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Re: Graduating law student portfolio and loan questions

Seattlenative wrote:Because OP's income as a working couple will be at the very highest Federal, state and local tax rates
hardly
by Bob's not my name
Tue Feb 17, 2015 8:32 am
 
Forum: Investing - Help with Personal Investments
Topic: Graduating law student portfolio and loan questions
Replies: 32
Views: 2549

Re: Graduating law student portfolio and loan questions

Expected combined 2015 earnings are 60k, 2016 projected 200k (possibly a bit conservative). ⋅ Hopefully you didn't pay your last tuition bill before Jan 1, so you can get a $2,000 Lifetime Learning Credit for 2015. ⋅ 2015 is the only year you'll be eligible for the Student Loan ...
by Bob's not my name
Mon Feb 16, 2015 1:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Graduating law student portfolio and loan questions
Replies: 32
Views: 2549

Re: Adjusted Livesoft Income (ALI)

A line will have to be drawn somewhere. :) I have decided that most perks are not going to be included. I lived in employer-owned housing in the past and benefitted from employer-paid travel when I add some vacation days when in overseas destinations, so I understand how those things are helpful. I...
by Bob's not my name
Wed Jan 21, 2015 7:05 am
 
Forum: Personal Finance (Not Investing)
Topic: Adjusted Livesoft Income (ALI)
Replies: 36
Views: 3987

Re: Review a 26 year old's portfolio - Update 2

acejacksingh wrote:I believe if I max out my Traditional 401k I will be able to lower my federal tax bracket to 15% as well. Does that look correct?
Yes, with headroom.
acejacksingh wrote:3) Holding onto individual stocks right now and slowly reducing positions because I don't want to increase my taxable income.
To the extent you can realize LTCG within the 15% bracket you'll pay only MD tax, so use that headroom.
by Bob's not my name
Wed Jan 21, 2015 4:33 am
 
Forum: Investing - Help with Personal Investments
Topic: Review a 26 year old's portfolio - Update 2
Replies: 42
Views: 5013

Re: estimating atfter tax return

Bond yield tax exempt same state = no taxes at all Bond yield tax exempt other states: local state income tax Bond yield for anything else = federal and state income tax plus net investment tax Treasury bond yield: federal income tax plus investment tax, no state US Stock qualified dividends = ltcg...
by Bob's not my name
Sun Jan 18, 2015 3:46 pm
 
Forum: Investing - Theory, News & General
Topic: estimating atfter tax return
Replies: 5
Views: 523

Re: Before Tax or Roth 403(b)?

I think you'd have to be out of your mind to choose post-tax (Roth) over pre-tax (traditional) when your marginal rate is about 34% (MD is 8%, not 5.25; read your tax booklet more closely). A $5,500 Roth contribution consumes $8,300 of gross income, of which $2,800 is thrown away to taxes.
by Bob's not my name
Wed Jan 14, 2015 3:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Before Tax or Roth 403(b)?
Replies: 4
Views: 261

Re: How to transfer estate without including tax man

Wricha wrote:after her pasting
This thread belongs in the domestic violence forum.
by Bob's not my name
Wed Jan 14, 2015 6:50 am
 
Forum: Investing - Help with Personal Investments
Topic: How to transfer estate without including tax man
Replies: 27
Views: 2417

Re: Calculating Partial Deduction for Traditional IRA Contri

I'm not familiar with the deductibility of health insurance premiums that aren't withheld from your pay, but I'd guess (with no research) that they're an itemized deduction. You are saving an extraordinary amount for someone living in a super high cost of living city. I wouldn't complicate things by...
by Bob's not my name
Tue Jan 13, 2015 7:03 pm
 
Forum: Personal Finance (Not Investing)
Topic: Calculating Partial Deduction for Traditional IRA Contribut.
Replies: 14
Views: 1016

Re: Calculating Partial Deduction for Traditional IRA Contri

No, that's not right. Your DC tax probably isn't high enough to exceed the standard deduction, so you're not going to itemize and essentially it's not deductible. Your taxable income for federal purposes is your AGI minus a $4,000 personal exemption and the $6,200 standard deduction, so let's say $1...
by Bob's not my name
Tue Jan 13, 2015 2:50 pm
 
Forum: Personal Finance (Not Investing)
Topic: Calculating Partial Deduction for Traditional IRA Contribut.
Replies: 14
Views: 1016

Re: Calculating Partial Deduction for Traditional IRA Contri

What you're doing seems smart to me. With WashDC added to federal you have a 33.5% marginal rate, so pre-tax savings are attractive. If you max the 401k you might get down to the 15% federal bracket, so at that point post-tax (Roth) savings become more attractive.
by Bob's not my name
Tue Jan 13, 2015 1:47 pm
 
Forum: Personal Finance (Not Investing)
Topic: Calculating Partial Deduction for Traditional IRA Contribut.
Replies: 14
Views: 1016

Re: Calculating Partial Deduction for Traditional IRA Contri

AGI (which isn't quite MAGI) is at the bottom of page 1 of your 1040. Your gross income doesn't appear anywhere on your 1040. Simplistically, AGI is: Gross income - pre-tax health, dental, and insurance premiums withheld from your pay - FSA contributions or HSA contributions - traditional 401k contr...
by Bob's not my name
Tue Jan 13, 2015 1:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: Calculating Partial Deduction for Traditional IRA Contribut.
Replies: 14
Views: 1016

Re: Calculating Partial Deduction for Traditional IRA Contri

chuckwagon1111 wrote:I max-out the 5% match and then contribute an additional 5%); my annual income is in the mid- to high-$60ks.
Sounds like your MAGI should be under $61,000 and you should be fully eligible for a deductible TIRA contribution. Why aren't you just increasing your 401k contribution instead?
by Bob's not my name
Tue Jan 13, 2015 3:58 am
 
Forum: Personal Finance (Not Investing)
Topic: Calculating Partial Deduction for Traditional IRA Contribut.
Replies: 14
Views: 1016

Re: Financ[ing] My Son's Law School

The student is a dependent.
by Bob's not my name
Mon Jan 12, 2015 8:44 am
 
Forum: Personal Finance (Not Investing)
Topic: Financ[ing] My Son's Law School
Replies: 65
Views: 4489

Re: Doing my taxes by hand

I've always done my taxes with a pen and real paper. I know that eventually electronic filing will be mandatory.
by Bob's not my name
Mon Jan 12, 2015 6:27 am
 
Forum: Personal Finance (Not Investing)
Topic: Doing my taxes by hand
Replies: 64
Views: 4798

Re: How much is too much for tax deferred investing

Your marginal tax rate may be over 35%. The threshold of the 25% bracket roughly coincides with the threshold of the child tax credit phaseout, which adds 5% to your marginal rate. So you may have 25% + 5% + state (which is deductible against federal at the margin if your itemized deductions exceed ...
by Bob's not my name
Mon Jan 12, 2015 5:32 am
 
Forum: Investing - Help with Personal Investments
Topic: How much is too much for tax deferred investing
Replies: 23
Views: 3025

Re: Investment help for retirement accounts - NoVA2015

2015 roth contributions should go Debt: 503k Mortgage on single family home @ 30 yr 3.375% APR Tax Filing Status: Married Filing Jointly Tax Rate: 33% Federal, 6.00% State Your gross income has to be over $270,000 to put you in the 33% bracket, and your AGI over about $230,000. That means you're no...
by Bob's not my name
Sun Jan 11, 2015 5:53 am
 
Forum: Investing - Help with Personal Investments
Topic: Investment help for retirement accounts - NoVA2015
Replies: 18
Views: 2080

Re: How much is too much for tax deferred investing

By the way, in 25 years $5M may not be enough for retirement.
by Bob's not my name
Sat Jan 10, 2015 4:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: How much is too much for tax deferred investing
Replies: 23
Views: 3025

Re: How much is too much for tax deferred investing

You're a quarter century from retirement. Show us the math on how you're going to suffer grievously from RMDs.
by Bob's not my name
Sat Jan 10, 2015 4:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: How much is too much for tax deferred investing
Replies: 23
Views: 3025

Re: IRA Deduction Tax Question

Not sure I follow your questions. 1) My gross income is about 102,000 but there may be another 10K in dividends or cap gains [tax]. I think this means my MAGI is right in the middle of that phase out window. Right? 2) I know with things like the child tax credit, a tax deferred contribution to a ret...
by Bob's not my name
Sat Jan 10, 2015 12:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: IRA Deduction Tax Question
Replies: 7
Views: 625

Re: Getting Married - Want advice merging Portfolio & Taxes

Our gross income is ~$200k - subtract $36k for 401k contributions, and we should be in the 25% tax bracket. And your pre-tax insurance premiums and your HSA contributions and at least the $12,600 standard deduction and $8,000 in personal exemptions. As for your AGI, it sounds like it will be about ...
by Bob's not my name
Sat Jan 10, 2015 11:06 am
 
Forum: Investing - Help with Personal Investments
Topic: Getting Married - Want advice merging Portfolio & Taxes
Replies: 24
Views: 1973

Re: Getting Married - Want advice merging Portfolio & Taxes

Tax Rate – 25-28% (we are going to be on the border depending on deductions). I think our AGI will be <$181,000, but it will be close. The Roth phaseout for 2015 is MAGI $183,000 - $193,000. $183,000 would put your taxable income at $162,400, which is $11,000 above the 25% bracket, but since you sa...
by Bob's not my name
Sat Jan 10, 2015 6:40 am
 
Forum: Investing - Help with Personal Investments
Topic: Getting Married - Want advice merging Portfolio & Taxes
Replies: 24
Views: 1973

Re: Maxing 401k vs Roth 401k vs Roth IRA

Rule of thumb: 1. Contribute enough to pre-tax 401k to get the full company match and drop into the 15% federal bracket (18% including your state tax) and get your AGI under any phaseouts that affect you. 2. Contribute to Roth IRA. Unless your income and/or wealth is modest, or unless you're plannin...
by Bob's not my name
Thu Jan 08, 2015 5:53 am
 
Forum: Investing - Help with Personal Investments
Topic: Maxing 401k vs Roth 401k vs Roth IRA
Replies: 25
Views: 2396

Re: Finance My Son's Law School

The debt totals mentioned are appalling. I don't remember the exact numbers but my kid made about $50,000 in the summers, borrowed about $20,000 (paid off within a year of graduating), got the LLC in graduation year, got a $10,000 advance from the hiring firm that helped with start-up costs like apa...
by Bob's not my name
Sun Jan 04, 2015 8:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: Financ[ing] My Son's Law School
Replies: 65
Views: 4489

Re: Finance My Son's Law School

Sorry about all the abuse. bogleheads hate it when you pay for your kids' education. I paid for my kids' graduate school, including one law school degree -- the lawyer is now making twice what I am, which is what Americans used to want before we got selfish. I agree with other posters that the debt ...
by Bob's not my name
Sun Jan 04, 2015 4:23 pm
 
Forum: Personal Finance (Not Investing)
Topic: Financ[ing] My Son's Law School
Replies: 65
Views: 4489

Re: New job with Vanguard options! Thoughts on 401k?

It sounds like you're paying part of the cost of your MBA yourself, since you are accumulating some debt. Your tax situation argues for traditional 401k. I see these possible elements of your tax situation: ⋅ High state tax (7%?) ⋅ 25% nominal federal rate ⋅ If you are ...
by Bob's not my name
Fri Jan 02, 2015 4:23 pm
 
Forum: Investing - Help with Personal Investments
Topic: New job with Vanguard options! Thoughts on 401k?
Replies: 16
Views: 1264

Re: Roth IRA

I usually sell my spp shares in 6 month intervals since my company offers this option semiannually. The company allows you to buy and sell every 6 months at at least a 15% return. I'm guessing this is a plan that allows you to buy shares at 15% off the price at the start or finish of the 6-month pe...
by Bob's not my name
Sun Dec 28, 2014 6:54 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth IRA
Replies: 6
Views: 2006

Re: Considering a pay cut for a career change

You are probably paying $15,000 in taxes (federal income tax, loss of child tax credits, payroll tax, state income tax), on your top $40,000 of income. Still leaves you $25,000 lighter, but that's the number you should be thinking about, not $40,000. 30% seems incorrect for two reasons: With bonuses...
by Bob's not my name
Sat Dec 27, 2014 6:55 am
 
Forum: Personal Finance (Not Investing)
Topic: Considering a pay cut for a career change
Replies: 19
Views: 3008

Re: 70-Year Old Retiree: Taxes, Etc

Can the OP conceivably avoid taxation of SS with $86,000 of other income and large IRAs? I thought it maxed out way below that. Also, "aggressively" might not make sense. For example, the OP's state might exempt conversions and withdrawals based on age, in which case it might be better to ...
by Bob's not my name
Wed Dec 24, 2014 9:29 am
 
Forum: Personal Finance (Not Investing)
Topic: 70-Year Old Retiree: Taxes, Etc
Replies: 16
Views: 1726

Re: Taking mortgage to contribute more to Roth

Unclear why the 401k loan is risky. OP hasn't said there's a repay-on-termination requirement -- some plans have this, but not all.
by Bob's not my name
Wed Dec 24, 2014 7:58 am
 
Forum: Personal Finance (Not Investing)
Topic: Taking mortgage to contribute more to Roth
Replies: 23
Views: 2426

Re: 70-Year Old Retiree: Taxes, Etc

OP is seven years from retirement.
by Bob's not my name
Wed Dec 24, 2014 7:28 am
 
Forum: Personal Finance (Not Investing)
Topic: 70-Year Old Retiree: Taxes, Etc
Replies: 16
Views: 1726

Re: Moving to lower-tax state: 401k contribs

Check the tax rules and make sure that both states allow you to deduct 401(k) contributions from your taxable income. I think only Pennsylvania taxes 401k contributions. New Jersey taxes TIRA and 403b contributions. Massachusetts taxes TIRA contributions. If you are staying with the same company, c...
by Bob's not my name
Wed Dec 24, 2014 5:23 am
 
Forum: Investing - Help with Personal Investments
Topic: Moving to lower-tax state: 401k contribs
Replies: 3
Views: 888

Re: New investor. Doesn't qualify for Roth. Help

MAGI is not what you make. You're still not eligible for direct Roth IRA contributions, but $129,000 MAGI is equal to about $155,000 gross income, depending on several factors. "I make" would normally be interpreted to mean earned income, not gross income, but you say you have no investmen...
by Bob's not my name
Tue Dec 23, 2014 9:50 am
 
Forum: Investing - Help with Personal Investments
Topic: New investor. Doesn't qualify for Roth. Help
Replies: 29
Views: 2190

Re: Tax Planning for 2015

$340,000 of gross income will equate to an AGI of about $300,000. ⋅ You'll be subject to the ACA 0.9% tax on wages and the ACA 3.8% tax on investment income. You're well over the thresholds, which aren't inflation-adjusted. ⋅ The ATRA personal exemption phaseout starts at about A...
by Bob's not my name
Tue Dec 23, 2014 6:20 am
 
Forum: Personal Finance (Not Investing)
Topic: Tax Planning for 2015
Replies: 13
Views: 3244

Re: New investor. Doesn't qualify for Roth. Help

Sents wrote:Utahgolf, there is a loophole for rich people called backdoor roth.
It's not for rich people, it's for high earners.
by Bob's not my name
Mon Dec 22, 2014 7:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: New investor. Doesn't qualify for Roth. Help
Replies: 29
Views: 2190

Re: New investor. Doesn't qualify for Roth. Help

UtahGolf wrote:But according to the Roth website, if I make over 129k, I am not allowed to have a Roth ira.
This is incorrect. You can make over $129k and still contribute directly to a Roth IRA. What's "the Roth website"?
by Bob's not my name
Mon Dec 22, 2014 7:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: New investor. Doesn't qualify for Roth. Help
Replies: 29
Views: 2190

Re: Simple tax question--If 401(k), no tax deduction for tIR

Even if you have a (solo?) 401k, your non-working spouse can make deductible TIRA contributions, provided your MAGI is under $181,000 -- that would typically mean gross income under $200,000. You can make deductible contributions yourself provided your MAGI is under $96,000 -- which would typically ...
by Bob's not my name
Mon Dec 22, 2014 1:05 pm
 
Forum: Personal Finance (Not Investing)
Topic: Simple tax question--If 401(k), no tax deduction for tIRA?
Replies: 4
Views: 349

Re: Lifetime Learning Credit for two tax years

That's understandable. Debt is bad, but borrowing briefly to avoid temporary 50% taxation may make sense. Looking at it another way, a $5,000 IRA contribution does not require $5,000, only $2,500.
by Bob's not my name
Sat Dec 20, 2014 12:43 pm
 
Forum: Personal Finance (Not Investing)
Topic: Lifetime Learning Credit for two tax years
Replies: 9
Views: 628

Re: Federal Taxes - Sticker Shock (And how to reduce)

1) How to reduce taxable income for this year? 2) How to plan for next year? I think these are two entirely separate things. I think we're agreeing on most things, but not on this. My point was that these two things are not separate at all, in fact they're pretty much the same thing. The 2014 spous...
by Bob's not my name
Sat Dec 20, 2014 12:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Federal Taxes - Sticker Shock (And how to reduce)
Replies: 58
Views: 5501

Re: Lifetime Learning Credit for two tax years

Can you give an example of when a $4,000 deduction would be worth more than a $2,000 credit for a taxpayer with income low enough to qualify for both? Edit: Came up with one myself. If you had only $4,000 of eligible expenses the LLC would be $800 while the $4,000 deduction might be worth $1,000, d...
by Bob's not my name
Sat Dec 20, 2014 11:54 am
 
Forum: Personal Finance (Not Investing)
Topic: Lifetime Learning Credit for two tax years
Replies: 9
Views: 628

Re: Lifetime Learning Credit for two tax years

Can you give an example of when a $4,000 deduction would be worth more than a $2,000 credit for a taxpayer with income low enough to qualify for both? Edit: Came up with one myself. If you had only $4,000 of eligible expenses the LLC would be $800 while the $4,000 deduction might be worth $1,000, de...
by Bob's not my name
Sat Dec 20, 2014 8:37 am
 
Forum: Personal Finance (Not Investing)
Topic: Lifetime Learning Credit for two tax years
Replies: 9
Views: 628

Re: Lifetime Learning Credit for two tax years

You have it right. You should split your tuition payments between this calendar year and next so as to maximize your LLC. Prepaying enough now to get the full credit for 2014, while leaving enough due and paying that remainder in 2015 will get you $4,000 in credits instead of $2,000. Note the AGI li...
by Bob's not my name
Sat Dec 20, 2014 5:41 am
 
Forum: Personal Finance (Not Investing)
Topic: Lifetime Learning Credit for two tax years
Replies: 9
Views: 628

Re: Federal Taxes - Sticker Shock (And how to reduce)

25% nominal bracket + 5% due to child tax credit phaseout for AGI $110,000 - $150,000 + 2.1% due to student loan interest deduction phaseout for AGI $130,000 - $160,000 --------------- 32.1% marginal rate Your AGI is probably about $130,000. If your gross income were to increase by about $30,000 you...
by Bob's not my name
Sat Dec 20, 2014 4:56 am
 
Forum: Personal Finance (Not Investing)
Topic: Federal Taxes - Sticker Shock (And how to reduce)
Replies: 58
Views: 5501

Re: Federal Taxes - Sticker Shock (And how to reduce)

Federal marginal rate = federal only, income tax only

32.1% actually
by Bob's not my name
Fri Dec 19, 2014 8:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: Federal Taxes - Sticker Shock (And how to reduce)
Replies: 58
Views: 5501

Re: Federal Taxes - Sticker Shock (And how to reduce)

OP's non-working spouse is definitely eligible for a deductible IRA contribution. They're tens of thousands of dollars under the phaseout. OP's federal marginal rate is high: 32.5% Homework assignment: why is the OP's federal marginal rate 32.5%? Hint: the OP can reduce his marginal rate by making m...
by Bob's not my name
Fri Dec 19, 2014 7:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Federal Taxes - Sticker Shock (And how to reduce)
Replies: 58
Views: 5501

Re: Close to Roth IRA limit should I do Roth or Back door?

I look at it as only a matter of time (this year, next year, following year) when you will be ineligible for Roth contributions. Not necessarily. The income limit goes up a couple thousand every year, the 401k limits go up about $1,000/year for a couple over 50, and pre-tax insurance premiums go up...
by Bob's not my name
Wed Dec 17, 2014 7:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Close to Roth IRA limit should I do Roth or Back door?
Replies: 12
Views: 1340

Re: Could it be worth using Roth even in a high tax bracket?

it's tax rate that matters, not tax bracket For the record though, there really aren't many people who can or should do everything pre-tax. If your income allows you to deduct a Traditional IRA contribution (under $60K for a single or under $96K for a married couple), your tax rate is probably low ...
by Bob's not my name
Wed Dec 17, 2014 12:37 pm
 
Forum: Investing - Theory, News & General
Topic: Could it be worth using Roth even in a high tax bracket?
Replies: 37
Views: 2483

Re: Could it be worth using Roth even in a high tax bracket?

a Roth 401k makes sense for 2 types of people: 1. Young people in lower tax brackets working in states with no or low income taxes. To be in the 15% bracket, a single earner has to have gross income under $50,000. In the 15% federal bracket and with no state income tax, post-tax (Roth) saving is at...
by Bob's not my name
Wed Dec 17, 2014 10:08 am
 
Forum: Investing - Theory, News & General
Topic: Could it be worth using Roth even in a high tax bracket?
Replies: 37
Views: 2483

Re: Could it be worth using Roth even in a high tax bracket?

As has been discussed by others above, uncertainty is a constant. Roth is a different risk choice, not a reduction of uncertainty. I agree with the others above that it's nice to have both Roth and traditional. But having and getting are two different things, and the cost of getting Roth must be con...
by Bob's not my name
Wed Dec 17, 2014 9:15 am
 
Forum: Investing - Theory, News & General
Topic: Could it be worth using Roth even in a high tax bracket?
Replies: 37
Views: 2483
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