Search found 15 matches

by Scott927
Wed Apr 02, 2014 5:30 pm
Forum: Personal Finance (Not Investing)
Topic: Private elementary school tuition - any tax breaks?
Replies: 11
Views: 1267

Private elementary school tuition - any tax breaks?

My daughter was just accepted at a private elementary school with tuition around $8,000/year. Are there any investment or savings vehicles that would provide tax breaks for her tuition payment?

I know about the Coverdell, but since she's staring in September, putting $2k into an account now is hardly going to make a dent. Doesn't seem worthwhile. I might look at it to help pay for high school though.
by Scott927
Sun Mar 16, 2014 10:46 am
Forum: Personal Investments
Topic: Retirement vehicle for 2014 AGI over $160,000
Replies: 9
Views: 1480

Retirement vehicle for 2014 AGI over $160,000

Prior to 2014, my AGI was always under $150,000 so my retirement savings plan looked like this: - Fund employer 401k up to the max employer match - Max out my Roth IRA - Max out my wife's Roth IRA For the most part, after building my emergency fund and paying off debt, that's where it stopped. In 2014, I'm getting a significant income boost and my AGI will surely be over $160,000. Given that, I have a few questions: - I suppose it's possible that something happens and I don't exceed $160k. Should I fund our Roth accounts for now until I'm sure that I'll exceed it and then convert the Roth? - Assuming for now that my income will exceed $160k, where do I put this money? I can't contribute to a Roth, I don't think I can deduct contributions to...
by Scott927
Sun Mar 09, 2014 9:16 am
Forum: Personal Finance (Not Investing)
Topic: S-Corp worth it given my financial situation?
Replies: 16
Views: 3260

Re: S-Corp worth it given my financial situation?

Unfortunately (?), I have an employer-sponsored health insurance plan through my full-time W-2 job so I more than likely can't deduct the premiums I pay. Also, I just got a $5k raise plus a $1k annual bonus bump yesterday so my total income from my primary job is now $102,500 meaning the S-Corp is even less helpful and may even cause me to pay more in expenses and taxes. The way I understand it is: I have $14,500 remaining before I hit the $117k cap. However, I have to pay myself a "reasonable" salary. Let's just say for the sake of argument that the salary is $40,000 (it's been indicated several times in this thread that $30k was unreasonably low). That means I'm withholding from my S-Corp paycheck on $22,500 over the cap, or $2,...
by Scott927
Thu Mar 06, 2014 11:03 am
Forum: Personal Finance (Not Investing)
Topic: S-Corp worth it given my financial situation?
Replies: 16
Views: 3260

Re: S-Corp worth it given my financial situation?

Thanks for the advice everyone. I'll be consulting with a tax professional, but for now I'm leaning towards continuing as a 1099 contractor. Doesn't seem worth the extra overhead at this point.
by Scott927
Wed Mar 05, 2014 9:05 pm
Forum: Personal Finance (Not Investing)
Topic: S-Corp worth it given my financial situation?
Replies: 16
Views: 3260

Re: S-Corp worth it given my financial situation?

Rob5TCP wrote:from Bankrate.com

S Corporations
"S Corporations tend to want to undercompensate and have employees take more in the way of distribution."
Thank you for your reply. I'm not really asking about the validity of the amount of salary I'm taking though. My question is more centered around: given the $117k FICA cap and the fact that I'm so close to it with my regular W-2 job, does it make sense to run the 1099 income through an S-Corp? I'd only have $18,500 of that income subject to FICA anyways, according to my understanding.

If that's the case, are there any other suggestions for how to save money on taxes given this scenario?
by Scott927
Wed Mar 05, 2014 9:03 pm
Forum: Personal Finance (Not Investing)
Topic: S-Corp worth it given my financial situation?
Replies: 16
Views: 3260

Re: S-Corp worth it given my financial situation?

I am a sub s - you can not have gross profits of $250,000 and take a salary of $30k with the balance as dividends. I don't know the exact ratios, but my accountant was quite firm on this. The IRS does have various criteria before they audit. This one does setup flags. That's not quite accurate. The S-Corp would only earn $108,000 of that (the remainder is income from my full-time, W-2 job). I'd take a $30,000 salary against that, probably another $20k or so in deductions and the remaining $58k or so as dividends. Also, I mentioned $30k would probably be the LOWEST I'd be able to conceive of paying myself. I may have to up it depending on various factors but the underlying questions remain the same given the FICA cap of $117k and my situati...
by Scott927
Wed Mar 05, 2014 8:11 pm
Forum: Personal Finance (Not Investing)
Topic: S-Corp worth it given my financial situation?
Replies: 16
Views: 3260

S-Corp worth it given my financial situation?

I earn approximately $95,000/year in W-2 wages with an annual bonus around $3,500. In addition to that, I earn another $108,000 in 1099 income. I considered setting up an S-Corporation to run the 1099 income through so that I can pay myself a $30,000 salary, deduct expenses and then take the remainder as a shareholder dividend, thereby saving FICA taxes on the dividend portion. However, I'm not sure it would be worth the trouble. Here are my thoughts: - I already pay FICA on about $98,500 a year including my bonus. - The FICA cap on wages is $117,000. - As an S-Corp, I have to pay myself a reasonable salary. Let's say the lowest I can consider reasonable is $30,000. So I pay myself W-2 wages from the S-Corp and withhold FICA from each check...
by Scott927
Mon Mar 03, 2014 7:21 pm
Forum: Personal Investments
Topic: Roth or Traditional IRA?
Replies: 1
Views: 288

Roth or Traditional IRA?

So for the past couple of years I've been maxing out my 401k up to the maximum employer match, then maxing out both mine and my wife's Roth IRAs. However, my income has been steadily increasing to the point where this year I plan to gross in the neighborhood of $210,000. I have a couple of questions: 1) Given the income, would I be better off with a Traditional IRA, deferring the taxes until such a time as I'm retired and probably in a much lower tax bracket? I haven't done any of the math on it and I'm not an expert, it just seems like if I do things right and I have an IRA worth exponentially more at retirement (I'm 36) taxing all of my earnings in retirement, even at a lower bracket would cost more money than taxing only my contributions...
by Scott927
Thu Jan 31, 2013 11:56 am
Forum: Personal Investments
Topic: Investing small amounts at a time in S&P index fund
Replies: 8
Views: 1083

Re: Investing small amounts at a time in S&P index fund

Just to be clear. I think Vanguard is pretty obviously the best place for --a retirement saver, as opposed to a trader --who wants to set up automatic investments --who prefers mutual funds to ETFs --who like Vanguard's mutual funds and intends to make them their core or only holdings. If you meet those four conditions, then, yes, consider moving to Vanguard. Thanks for the informative posts. I appreciate you taking the time to give me a hand on this. I actually do meet all four of those so I'll look into moving to Vanguard this afternoon. Now, to derail my own thread, you mentioned total market funds...something like VTSMX? Average annual performance looks pretty damn close to VFINX. Keeping in mind I'm a beginner at a lot of this, what w...
by Scott927
Thu Jan 31, 2013 11:41 am
Forum: Personal Investments
Topic: Investing small amounts at a time in S&P index fund
Replies: 8
Views: 1083

Re: Investing small amounts at a time in S&P index fund

Sounds like everyone recommends moving to Vanguard. :) Right now my Roth IRA account is at E-Trade.
by Scott927
Thu Jan 31, 2013 11:28 am
Forum: Personal Investments
Topic: Investing small amounts at a time in S&P index fund
Replies: 8
Views: 1083

Investing small amounts at a time in S&P index fund

Hello, This is probably a pretty basic question, but I'm 35 and just started a Roth IRA last year which I maxed out. I earn some monthly income from advertising that runs on a website I own, and I'd like to funnel this money into my Roth IRA. That'll cover about $3,600 a year of my max investment for my IRA. RIght now, I've got everything invested in VFINX (Vanguard S&P 500 index fund), which I like. I'd like to add to this in small amounts, but there's a $19.99 commission fee for every trade. I get about $300/month so if I invested that every month, I'd be eating about 6.6% of my money right off the bat. Doesn't seem like a very good idea to me. :) I recall reading somewhere that as a baseline, you don't want to pay more than "X&q...
by Scott927
Fri Aug 10, 2012 1:44 pm
Forum: Personal Investments
Topic: How to invest small sums of cash
Replies: 17
Views: 2330

Re: How to invest small sums of cash

To reiterate what NYBoglehead mentioned, is there a reason why you are avoiding investing in the 401k? The fact that your employer doesn't match is a good reason to invest in the Roth IRA first, but not a reason (by itself) to invest in taxable accounts before the 401k. Is there some other reason you are avoiding the 401k? No, there is no real reason (except possibly lack of experience/understanding). The money I'm looking at investing is not coming from my employer (it's Google Adsense revenue from a website I run). I was under the impression that 401k contributions (being tax-deferred) would have to come out of my paycheck directly and deposited instead to a 401k by my employer. Now, having said that, I could obviously have my employer d...
by Scott927
Fri Aug 10, 2012 1:24 pm
Forum: Personal Investments
Topic: How to invest small sums of cash
Replies: 17
Views: 2330

Re: How to invest small sums of cash

Scott, You can buy S&P 500 and Total Market Index ETFs (along with all the others, but the ERs are a little higher and we don't like to market time/pick winners) with Vanguard commission free if you'd rather not wait to accumulate the $3,000. That said, if you've got plenty large enough of an emergency fund it might make sense to take the $3,000 out of that and gradually replenish until you get back to the number you want. Just a thought on that. Secondly, just because your employer doesn't match your 401k contributions doesn't mean it doesn't make sense not to contribute. After maxing out your Roth IRA, a 401k allows you to accumulate assets tax-deffered and at the same time lower your current tax liability. You need to run your own n...
by Scott927
Fri Aug 10, 2012 1:20 pm
Forum: Personal Investments
Topic: How to invest small sums of cash
Replies: 17
Views: 2330

Re: How to invest small sums of cash

allsop wrote:Several Vanguard funds have a minimum of $3000 for the first investment but after that the subsequent investments are far lower, but that you have to look up on the Vanguard site for details.

So, put the money into high yield FDIC insured (or similar) online bank accounts until you have $3000 and then invest in your desired Vanguard fund.
Thanks for the reply. I would assume that the $3k minimum applies to each account. The Roth IRA has $5k invested in VFINX, but my brokerage account has $0 in VFINX. That'd be great if my $5k from the Roth covered my $3k min on the brokerage account, but I'm not too hopeful on that. I'll check though, thanks.
by Scott927
Fri Aug 10, 2012 12:38 pm
Forum: Personal Investments
Topic: How to invest small sums of cash
Replies: 17
Views: 2330

How to invest small sums of cash

Hello, I'm 35, a total novice investor and just getting to a point where I have extra cash to invest for retirement/future needs. I have no debt and plenty of money in an emergency fund. My employer doesn't match 401k funds, so I maxed out my Roth IRA this year (first year doing so). For now, I've put it all in VFINX (Vanguard S&P 500 Index Fund). I also opened a brokerage account and get around $300/month auto-deposited to it that I'd like to invest somehow. How should I invest these smaller sums of money on a monthly basis? I like index funds but most of the minimum investments are around $3,000 and I'd prefer not to wait 10 months to invest. However, I also don't want to overpay on commissions/fees for a lot of small trades. Again, I...