Search found 2314 matches

by Harmanic
Wed Feb 12, 2025 1:21 pm
Forum: Personal Finance (Not Investing)
Topic: How to Stop Over-Analyzing My Financial Life???
Replies: 30
Views: 2210

Re: How to Stop Over-Analyzing My Financial Life???


I’m 24 years old, and up until a few months ago, my non-retirement finances were almost entirely in HYSA & CDs (95%), with just a small portion in individual stocks on Robinhood (5%). I’ve never been in debt, and I can comfortably afford my already frugal lifestyle.


In another post, you said you are high income. I don't know what you do for a living, but you are young enough that maybe you can turn this hobby into something that can help your career in some way. That way you can turn your analyzing and obsessing into something productive that can help you and others.

I agree with others that it is good to have other interests, but you don't necessarily need to abandon your personal finance obsession altogether.

Finally, it is not ...
by Harmanic
Wed Feb 12, 2025 8:18 am
Forum: Personal Investments
Topic: Escaping the Pit of Doom - A fixed Index Annuity
Replies: 21
Views: 1790

Re: Escaping the Pit of Doom - A fixed Index Annuity





To be fair, BND (total bond index fund) has earned roughly 0% over the past 6 years, and many people buy both income riders and death benefit riders, which would have also taken this FIA down to 0%. Either way, the OP could have done worse.


And to be further “fair”, OP said that he has earned 1.89% over the past two years in an S&P index option. Meanwhile, the S&P closed at 6,068 yesterday, up 48% from 4,090 on 2/10/23.

I wouldn’t expect anywhere near 48% to be credited to an indexed annuity. But it would have been nice for OP to have earned some higher amount (6%?, 10%?) per year over the past two years.

My “absolutely pathetic” and “incredibly crappy” comments stand.


This is why annuity sales agents are being grossly ...
by Harmanic
Wed Feb 12, 2025 8:16 am
Forum: Personal Consumer Issues
Topic: Tesla Model X Review, 2 Months In
Replies: 61
Views: 10324

Re: Tesla Model X Review, 2 Months In

TomatoTomahto wrote: Wed Feb 12, 2025 7:58 am
Legoman666 wrote: Wed Feb 12, 2025 7:53 am The Macan is their cheapest model, so I'm not sure what you were expecting....
Well, at $105k and well equipped $120k, I expected better. They raised prices by 20-30%, and their sales are way down. Fired their CFO. They are backtracking from electric.

I think my wife will get a Lucid Gravity when they become available.
Didn't mean to start a debate. I just wanted to point out that there are other great EV options besides Tesla.
by Harmanic
Wed Feb 12, 2025 7:26 am
Forum: Personal Investments
Topic: Redeem large I-Bond portfolio over 60 or 120 Months.
Replies: 16
Views: 1180

Re: Redeem large I-Bond portfolio over 60 or 120 Months.

Many people have complained that Treasury Direct is terrible for beneficiaries to deal with. That might be a recommendation for redeeming them faster and leaving other assets for your heirs.
by Harmanic
Wed Feb 12, 2025 7:23 am
Forum: Personal Consumer Issues
Topic: Tesla Model X Review, 2 Months In
Replies: 61
Views: 10324

Re: Tesla Model X Review, 2 Months In



OP, do you still own the car? If so, how is it going?

Not OP, but my Model X was sold to Carvana (or was it Carmax?). Tesla of course refused to honor their “lifetime Supercharging for the car (not owner)” promise for early owners and had some convoluted explanation.

I got tired of driving around with a paper bag over my head and am much happier in my Mercedes EQS EV.


I really don't understand why other EV models never got the love that Tesla did. We have had a BMW i3 for 10 years and it is still like new, never needs maintenance, and is a fantastic car to drive. The short range has never been an issue for us and we are not interested in self driving. We have thought about upgrading to a Porsche Taycan, but can't really justify it ...
by Harmanic
Wed Feb 12, 2025 7:15 am
Forum: Personal Investments
Topic: Escaping the Pit of Doom - A fixed Index Annuity
Replies: 21
Views: 1790

Re: Escaping the Pit of Doom - A fixed Index Annuity

Stinky wrote: Tue Feb 11, 2025 5:16 pm This is incredibly crappy annuity performance. Making just 2.1% per year for the past 6 years is absolutely pathetic.
To be fair, BND (total bond index fund) has earned roughly 0% over the past 6 years, and many people buy both income riders and death benefit riders, which would have also taken this FIA down to 0%. Either way, the OP could have done worse.
by Harmanic
Tue Feb 11, 2025 6:10 pm
Forum: Personal Investments
Topic: Dealing with RSU "bomb" and taxes
Replies: 21
Views: 2612

Re: Dealing with RSU "bomb" and taxes

If they don't expire, which as a FAANG stock they most certainly do not, then you can just cash flow them and use them for your expenses once you retire. I would not cash them in all at once. Of course, there is some market risk in spreading it out, but that's how you minimize the tax burden. If you have employment income the year that you retire, you can use savings and brokerage assets and then start selling the RSUs the next year.

You will still have plenty of time to do Roth conversions after you sell the RSUs over 5 years or so.
by Harmanic
Tue Feb 11, 2025 6:05 pm
Forum: Personal Investments
Topic: TIAA Annuity – Why or Why Not?
Replies: 122
Views: 21691

Re: TIAA Annuity – Why or Why Not?





When you say "8-year wind down", do you mean that you have the choice of initiating a TPA (transfer payout annuity) to deliver 100% of the "restricted" TIAA Traditional money to the status of "cash on hand", over 8 years? I ask because that doesn't sound to me like "cancel the contract". It sounds like you cannot simply STOP the IPRO and maintain the continuing investment you had before. (Subject to any RMD's, of course.)


According to @TIAAsimplified on YouTube, the only choice to get out of IPO with RC is to annuitize. RA and GRA will let you annuitize, take the TPA (which by my understanding is 9 years), or do RMD payments. You have to wait at least one year to get out of IPO. https://www.youtube.com/watch?v=48JmOtGFeZU


That's ...
by Harmanic
Tue Feb 11, 2025 4:18 pm
Forum: Personal Investments
Topic: TIAA Annuity – Why or Why Not?
Replies: 122
Views: 21691

Re: TIAA Annuity – Why or Why Not?



One good thing about the IPRO is that it allows your oldest vintages to continue to grow, because every year they collapse newer vintages into older ones, allowing for a higher payout rate when you eventually annuitize. Also, much of the interest would be going to newer vintages which have a lower payout rate on annuitization.


I just want to confirm that you are talking about the table of "Interest Payout Rates", that roughly estimate your payout on a life annuity. You're using the term "vintages" a little loosely, because there is no predicting what TIAA will do with vintages in any future year. And most commonly, we use the term "vintages" to describe Accumulation -Stage interest earning groups. This recent post is about Payout ...
by Harmanic
Tue Feb 11, 2025 2:39 pm
Forum: Personal Investments
Topic: Escaping the Pit of Doom - A fixed Index Annuity
Replies: 21
Views: 1790

Re: Escaping the Pit of Doom - A fixed Index Annuity

Chogy wrote: Tue Feb 11, 2025 1:16 pm
Harmanic wrote: Tue Feb 11, 2025 12:45 pm Do you have any income riders? If so, what are they worth?
No riders. It was a fairly standard contract with what might be called "stock" features. I have 2 weeks remaining to reallocate, and am tempted to just drop it all into Fixed at 2.20% until I can pull the surrender trigger. It seems the cash surrender value drops with negative market days. Overall a really annoying setup. Thanks.
Well, at least you haven't been paying for something you're not using. Many people buy these riders and never activate them. That makes it much easier for you to decide what to do with it. Imagine if you had been paying 1% per year for an income rider!
by Harmanic
Tue Feb 11, 2025 12:47 pm
Forum: Personal Investments
Topic: TIAA Annuity – Why or Why Not?
Replies: 122
Views: 21691

Re: TIAA Annuity – Why or Why Not?

JimG wrote: Tue Feb 11, 2025 12:44 pm The Inflation variable was ended something like 5 years ago. I'm sure some of the other Boglehead members can date that much more accurately than I can.
The "graded" option was never indexed to inflation. It was just a COLA. No magic there. I think they did away with it more recently than five years, but who knows, time seems to fly by these days.
by Harmanic
Tue Feb 11, 2025 12:45 pm
Forum: Personal Investments
Topic: Escaping the Pit of Doom - A fixed Index Annuity
Replies: 21
Views: 1790

Re: Escaping the Pit of Doom - A fixed Index Annuity

Do you have any income riders? If so, what are they worth?
by Harmanic
Tue Feb 11, 2025 11:53 am
Forum: Personal Investments
Topic: TIAA Annuity – Why or Why Not?
Replies: 122
Views: 21691

Re: TIAA Annuity – Why or Why Not?


Sorry, but I missed the reply before yours.

All I am addressing is the TIAA IPRO. The guru of annuities is Wade Pfau who turned me on to the great benefit of an annuity IF it is well chosen. I would likely not have chosen a standard TIAA annuity (or any annuity). An IPRO is hardly known in the TIAA world for some reason; the employees themselves are somewhat unaware of it. But Pfau drew my attention to it.

My previous post outlines the fundamentals. Invest/transfer your TIAA funds in the amount desired; they calculate the "guaranteed" return at that point in time; the principle is secure and you can get it back if needed or the course of 8 years. TIAA holds 20% of the annual income amount for taxes which are adjusted when you file ...
by Harmanic
Mon Feb 10, 2025 6:57 pm
Forum: Personal Investments
Topic: Parents have not saved well for retirement. What can I do?
Replies: 35
Views: 3996

Re: Parents have not saved well for retirement. What can I do?

Wiggums wrote: Mon Feb 10, 2025 4:35 pm I see medicare/medicaid mentioned here. Are those services available outside the United States?
No. But they should sign up for Medicare anyway, just in case they return or even visit. Medicare A is free, so there is no harm in signing up at age 65 even if they don't intend to use it.
by Harmanic
Mon Feb 10, 2025 6:26 pm
Forum: Personal Finance (Not Investing)
Topic: *When* to start using 529 money for college
Replies: 22
Views: 1788

Re: *When* to start using 529 money for college

gowest wrote: Mon Feb 10, 2025 3:13 pm OP here. Since we are able to cash flow college expenses, I'm now wondering if I should purposefully NOT use some of the 529 money in order to be able to roll the money over into Roth IRAs for the kids. It looks like the current lifetime limit is $35k per kid. We first opened the accounts in 2018, and it looks like the accounts need to be at least 15 years old to do this. But maybe this is worth considering.
Do a search for "Dynasty 529". Personally, I would use it up as soon as you can and then invest in other vehicles, such as Roth IRAs and brokerage accounts, directly.
by Harmanic
Mon Feb 10, 2025 6:22 pm
Forum: Personal Finance (Not Investing)
Topic: Pre-tax $$ in an Inherited Nonqualified Annuity?
Replies: 5
Views: 240

Re: Pre-tax $$ in an Inherited Nonqualified Annuity?

Makefile wrote: Mon Feb 10, 2025 6:15 pm Maybe the annuity was established using a 1035 exchange from another annuity, and the "gain" doesn't include the gain exchanged in from the previous annuity.
That makes the most sense. If the owner had it for a long time, the basis would be low and it would be mostly gains. This is one of the big drawbacks of annuities - no step up on death.
by Harmanic
Mon Feb 10, 2025 6:18 pm
Forum: Personal Finance (Not Investing)
Topic: Any Azul Wells fans here?
Replies: 26
Views: 8545

Re: Any Azul Wells fans here?

JackHammer wrote: Wed Jan 15, 2025 9:08 pm I occasionally will watch his videos on YouTube. He talks so slowly I have to watch at 1.75 speed to make it tolerable.
Actually it is kind of refreshing. He should do audiobooks. His soothing voice would certainly put me to sleep.

I agree with others, his videos are repetitive. The message is a good one though and the opposite of the many fear-mongering ones out there. Basically, he shows that most people (at least the ones who watch finance videos) can retire on much less than they think they need.
by Harmanic
Mon Feb 10, 2025 8:50 am
Forum: Personal Investments
Topic: Parents have not saved well for retirement. What can I do?
Replies: 35
Views: 3996

Re: Parents have not saved well for retirement. What can I do?

When flying in a plane, they tell you to put your oxygen mask on before helping the person next to you. The same is true in your situation.

Don't jeopardize your future to support them. Help them if they want help to set up wills and navigate bureaucracy, like applying for Medicare, Social Security, and other benefits. They will not need long term care insurance, because they will qualify for Medicaid. If they move to Europe and the Caribbean, they might be able to live comfortably on their Social Security alone as expenses are likely to be low in most overseas locations. More than half of seniors already life fine on social security alone, including those who stay stateside.
by Harmanic
Mon Feb 10, 2025 8:30 am
Forum: Personal Finance (Not Investing)
Topic: Contemplating taking a Federal government job. Career/Pension questions
Replies: 78
Views: 10187

Re: Contemplating taking a Federal government job. Career/Pension questions

cheese_breath wrote: Mon Feb 10, 2025 8:23 am Hopefully not to be taken as political, but job security might be a concern right now
On the other hand, uncertainty can create opportunities for rapid career advancement if one has the fortitude to stick with it (make sure you check your ego at the door). One of my first jobs was a government job in an office that was in chaos. When I arrived, the entire team was gone. Before long I was in charge of a program that most people don't get promoted into for 20 years or more. Worst case, you get severance and/or UI.
by Harmanic
Mon Feb 10, 2025 8:27 am
Forum: Personal Finance (Not Investing)
Topic: SPIA set up to pay on the 7th still hasn't shown up yet
Replies: 6
Views: 500

Re: SPIA set up to pay on the 7th still hasn't shown up yet

Give it up to 10 working days and then call them. I have had this happen with other types of ACH transfers. This is especially true if this is your first payment and they are still setting things up.
by Harmanic
Mon Feb 10, 2025 8:24 am
Forum: Personal Investments
Topic: Employer ESPP
Replies: 24
Views: 2115

Re: Employer ESPP

Bogleheads are notoriously risk averse. The maximum you can contribute is $20k, so if you hold it for a year and it goes down, you aren't going to lose much. I know people who have held their ESPP shares for many years. My SIL bought her company shares in the early 2010s and kept them after she left the company. They are now 10x their purchase price.

I agree with the concentrated risk, but it does not have to be all or nothing. Getting the discount on the maximum contributions and then holding them for a year or more seems like a good deal. If it becomes too much of your asset allocation, you can sell some of the shares after a year and rebalance into an index fund.

Just figure out the maximum you could lose on this investment and ...
by Harmanic
Mon Feb 10, 2025 6:35 am
Forum: Personal Finance (Not Investing)
Topic: Taxes: $14 underpayment penalty despite large refund
Replies: 31
Views: 3263

Re: Taxes: $14 underpayment penalty despite large refund

Cyclesafe wrote: Mon Feb 10, 2025 6:31 am
It's not about the money, it's about understanding and having more control over your taxes.
I agree. There is some enjoyment in having a good understanding of the tax code. Most people would think that is kind of weird, but I know I am not the only one.
by Harmanic
Mon Feb 10, 2025 6:31 am
Forum: Investing - Theory, News & General
Topic: Total Portfolio Allocation and Withdrawal (TPAW)
Replies: 1423
Views: 381895

Re: Total Portfolio Allocation and Withdrawal (TPAW)



How do I set things up to exhibit such a drop? The only way I can think of doing it would be to add an expense that represent "added cost of couple vs single" throughout the entire plan, and it fact it seems to do the trick, but for some reason doesn't feel "right" the way handling gogo travel does. For example the 95% percentile at her death goes down when the intent is that by her spending less we should have more money in the risk portfolio (our guess is that she would not increase her spending but it creates for the opportunistic legacy to be higher)
Or looking at it the other way, we'd like to shift some of the money she wouldn't spend as a single to the left to spend a little more as a couple.


You are trying to predict the ...
by Harmanic
Sun Feb 09, 2025 5:51 pm
Forum: Personal Consumer Issues
Topic: How long did your Bosch dishwasher last?
Replies: 85
Views: 6426

Re: How long did your Bosch dishwasher last?

Bagels wrote: Sun Feb 09, 2025 2:52 pm
Harmanic wrote: Sun Feb 09, 2025 2:22 pm I have one of the German made models that cost nearly $3,000 and it has been nothing but trouble.
Miele?
Bosch
by Harmanic
Sun Feb 09, 2025 2:22 pm
Forum: Personal Consumer Issues
Topic: How long did your Bosch dishwasher last?
Replies: 85
Views: 6426

Re: How long did your Bosch dishwasher last?

I have one of the German made models that cost nearly $3,000 and it has been nothing but trouble. The welds on the top rack disintegrated and the computer glitches out on almost every wash. It started failing right after the 1 year warranty expiration. I am not sure that higher prices and "Made in Germany" mean better quality and reliability.
by Harmanic
Sun Feb 09, 2025 2:17 pm
Forum: Investing - Theory, News & General
Topic: What portion of US stock market could be considered international?
Replies: 36
Views: 2999

Re: What portion of US stock market could be considered international?

RogerRabbit wrote: Sat Feb 08, 2025 12:20 pm Jack Bogle, Warren Buffet and others make the case that holding a US stock index fund such as VOO or VTI includes multi-national companies and thus international exposure.
The same can be said for international companies that often derive significant revenue from US customers and subsidiaries.
by Harmanic
Sat Feb 08, 2025 10:30 am
Forum: Personal Investments
Topic: Fixed Index Annuity
Replies: 6
Views: 811

Re: Fixed Index Annuity





The way this works is that the insurance company might invest $95 out of $100 in bonds and then use $3 to buy options and $2 to cover fees. By the end of the year, the $95 in bonds have grown to $100 because of the interest. The options might be worth $6 or nothing. And the $2 in fees are gone to pay the insurance company and agent.

You can do the same yourself. Say you have $100,000. You buy a $95,000 bond ladder and invest $5,000 in VT or VTI. Your bond ladder with protect your principle and you will have the potential to earn market growth on your $5,000 (instead of the $3,000 in options). Heck, you could just buy $5,000 in options yourself if you wanted to take some extra risk and will still likely come out ahead of the FIA ...
by Harmanic
Sat Feb 08, 2025 10:28 am
Forum: Personal Finance (Not Investing)
Topic: Is LTCG in retirement similar to Roth conversion?
Replies: 5
Views: 663

Re: Is LTCG in retirement similar to Roth conversion?

Roth conversion will cost 12% in tax, but future gains will be tax free. LTCG will be 0%, but future gains might be taxed. Many people do a combination of Roth conversions and tax gain harvesting.
by Harmanic
Sat Feb 08, 2025 9:18 am
Forum: Personal Investments
Topic: Annuity rollover in retirement account: IRA or Roth?
Replies: 4
Views: 358

Re: Annuity rollover in retirement account: IRA or Roth?

You can do an illustration of the payout rate if you annuitize at a future date. You can do this right on the website.

The loyalty credits are based on the time in the plan, not new contributions. Therefore, she would actually get MORE loyalty credits because she stopped contributing awhile ago therefore more of the money in the plan is long term.

If there is any chance she will want guaranteed income in retirement, you probably can't do better. If she has other pensions and social security to cover basic living costs in retirement, then it is a toss up. Personally, I think TIAA Traditional is a superior fixed income option to almost everything else on the market.

Also note that the payout rate will be higher in 20 years than the actual ...
by Harmanic
Sat Feb 08, 2025 6:38 am
Forum: Personal Investments
Topic: Does an Annuity make sense?
Replies: 40
Views: 3109

Re: Does an Annuity make sense?

friendlydave wrote: Fri Feb 07, 2025 7:12 pm Please slow down. Based on what you have posted, I do not believe your advisor is leading you to a good place. Find a true hourly financial advisor and stick with low fee options. Until you figure this out, keeping your money in safe short term investments ( money market) is okay.
Especially considering that the TSP has some of the lowest cost annuities available since the TSP covers all the fees. The financial advisor sales agent probably knows this but just wants a big fat commission, which he wouldn't get from the TSP.
by Harmanic
Sat Feb 08, 2025 6:33 am
Forum: Investing - Theory, News & General
Topic: Implications of selling ESPP shares
Replies: 18
Views: 2633

Re: Implications of selling ESPP shares

Wannaretireearly wrote: Fri Feb 07, 2025 12:31 am Folks get too tied to their employer stock. Remember, even if it does go up by 5-10% a year, you could’ve had that money in a fund earning similar, but with much less risk.

I now sell RSUs and ESPP immediately.
On the other hand, people have regretted selling and losing out on a windfall. My SIL bought into an ESPP about 15 years ago. She kept it after she left the company and her shares are already 10x. Obviously it is different if you have a concentrated positions, but if you have significant other assets, holding company shares is fine. You just need to have the capacity to absorb losses if they occur (think Enron). Each person's situation is different.
by Harmanic
Sat Feb 08, 2025 6:23 am
Forum: Personal Investments
Topic: Fixed Index Annuity
Replies: 6
Views: 811

Re: Fixed Index Annuity



The annuity recommended provides safety with no principal loss during market declines, but caps the gains.


The way this works is that the insurance company might invest $95 out of $100 in bonds and then use $3 to buy options and $2 to cover fees. By the end of the year, the $95 in bonds have grown to $100 because of the interest. The options might be worth $6 or nothing. And the $2 in fees are gone to pay the insurance company and agent.

You can do the same yourself. Say you have $100,000. You buy a $95,000 bond ladder and invest $5,000 in VT or VTI. Your bond ladder with protect your principle and you will have the potential to earn market growth on your $5,000 (instead of the $3,000 in options). Heck, you could just buy $5,000 in ...
by Harmanic
Fri Feb 07, 2025 4:03 pm
Forum: Personal Investments
Topic: I was offered an annuity
Replies: 20
Views: 1658

Re: I was offered an annuity

Chuckles960 wrote: Fri Feb 07, 2025 3:37 pm But it isn't a good investment, any more than car insurance, home insurance, etc. are good investments. You lose money in order to be protected from losing even more money. You can't compare them to bonds, which are volatile investments. They have gone down, but they could go back up.
This is misinformation. A MYGA is just like a CD and often pays much higher rates.
by Harmanic
Fri Feb 07, 2025 3:59 pm
Forum: Personal Investments
Topic: Annuity rollover in retirement account: IRA or Roth?
Replies: 4
Views: 358

Re: Annuity rollover in retirement account: IRA or Roth?

That annuity is likely TIAA Traditional and it is from over 15 years ago, she may have accumulated significant loyalty credits.
by Harmanic
Fri Feb 07, 2025 3:00 pm
Forum: Investing - Theory, News & General
Topic: Quantifying whole life vs. munis
Replies: 8
Views: 936

Re: Quantifying whole life vs. munis

Life insurance is not an investment. It is insurance. If you want to insure yourself for your beneficiaries, then fine, but if you want an investment, munis are better.
by Harmanic
Fri Feb 07, 2025 2:52 pm
Forum: Personal Investments
Topic: I was offered an annuity
Replies: 20
Views: 1658

Re: I was offered an annuity

It is fine assuming you will be older than 59.5 at maturity or are willing to roll it over to another annuity at maturity. Otherwise there is a 10% IRS penalty.
by Harmanic
Fri Feb 07, 2025 1:52 pm
Forum: Investing - Theory, News & General
Topic: Best paid investment site with good tools
Replies: 5
Views: 1330

Re: Best paid investment site with good tools

Morningstar - by far. They have free content, but the Investor subscription unlocks a lot of helpful features.
by Harmanic
Fri Feb 07, 2025 10:21 am
Forum: Personal Finance (Not Investing)
Topic: Okay decision? Selling VTSAX in brokerage to put down payment on condo?
Replies: 26
Views: 2097

Re: Okay decision? Selling VTSAX in brokerage to put down payment on condo?

Without going into the tax questions, I think your logic makes sense. Unless you had it earmarked for something else, I see no issue in taking your taxable gains and buying a house with the proceeds.

Depending on mortgage rates, you might even want to sell more next year to pay down your mortgage faster.
by Harmanic
Thu Feb 06, 2025 2:35 pm
Forum: Personal Finance (Not Investing)
Topic: Check whether my understanding of claiming a child as dependent is correct
Replies: 74
Views: 3606

Re: If the child (being claimed as dependent) files 1040, can parents claim AOTC?

acegolfer wrote: Thu Feb 06, 2025 2:31 pm
Harmanic wrote: Thu Feb 06, 2025 2:22 pm Undergraduate scholarships are not considered income if used for educational expenses at degree granting institutions. And yes, the 1098-T including all expenses and scholarships goes on the parent tax return. The student cannot claim any deductions as a dependent.

See page 6. https://www.irs.gov/pub/irs-pdf/p970.pdf

EDIT: Taxing of graduate scholarships has not been implemented. My mistake.
You are contradicting a lot replies in this thread. viewtopic.php?p=8236530#p8236530
I don't see any contradiction. Also note that the student does not get to claim the standard deduction filing as a dependent. You might want to read the IRS publication closely. Link above.
by Harmanic
Thu Feb 06, 2025 2:22 pm
Forum: Personal Finance (Not Investing)
Topic: Check whether my understanding of claiming a child as dependent is correct
Replies: 74
Views: 3606

Re: If the child (being claimed as dependent) files 1040, can parents claim AOTC?

acegolfer wrote: Thu Feb 06, 2025 2:20 pm
Harmanic wrote: Thu Feb 06, 2025 2:17 pm

Because the student is your dependent. They only include their income on their return and everything else goes on your return. They do not claim any deductions, because you are claiming them.
Isn't the scholarship in 1098-T part of student's gross income? Or is that part of parent's gross income?
Undergraduate scholarships are not considered income if used for educational expenses at degree granting institutions. And yes, the 1098-T including all expenses and scholarships goes on the parent tax return. The student cannot claim any deductions as a dependent.

See page 6. https://www.irs.gov/pub/irs-pdf/p970.pdf

EDIT: Taxing of graduate scholarships has not been implemented. My mistake.
by Harmanic
Thu Feb 06, 2025 2:17 pm
Forum: Personal Finance (Not Investing)
Topic: Check whether my understanding of claiming a child as dependent is correct
Replies: 74
Views: 3606

Re: If the child (being claimed as dependent) files 1040, can parents claim AOTC?

acegolfer wrote: Thu Feb 06, 2025 2:01 pm
Harmanic wrote: Thu Feb 06, 2025 1:36 pm Yes, the parent enters the 1098-T, not the student.
I don't get it. If the student files 1040, how does he not enter 1098-T, which has scholarship information?
Because the student is your dependent. They only include their income on their return and everything else goes on your return. They do not claim any deductions, because you are claiming them.
by Harmanic
Thu Feb 06, 2025 2:14 pm
Forum: Personal Finance (Not Investing)
Topic: Term Life - still needed if retired or FIRE-ready?
Replies: 17
Views: 992

Re: Term Life - still needed if retired and FIRE-ready?



When you buy a fixed term policy, the premiums are spread out over the term at a flat rate (15 years in your case) with you paying higher at the beginning and less at the end based on actuarial projections. That means that your policy is cheaper now that you are on the tail end, so you are probably not paying much. I would keep it until the term is up, even if you don't need it. If something happens to you, your beneficiaries will be better off for little cost. However, I would not buy a new policy.


The policy premiums are fixed for the 15 yr duration. I wasn't aware of fixed term policies that have decreasing premiums, but in any case that doesn't apply to me


That's not what I meant. I meant that you pay flat premiums, but they ...
by Harmanic
Thu Feb 06, 2025 1:38 pm
Forum: Personal Finance (Not Investing)
Topic: Check whether my understanding of claiming a child as dependent is correct
Replies: 74
Views: 3606

Re: If the child (being claimed as dependent) files 1040, can parents claim AOTC?

acegolfer wrote: Thu Feb 06, 2025 1:21 pm On another thought, perhaps better for parents to report all $3k education expense and get $2250 AOTC. Student's AGI = $14k still under $14,600.
I don't think you can split the education expenses like that anyway. Maybe someone else can confirm.
by Harmanic
Thu Feb 06, 2025 1:33 pm
Forum: Personal Finance (Not Investing)
Topic: KlangFool's Traditional vs Roth Recommendation
Replies: 93
Views: 13564

Re: KlangFool's Traditional vs Roth Recommendation

If you are maxing out all your retirement accounts, Roth is a better way to get more assets in tax sheltered accounts, because you do not have to share your space with Uncle Sam.

If you are not maxing your accounts, then this is not an issue. But Roth is better than taxable and therefore putting $50,000 into a Roth account is better than putting $50,000 into a traditional account and putting your tax savings into a taxable account.

That said, taxable accounts have their advantages too.
by Harmanic
Thu Feb 06, 2025 1:03 pm
Forum: Personal Investments
Topic: ORR - I bought an ETF with an 18% ER
Replies: 31
Views: 4516

Re: ORR - I bought an ETF with an 18% ER

The fund has few assets and therefore would be at high risk of folding. Too many of these niche funds come and go to be worth bothering with.
by Harmanic
Thu Feb 06, 2025 12:58 pm
Forum: Personal Finance (Not Investing)
Topic: Term Life - still needed if retired or FIRE-ready?
Replies: 17
Views: 992

Re: Term Life - still needed if retired and FIRE-ready?

When you buy a fixed term policy, the premiums are spread out over the term at a flat rate (15 years in your case) with you paying higher at the beginning and less at the end based on actuarial projections. That means that your policy is cheaper now that you are on the tail end, so you are probably not paying much. I would keep it until the term is up, even if you don't need it. If something happens to you, your beneficiaries will be better off for little cost. However, I would not buy a new policy.
by Harmanic
Thu Feb 06, 2025 12:54 pm
Forum: Personal Finance (Not Investing)
Topic: Check whether my understanding of claiming a child as dependent is correct
Replies: 74
Views: 3606

Re: If the child (being claimed as dependent) files 1040, can parents claim AOTC?

Yes, as long as she selects "claimed as a dependent on another tax return" for her return, you should be fine. This happens when students have part time jobs and internships.

You claim her as a dependent, you claim AOTC
She declares that she is a dependent, she does NOT claim AOTC.

Note this can only be done for four years. After that you revert to the standard educational deduction.