write off to $18,000 with bonus depreciation.
Great tip and reminder!
Let’s hope folks mainly buy the truck because they need to though.
Sam – Have you ever looked into buying into a partnership that specializes in buying and converting the land into a conservation easement?
This was recently brought on my radar this year when I finally found the CPA I’ve been looking for for years.
I actually bought a couple of units into a deal myself spent $68,600 and that bought me a deduction worth $343,000. This particular deal has a 5:1 ratio of donation (of the purchased land) to deduction (based on the highest and best use appraisal).
My CPA helped calculate how much I should invest to maximize the maximum the IRS allows in terms of deductibility against your AGI. In this case, we calculated that the largest deduction I could utilize in 2019 based on my projected AGI of $350,000, which translated into two units at $34,300/unit. This will save me about $140,000 in taxes and net of the donation is an actual savings of $71,400 (greater than a 100% return).
It’s a great option for high earners in high marginal tax rates. It doesn’t make sense at every income level.
Dom
I’ve heard of it! But haven’t done so. Will look into it. Sounds like a great tax shield. Maybe you want to do a guest post about how to do something like this.
Careful with conservation easements. These are a huge red flag to the IRS and will almost guarantee an audit. In my experience most of these audits are not resolved at the IRS audit team level but instead get elevated to IRS Appeals. Even if the taxpayer prevails after the audit, the taxpayer will incur thousands in legal/CPA fees and an inordinate amount of stress.
-Tax lawyer who charges clients $400 to defend IRS audits
Regarding your statement: “If you’re not subject to AMT, you can also consider paying property tax installments and state taxes in the current year that aren’t due until next year. Accelerating these payments may help you benefit every other year and lower your tax burden for the current taxable year.”
Doesn’t the IRS now limit people to $10,000 in SALT … State and Local Taxes – that’s all taxes including property taxes, etc.
Sam, I would also recommend to look into the Opportunity Zones investment program. On one hand it helps you save on taxes and on the other hand helps to revitalize parts of the city whicg would otherwise not have seen investment opportunities.
Of course, one needs to run the numbers to make sure the deal makes sense and not let the tax tail wag the dog.
Good reminder on Opportunity Zones! I had written about the topic in the past. Haven’t taken the plunge yet because I haven’t found the perfect vehicle to do so yet.
Got 3 more less-known tax saving strategies:
1. If you got family/friends you are supporting financially (who’s likely in a lower tax bracket), consider gifting them long-term appreciated (capital gains) stocks. The transfer is direct – with no changes in cost basis. When they sell, they likely will pay 0% capital gains tax rate where you might have paid 23% federal + x% state rate.
2. Similar strategy as above but for charities – gift appreciated stocks to a Donor Advised Fund (that you control). You can also time it so that you gift it all in one year when extra deductions help and not donate in other years. You can then control when the fund actually distribute money out to charities – so to charities you donate money to yearly anyways, it’ll remain the same for them.
3. If you’ve got 1 property you’re renting out and has no mortgage and you’re living in another primary residence with a large mortgage (and interest deduction), but you’re still pretty close to the $24k total standard deduction limit, consider swapping (move into the no-mortgage place and rent out the with-mortgage place). This way, you still take the $24k deduction, but now your mortgage interest can be used to be deducted from rent. For example, you’re in California – maxed out your State Tax deduction of $10k. Your primary residence has a mortgage where you’re paying $14k interest a year. But your other rental has no mortgage. You’d have itemized deduction of ~$24k – which is useless. But if you swap the 2 residence, you’ll still have standard deduction of $24k. But now you can deduct the extra $14k from rent income.
Great tips! If I buy this new property close by, I will pay cash and rent out my existing property with a mortgage that I just refinanced.
James – Did you mean to address Property Tax? The SALT limit is $10k, but mortgage interest is maxed on a $750k mortgage.
I was indeed talking about Federal Income tax. In my example, the $10k SALT deduction already included property tax. But yes, it could make a difference if the 2 properties have vastly different property tax. For example, assuming property A (currently your rental) still had $0 mortgage interest deduction and property 2 (your primary residence) had $14k mortgage interest deduction.
Example #1. Property A Property Tax = Property B = $5k. Then Property Tax makes no difference. You’ll still have an extra $14k deduction if you swap.
Example #2: A Tax = $3k. B Tax = $8k. Your State income tax is $10k (reaching the SALT limit – which renders itemizing deduction of property tax useless). If you swap, you get an extra $5k in deduction – making it $19k total.
Example #3: A Tax = $8k. B Tax = $3k. State income tax is $10k. If you swap, you lose $5k in deduction from property tax – making it only $9k in total deductions benefit.
Example #4: A Tax = $8k. B Tax = $3k. State income tax is $7k. Without swapping, your itemized deduction will be $24k total and rental deduction will be $8k for a total of $32k. With swapping, your itemized deduction will be $24k still (due to $10k SALT limit) total and rental deduction will be $17k for a total of $41k. So looks like still just $9k in total deductions benefit.
Thanks James.
In your original comment, it read to me like you were confusing SALT and mortgage interest, so I was just clarifying.
The idea of swapping properties to deduct the higher property taxes is a cool point though.
Cheers,
Ben
“Taxes are used to pay for defense, healthcare, infrastructure, food and shelter assistance programs, public schools, and more. If these things are considered good, then paying taxes is absolutely a form of giving.”
Paying your taxes is not like giving to charity. These things generally benefit you *at least defense, healthcare, infrastructure. Even public schools and safety net programs (e.g. food and shelter programs) benefit you like insurance does. You may need them someday. You don’t get to choose what you contribute to directly but they are still there for you. Paying taxes is essentially giving to yourself and not like giving to charity. But I agree it is being a good person to pay your taxes but no one deserves a congratulations or anything. It is pulling your weight for a shared benefit.
Do you think we should broaden the tax base so that everybody pays some income tax who generate income? As of now, a large percentage of the income earning population does not pay any income tax. It might be good if we all pay something to pitch in for our great country.
Amen
Everyone should be on the hook for some taxes, even if it’s a token amount, so that no one is completely invested in raising them.
Frankly, since the most important thing a government can do is provide a stable currency (as this requires them to do everything that makes it stable) a government could just charge usage fees for its currency (recognizing that even the barter system is based on perceived financial value as measured in currency, and therefore subject to a fee), and eliminate taxes altogether.
It might seem like a subtle change at first, but it could have some seriously positive impacts on how budgets are set.
Actually, everyone who generates income pays taxes. (Unless they are paid in cash and live in a no sales tax state.) Up until somewhere around $200,000 in annual income, households pay more in payroll taxes than they do in income tax.
Ugh, I hate seeing this misleading argument about poor people not paying income taxes. No, we should not shift the burden of income taxes to the poor because they pay taxes in other ways outside of income taxes. They pay sales, state, local, property, etc at a much higher burden than you or I do. It’s convenient to narrow the argument down to income taxes, and make it seem like poor people aren’t contributing to society. Way to further a rich person narrative, bro.
How did you go from what I said to “the poor people aren’t contributing to society”? That’s a pretty arrogant statement.
See: Spoiled Or Clueless? Work A Minimum Wage Job As An Adult
Some argue there is a very big benefit if 100% of income-earning Americans pay some amount of income tax because there would be more skin in the game, more fiscal prudence, less waste, more revenue to benefit everyone, and more patriotism.
Feel free to elaborate what you think is the right income tax paying percentage should be for Americans who earn income and why. Further, what are you doing to help society and the poor? Thanks
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The Tax Policy Center has updated its estimate of the percentage of Americans who pay no federal individual income taxes. And the number is: 44 percent in 2018—about 2 percentage points above last year. The share of non-payers will drop steadily until the individual income tax provisions of the Tax Cuts and Jobs Act (TCJA) expire after 2025, causing a 2-percentage point drop.
While the share of households paying no federal income tax will increase, nearly all those households will continue to pay some taxes— whether federal payroll taxes, federal excise taxes, or state taxes.
The large percentage of people who don’t owe federal income tax is a feature, not a bug, of the revenue code. By design, the federal income tax always has excluded a significant fraction of households through a combination of personal exemptions, the standard deduction, zero bracket amounts, and more recently, tax credits.
Passage of the TCJA was the main cause of the 2 percentage point jump in non-payers of the federal income tax. The law’s increase in the standard deduction and its expansion of the Child Tax Credit (CTC) were the main drivers of this result. However, the effects of those changes were dampened somewhat by the elimination of personal exemptions.
The fraction of non-income-tax-payers grew for those in all but the top quintile, and by the largest amount (3 percentage points) among middle-income households.
Due to real income growth over time, the share of those who don’t pay federal income tax will steadily decline by roughly half a percentage point-a-year until the TCJA’s individual provisions expire in 2025. In 2026, the share of those paying no income tax will drop by 2 percentage points.
Anyway, my point…and I concede that it does come across as arrogant…is that by limiting the tax argument to only federal income taxes like you did in your reply to me, and ignoring the full tax burden that people pay, it only serves to feed the narrative that divides us. It makes people think that poor people don’t pay taxes aka contribute like everyone else does. I think the progressive tax system we have now is the right one. However, the top tax rates should be much higher than they are now. And yes, that would mean I pay more in taxes, and a large percent still would not. (if we continue to limit the argument to only federal taxes)
I hope you find the extra money you are looking for, and that it satisfies you in life.
I agree that everyone that generates income should pay an income tax, but I also think the use of the 44% statistic is misleading when paired with comments about people not paying taxes due to exemptions, deductions, tax credits, etc.
According to the tax policy link, 24.7% of people had zero or a negative sum of payroll and income taxes in 2018, so the largest reason for people not paying income taxes is simply that they didn’t have income.
I think a better interpretation of the data is ~20% (44% – 24%) of people had positive income AND didn’t pay taxes, and this group of people benefitted from exemptions, deductions, tax credits, etc.
Sure, that makes sense. Just proposing that everybody who earns income pay some income tax. Yes, there are other taxes, which other people pay as well.
Per the IRS, for both traditional and Roth IRAs. . . you can make 2019 IRA contributions until April 15, 2020.
So you don’t have to do it this month. Since they changed the rules on rollbacks, it might be a good idea to wait so you can see where your modified AGI is going to land, if there is any question you might land on the high side, and have to reduce it, or forego it altogether.
Also, people over 50 have a higher maximum contribution limit for 401(k) plans, as well as for traditional and Roth IRAs, due to catch up provisions.
Good to point out. Thanks
Very useful information. As I have less than a year since starting my small LLC and this would be my first tax ‘season’, it’s a good idea to learn how to save money off these taxes, as the income is still very low and there’s not a lot of money to be squandered. I’ll need to look into all these options and see which I can put to good use.
I’ve been busy gathering things to donate before the month is up for the year. It’s a win win in my book to be able to find things someone else could use, clear up space and get a tax deduction on top of it all.
Fascinating stats on the percentage of giving by income. I can see how taxes paid are a part of that equation. Now if only we could feel confident that the local, state and fed government maximized the use of each of our tax dollars to help those who need it. But at least some of the money should be put to good use!
I’ll reiterate to donate gently used items. Many including myself have a lot of things we buy that we later regret and don’t really need. We take them for granted, therefore we should give them away, get a tax benefit and feel better for helping someone else.
On pace to make 6x the median income in usa for my age this year. I doubt i work much harder…. strategic planning is where it’s at. In 4 years that multiple is projected to grow to 8x. In 8 years the multiple is projected to grow to 13x…. jeez. Just a small bit of planning in the beginning. As a result, I’ll pay a ridiculous amount in taxes…. which is tough for me to think about…. but thanks to your article I’ll be able to navigate the tax landscape a bit more clearly. Thanks!
One tax trick I am employing this year (not really a tax savings though) is how I am dealing with a large capital gains tax I anticipate from selling the medical building I practice in for quite a large profit.
I think my capital gains tax is estimated at $250k from this sale. There were 3 options available, 1) do a quarterly payment plan (I only had 2 quarters to make payments due to timing of sale), 2) increase my withholdings from my income to cover it or 3) take advantage of an irs rule that allowed me to witthold 110% of my previous years tax owed and then settled the difference penalty free in April.
I did #3 which essentially gave me a $250k “float” for over 6 months where I could earn interest on it as well.