How A Student Can Make $15K in a Month without Working More

Some of you may have read my post How To Maximize Your Return in Graduate School and if you had I’d love to hear how your 2019 goals have come along. If you have not read the previous post I would go read it first, but keep in mind there have been some changes by the IRS in 2019, so make sure to come back to this post. These posts can significantly increase your tax return. Just make sure to come back before the end of November! Timing is important!

Increasing a student’s income by $15,000 in one month is a pure miracle in my opinion and one that was given to us! Plus we will get back over $6,000 in tax credits. I want to share this with you, because it’s simple and it may be possible for you as well.

God’s timing is always on-time and never late.

How did we make $15K in a month without working more? I transferred a Traditional IRA (pretax IRA) to a Roth IRA (post tax IRA).

Wait but aren’t there penalties and taxes? Yes, there are penalties and taxes but we actually will not have to pay them because my husband is still a medical student and still owes one more semester of medical school tuition.

Check if this strategy could work for you: Do you answer “yes” to the following questions?

  1. If you are married, $24,000 is the standard deduction ($12,200 single); therefore, stick to an income at or below $24,000 so you don’t have to pay Federal taxes on this amount as of 2018!
  2. Do you have an IRA or 401K or 403B? Any amount may work in your favor!

If yes, keep going…

  1. Has your IRA been established for 5 or more years?
  2. Investment income must be $3,600 or less for this year. (rental properties, savings account interest, dividends, etc.)
  3. Do you have $10,000 or less of qualifying educational expenses?
  • If there were contributions $10K or more you can use $10K without tax penalty towards your tuition (or your spouses) and qualifying educational expenses.

If you answer “yes” to all three above, keep going?

There is actually an EITC (Earned Income Tax Credit) which will refund you a % of your income (see chart below). That’s right you can actually get credited $ for earning a low to moderate income! Checkout the max earned income amounts here. Married filing jointly with two children can earn up to $52,493. The max almost doubled from 2018. If you are not sure if you qualify for EITC check here.With EITC the more you make doesn’t mean the higher the return. There is a chart to allow you to figure out the exact credit you will qualify for based on your income or roll over amount. See Publication 596 for an idea of the credit ranges. For 2019 tax year, the credit ranges from $529 to $6557 depending on filing status and how many children you have (you do not have to have a child to claim Earned Income Tax Credit).

  • Example for 2019: A couple married filing jointly with two children would qualify for the maximum earned income tax credit of $5,828 by earning at least $14,550 but less than $15,550. Always seek out your CPA for exact numbers.

Imagine me giving you a GIANT wink! Publication 596 is going to give you the info you need to know how much to rollover from your pre-taxed account to your Roth IRA to maximize your credit. Remember you have to do this in 2019 for it to count for income in 2019. You can rollover more in 2020 also.

Side note: For those with a child or two, this credit is in addition to child credits so married filing jointly with two children will get those as well based on income. Whoo-hoo! Its like a credit for changing all those dirty diapers 😉

Whew! Take a deep breath! The charts and math may be super confusing to you. If they are, then call up a CPA and get scheduled to meet with him or her soon! But if you answered “YES” to all the questions, then there is good news! You may only be fined the 10% early withdraw and not have to pay taxes on the amount you withdraw as long as you are under $24,00 for married filing jointly or $12,000 for single status.

AND IF YOU ARE STILL PAYING EDUCATIONAL EXPENSES, then up to $10K can be used toward educational expenses without paying the 10% early withdrawal penalty!

*check with your financial advisor to make sure you are past the 5 year threshold as well.

Again, I’m just sharing how a little miracle was worked out for us to increase our income, allow for us to pay off some tuition without penalties, and increase our tax return. I am not a CPA or Certified Tax Specialist. I just hope that this post helps you get a higher tax return to aid in your medical school journey!

But he said to me, “My grace is sufficient for you, for my power is made perfect in weakness.” Therefore I will boast all the more gladly of my weaknesses, so that the power of Christ may rest upon me.

2 Cor. 12:9

Photo by Kelly Sikkema on Unsplash

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Most people by the time they are 30 years old have graduated college and been established in their career or hometown for a few years, but that isn’t my adulting story. Living a nontraditional life I have learned a lot of maybe not so random skills, which has lead me to start this blog. I love helping women and their family find safer solutions to the not so regulated personal care industry, staying at home with Evelyn Paige, and dreaming with my husband.

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