Search found 1654 matches

by PaddyMac
Fri Mar 17, 2023 10:41 pm
Forum: Personal Investments
Topic: Excess contribution to self-employed 401k
Replies: 15
Views: 904

Re: Excess contribution to self-employed 401k

Spelunker wrote: Fri Mar 17, 2023 12:08 pm 1. Started a new job in 2022 which came with a signing bonus paid as 1099 income
When I replied to you above, based on your Subject, I assumed your new job was as a self-employed individual, since you had an Individual 401k retirement account. Are you receiving income from this employer as W-2 income?

And what type of 1099 did you get?
by PaddyMac
Fri Mar 17, 2023 2:02 pm
Forum: Personal Investments
Topic: Excess contribution to self-employed 401k
Replies: 15
Views: 904

Re: Excess contribution to self-employed 401k

I don't see why not. As a self-employed individual you are entitled to contribute for 2022 into a 401k up until your tax filing deadline of April 15 or October 15 if you file an extension.

Worse case you may get a polite letter from the IRS asking "WTF?" but then you can explain.

By the way, whether or not you got a 1099 from your employer should not have mattered. It was taxable income in 2022 because you received it then, and you would have had to report it as such. Hence, you could use that earned income for your 401k..
by PaddyMac
Fri Mar 17, 2023 1:58 pm
Forum: Personal Investments
Topic: Talked to Vanguard but still confused.
Replies: 32
Views: 2933

Re: Talked to Vanguard but still confused.

Re moving to a Brokerage account. Do you mean you took it out of a SEP-IRA and into a regular, taxable Brokerage account? That does not sound right. If you did that you would be hit with early-withdrawal penalties if under 59.5 afaik. And the income would all be taxable as you had originally saved those funds tax deferred in the year they were contributed to the SEP-IRA.

We have Brokerage account with Vanguard and the income it generates each year is taxable income.
by PaddyMac
Tue Feb 14, 2023 3:29 pm
Forum: Personal Finance (Not Investing)
Topic: Pay off mortgage with 401k at retirement?
Replies: 37
Views: 3296

Re: Pay off mortgage with 401k at retirement?

I assume you have considered the taxes you would have to pay on that amount? I hate to pay taxes. Plus, are you depending on the ACA for healthcare that year? If so, no subsidy with a high income.

Plus, you'll only be 58 – can you withdraw that much before 59.5?

I would not do it. Most of it goes towards principal. Shame you didn't refinance when interest rates were low. We're in a similar house and have 10 years left on our mortgage, but it's a 15-year at 2.75% and 2/3rd of it goes to principal. No brainer to keep it now.
by PaddyMac
Tue Jan 24, 2023 7:08 pm
Forum: Personal Finance (Not Investing)
Topic: Solo 401k for part-time gig
Replies: 7
Views: 453

Re: Solo 401k for part-time gig

We've been self-employed for decades and have 401k for our business at Vanguard (which has a Roth 401k option). Track your income through dummy tax form and you will see that your wife will still be paying SE Tax of 15.3% on her Schedule C income. When you have low income like $15-25K, the 401k contributions max out so that you can't actually save 100% of income. Fidelity has a good PDF worksheet, you can build it as a spreadsheet and make it interactive: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/customer-service/401k-self-employed-owner-only-business.pdf This is also a great resource: https://sheet.zohopublic.com/sheet/published.do?rid=hd3vb2c79aa2e630443d58a05e8140934898a But yes, through some quirk of the tax rul...
by PaddyMac
Thu Dec 08, 2022 10:08 pm
Forum: Personal Finance (Not Investing)
Topic: Healthcare and other considerations heading into a no-income period
Replies: 21
Views: 2006

Re: Healthcare and other considerations heading into a no-income period

If you start the company in 2023, then be sure to open an Individual 401k account with Vanguard well before the end of the year. You don't have to fund it then. As a self-employed person, you can make contributions for Tax Year 2023 all the way through to October 15, 2024 IF you file for an extension for 2023. Assuming you are cash-flow positive by then, you can reduce your personal income taxes for 2023 by stuffing your 401k months after the year has ended. You will have to file the business taxes by Feb. 15, but you don't have to file the personal taxes at the same time. However, you must OPEN the account in 2023. This account also has a Roth 401k component. We always try to stuff that Roth space if we have cash flow (or can sell some of ...
by PaddyMac
Thu Dec 08, 2022 10:01 pm
Forum: Personal Finance (Not Investing)
Topic: ACA Bronze vs. Silver/Gold?
Replies: 19
Views: 2611

Re: ACA Bronze vs. Silver/Gold?

Thanks for asking this as I was wondering the same thing after picking a new plan last week. We're in New Mexico and the Bronze plan was only $127 per month for both of us using Presbyterian (new for us). We paid over $300 last year using the same income (I enter an AGI of $80K, which is a guess as we're self-employed). I kept thinking that I must be missing something! The Silver and Gold plans are way more. We figure if we save $200 a month, that's $2400 a year to put towards the co-pays and expenses, and that counts towards our deductible. We have had two years where one of us has hit our individual deductible with major surgery, but we have an HSA to cover that shock expense. So relieved that the "cliff" is disabled until the y...
by PaddyMac
Thu Dec 08, 2022 9:49 pm
Forum: Personal Finance (Not Investing)
Topic: Offsetting 401K Contribution & Roth IRA Conversion in Same Year?
Replies: 2
Views: 296

Re: Offsetting 401K Contribution & Roth IRA Conversion in Same Year?

Agree with above. We have an Individual 401k plan with Vanguard and it has a Roth 401k component. We can pick and choose whether to invest in the tax-deferred side or the Roth side.

In recent years we've been able to sell off one of our taxable accounts with no capital gains, then move that over to the Roth 401k where it can grow tax free.

Because we're over 55, we can max out the EmployEE and the catch-up contributions this way. If I recall, the 20% EmployER side has to be tax-deferred.
by PaddyMac
Thu Dec 08, 2022 9:43 pm
Forum: Personal Finance (Not Investing)
Topic: HSA from fidelity to VG?
Replies: 9
Views: 1120

Re: HSA from fidelity to VG?

I opened a second HSA with Fidelity this year as I read here that they were a good option.

One benefit is that now I can get access to their Retirement planning calculator, which I always liked (but they kept deleting my data).
by PaddyMac
Wed Nov 23, 2022 11:38 am
Forum: Personal Finance (Not Investing)
Topic: Estimating Retirement Costs - Some big numbers that I can't guess
Replies: 15
Views: 2079

Re: Estimating Retirement Costs - Some big numbers that I can't guess

During the few years where you plan to be on the ACA, keep a close eye on the threshold for getting subsidized premiums. If you get a subsidy, then the monthly premiums are low and the income threshold is fairly reasonable ($68K a year AGI etc). Also note that this year there is a sliding scale, but the ACA "cliff" is likely to return. If it does, one dollar more of AGI and you lose the entire $10K of a subsidy etc. Then for those years if you need more money to live on, then be prepared to withdraw from tax-free accounts: HSA for medical, Roth-IRA, Roth-401k or taxable (watch cap gains though). We're been doing this calculation until we reach Medicare age, and with the subsidy at @ $10K a year, it's really worth it to keep track....
by PaddyMac
Tue Oct 04, 2022 3:35 pm
Forum: Personal Consumer Issues
Topic: United Airlines flyers (or cc holders): Mileage Plus still valuable?
Replies: 32
Views: 3014

Re: United Airlines flyers (or cc holders): Mileage Plus still valuable?

We're fed up with airline miles timing out. They are such a racket. We tend to pop in and out of airline cards. Usually when we go to Europe, we are booking a certain airline and an offer pops up for one year free and X cash back. So we apply, and then cancel it after 12 months. A few years later, we'll be offered the same card. The only travel card we pay an annual fee on is the Marriott Bonvoy card. We pay $95 per year, but we get one night free. It's rare that we don't need a hotel for a night, especially on a long trip. And we found that we can book the standard room but when we get there, we have been upgraded to a corner suite! We collect points on Chase INK Business card. They don't expire, and you can choose to get the points in cas...
by PaddyMac
Tue Jul 05, 2022 10:39 am
Forum: Personal Consumer Issues
Topic: International Travel/CC Recommendation for Ireland and Greece
Replies: 22
Views: 1462

Re: International Travel/CC Recommendation for Ireland and Greece

In Ireland, esp. Dublin, download the FreeNow app for getting a taxi. Most of the taxi drivers use it during off peak hours and it works great, bit like Uber app but these are real taxis, NOT regular folk, so they know where they are going (and if they have a Dublin accent then they also know all the back alleys that save time).

During peak hours or when there is a sudden downpour, then you are better off going to a taxi rank. That's because FreeNow takes a % of the fare, so the taxis know that when it rains, they can pick up a fare easy enough at a rank. So if FreeNow is not showing anyone coming for you, ask a local where the nearest rank is.
by PaddyMac
Wed Jun 08, 2022 10:48 am
Forum: Personal Investments
Topic: HSA in retirement
Replies: 13
Views: 2166

Re: HSA in retirement

We've had an HSA for years and it built up to about $70K last year. We used it over the years for unusual medical expenses (root canal, etc), averaging maybe $1K a year in withdrawals. Last year hubby broke his leg, and between maxing out the deductible and installing a stairlift, we withdrew $20K or so. Being semi-retired, it's nice to dip into the HSA for larger bills as it is tax free money which keeps our OMAGI to a point where we get a reasonable subsidy. After this year, the ACA "cliff" is set to return, so we may withdraw even more. But I'm going to try to keep it to $40-$50K so that it covers 2 good emergencies. I don't consider the HSA as part of our retirement portfolio for asset allocation. It's pretty conservatively in...
by PaddyMac
Tue May 31, 2022 10:19 am
Forum: Personal Consumer Issues
Topic: Attempting to Label a Canvas Bag
Replies: 20
Views: 1424

Re: Attempting to Label a Canvas Bag

As someone who does lettering on fabric, I would use a large Posca marker. Sharpies are ok too.
by PaddyMac
Thu May 05, 2022 11:24 am
Forum: Personal Finance (Not Investing)
Topic: Spreadsheet help, please...
Replies: 18
Views: 2042

Re: Spreadsheet help, please...

Mac users might be reminded that Numbers is free from the App Store (you used to have to pay for it). It comes with lots of templates, and imo opinion is easier to use. I never could get into Excel, but like using Numbers. I built our entire business and personal tax return in Numbers, and check it against TaxAct when filing. That way I understand better what is going on and it makes it very easy to play "what ifs". The only feature I use Excel for occasionally is to transpose a vertical row to horizontal, or vice versa. Hopefully Numbers will add that feature. If the Excel spreadsheet you are using is very complicated and not your own design, then I would leave it in Excel in case there is some incompatibility. As for learning: I...
by PaddyMac
Sat Apr 30, 2022 11:09 am
Forum: Personal Finance (Not Investing)
Topic: W2 Vs 1099 job offer?
Replies: 10
Views: 818

Re: W2 Vs 1099 job offer?

First you really need to research the IRS rules on the differences between W2 and being a contractor. It's not just a choice she can make if she doesn't fit the rules. For instance, does the company expect her to work certain hours? If so, then she's W2. Or can she just put in 20 hours a week, totally under her control? If so, contractor. https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee Does the company give her a laptop or does she buy her own equipment? These things matter. I've always been self-employed, and one time a client's accounting company tried to put me on W-2 because they were nervous or something. I told them I had an EIN, I charge sales tax, had a DBA, website, etc...
by PaddyMac
Sat Apr 30, 2022 11:01 am
Forum: Investing - Theory, News & General
Topic: IRS increases HSA contribution limits for 2023
Replies: 22
Views: 2955

Re: IRS increases HSA contribution limits for 2023

That's great, assuming we can get an HSA plan next year.

Note that for the $1000 extra, that is per person, not per plan. Because HSA plans are per person, you need two plans for a couple.

This year I opened a second HSA plan, and put the second $1000 catchup in the second plan.
by PaddyMac
Thu Apr 28, 2022 5:49 am
Forum: Personal Consumer Issues
Topic: Dublin to Belfast Travel
Replies: 17
Views: 1703

Re: Dublin to Belfast Travel

I grew up near Dublin Airport. If you can get a bus to Belfast from the airport, that would be the best solution. You do not want to have to travel south into Dublin City to get a train back up north!
by PaddyMac
Thu Apr 28, 2022 5:23 am
Forum: Personal Consumer Issues
Topic: Easiest way to stop and fix oxidation on car top?
Replies: 46
Views: 2701

Re: Easiest way to stop and fix oxidation on car top?

You might look into posting on AutoGeeks. Their Forum is great for detailing and clear coat failure.

https://www.autogeekonline.net/forum/
by PaddyMac
Fri Apr 22, 2022 2:09 pm
Forum: Personal Consumer Issues
Topic: Color Laser Printers
Replies: 38
Views: 3463

Re: Color Laser Printers

We have a small HP color laserjet M479 that I try to only print B&W on, so that I never have to buy color cartridges for it. I also have a Tabloid size HP 5225 color laserjet that is a workhorse. It even prints up to 12x18. Unfortunately after I replaced the color cartridges last time, it now prints a color stripe along one edge for the first few pages until it clears itself out. I tried the cleaning cycle (twice), but hasn't fixed it. I probably need to get an HP tech up to look at it, but never have time. If anyone knows what's up, let me know if it's easily fixable. For color photography, we use Epson. An old Epson 3880 is still going strong (and has survived his larger 7980 cousin which went to a recycling place). They use pigment i...
by PaddyMac
Thu Mar 31, 2022 11:48 pm
Forum: Personal Finance (Not Investing)
Topic: IRS Identity Verification Letter
Replies: 11
Views: 1516

Re: IRS Identity Verification Letter

I just went through their video interview yesterday so I could open an IRS account to pay estimated taxes and check refunds etc. It's not a big hassle. The guy who called to set up the interview is American, and felt like setting up the Trusted Traveler verification etc. Just have your docs ready to hold up to the camera, and have your mobile phone ready.

Frankly, I was rather impressed with the layers and levels of security to set up my account. I would be horrified if it was easy!

The fact that the link is on the main IRS.gov website meant that I didn't worry too much.
by PaddyMac
Wed Mar 23, 2022 3:53 pm
Forum: Personal Finance (Not Investing)
Topic: Solo 401k for single member llc
Replies: 14
Views: 1065

Re: Solo 401k for single member llc

If she only has EmployER contributions open to her, then she may as well open a SEP-IRA and that is basically the EmployER part of a solo 401k. It's easy to open, has no ongoing paperwork requirements, and she can also contribute for last year, 2021, up to her tax filing deadline (or Oct 15 with extn to file).

It's too late to open a 401k for 2021. The 401k also requires a separate EIN, and paperwork filing every July etc. The SEP is easier and can be converted to a regular IRA some other time.

I would say that an advantage of a 401k is that you can have Roth space, but that is only on the EmployEE side, not ER side. EmployER contributions are always tax deferred, just like a SEP.
by PaddyMac
Wed Mar 23, 2022 3:46 pm
Forum: Personal Finance (Not Investing)
Topic: Estimated Tax Payments
Replies: 12
Views: 1642

Re: Estimated Tax Payments

You can't go wrong paying 100% of the taxes you owed for 2021. Divide by 4. Look up "safe harbor" for estimated taxes; I believe it 110% at a certain threshold.
by PaddyMac
Wed Mar 09, 2022 10:53 am
Forum: Personal Consumer Issues
Topic: Installing Stairlift for Elderly Parents
Replies: 21
Views: 2495

Re: Installing Stairlift for Elderly Parents

We installed a stairlift last summer when my husband broke his leg and needed to get to his work/studio downstairs. We were lucky to hook up with a small Albuquerque business (Right Track) who reps Bruno and Handicare. The owner has been in the business a while, was a straight shooter etc. He said that Bruno had great product, but he was excited by the UK company Handicare. https://www.handicareusa.com/product-category/stairlifts/ We initially rented two straight sections of a Bruno (you can only rent straight lifts) and then had a custom Handicare installed which wraps around the landing. His crew used a series of photos to map out our landing and then Handicare ships over a series of modules that fit together (took about 3 weeks). We upgr...
by PaddyMac
Tue Mar 08, 2022 6:54 pm
Forum: Personal Finance (Not Investing)
Topic: Pay off niece's credit card debt or not?
Replies: 96
Views: 9569

Re: Pay off niece's credit card debt or not?

I was in my mid-twenties when I got in over my head on my first home purchase as I put all the furnishings on credit cards. It took a while to get out of debt, but that lesson has stayed with me for the rest of my life. I haven't paid interest on a credit card since. It's a hard lesson, but I really think everyone needs to learn it at some point.
by PaddyMac
Tue Mar 08, 2022 6:50 pm
Forum: Personal Finance (Not Investing)
Topic: Best online banking for a new small business
Replies: 16
Views: 1171

Re: Best online banking for a new small business

Who do you bank with now? I find it convenient to just have one log in. We bank at Wells Fargo so I opened a simple business checking. I need to keep $500 in the account to avoid fees, but I don't like being below that anyway as I have credit cards on Autopay.
by PaddyMac
Sun Mar 06, 2022 11:29 am
Forum: Personal Finance (Not Investing)
Topic: LLC Personal and Business Checking Account Transfers
Replies: 5
Views: 670

Re: LLC Personal and Business Checking Account Transfers

I just put it on my books as Capital and then repay myself later, if my LLC needs cash. Or if I need cashflow for a good reason or tax deduction, I move the cash to the LLC and they buy a computer etc.

As for whether the cashback is taxable, you may want to do more research. I do report Affiliate Income (Amazon or other affiliate income), but not when the credit card gives me cash back on purchases made.

https://turbotax.intuit.com/tax-tips/ir ... /L1FWHVWGa
https://www.investopedia.com/ask/answer ... me-irs.asp
by PaddyMac
Wed Mar 02, 2022 10:58 am
Forum: Personal Investments
Topic: Roth IRA - Contributing & Withdrawing in same year
Replies: 1
Views: 247

Roth IRA - Contributing & Withdrawing in same year

Question: I read once that you were not allowed to withdraw funds from a Roth IRA the same year that you are contributing. I can't find anything on this now when I search online. Perhaps it was in relation to a new account, or those that don't have earned income? Can anyone shed light on this? Our situation: We have two Roth IRAs at Wells Fargo that are over a decade old and have over $100K in each. We also both have Roth 401k accounts with Vanguard. We are both 61 and semi-retired. We expect to have a decent amount of earned income for a number of years due to ongoing royalties and encore careers. Meanwhile, we have a taxable account that is designed to kick off dividends and this account generates almost $20K a year in dividends. I expect...
by PaddyMac
Wed Mar 02, 2022 10:24 am
Forum: Personal Investments
Topic: Reinvesting dividends
Replies: 61
Views: 6290

Re: Reinvesting dividends

We reinvested during the accumulation phase. A while back we stopped reinvesting in our taxable accounts, and withdrew the cash as we were transitioning to retirement (those dividends are tax-free if you are in the lower tax brackets and the dividends are qualified). Recently we turned off reinvesting in all our accounts, including our tax-deferred, as we are starting to withdraw funds. Note that in a Vanguard account, this took about a week. You have to have a Federal Money Market account in that account (401k, etc.) and that has to be funded with $3K in cash before you can feed funds into it. I was a bit annoyed at the end of December to be forced to sell $12K of total stock market, but now, not so much considering the volatility as we ca...
by PaddyMac
Mon Feb 28, 2022 10:42 am
Forum: Investing - Theory, News & General
Topic: Qualified dividends cannot exceed ordinary dividends?
Replies: 11
Views: 1858

Re: Qualified dividends cannot exceed ordinary dividends?

Not sure how you got TaxAct into that situation where it's giving an error. Maybe you are following a "wizard" style entry and missing something?

I just edit the entry for last year's 1099-DIV for that account, then transfer the values that are in the Boxes into the same-looking form in TaxAct. Then TaxAct does the calculations.

If we opened a new account, then I would generate a new 1099-DIV, but for existing account, it's handy that it remembers all the stuff on the left side of the form and just zeroes out the Boxes with the amounts.
by PaddyMac
Mon Feb 28, 2022 10:30 am
Forum: Personal Investments
Topic: Individual 401K vs SEP-IRA
Replies: 5
Views: 416

Re: Individual 401K vs SEP-IRA

You're correct, and the SEP is less work. On the other hand, we found later on that we needed more Roth space and the Vanguard 401k allowed us to add on a Roth 401k.

You can also switch to a 401k later, but when you do, you must stop adding new contributions to the SEP.

Note that we've never been able to do backdoor Roths due to the rules regarding also having sizable SEPs.
by PaddyMac
Mon Feb 14, 2022 7:14 pm
Forum: Personal Finance (Not Investing)
Topic: Make me a tax prep Boglehead
Replies: 11
Views: 1449

Re: Make me a tax prep Boglehead

ClassII wrote: Mon Feb 14, 2022 3:19 pm More I was not impressed having to do 90% of the work gathering the forms and explaining all my unique little tax situations to the guy, a few unique to my industry he had no idea about!
Ha! Was in the same boat. Last straw was when we filled in our CPA's worksheet and they didn't transfer our HSA contributions to the actual tax form. I decided then that it was time to learn to use an online tax program instead of the CPA's worksheet and save the ever increasing fees.

I use TaxAct because I don't like Intuit as a company, but they probably do have the most users and they seem to have good website articles too.
by PaddyMac
Wed Feb 02, 2022 11:46 am
Forum: Personal Finance (Not Investing)
Topic: Worth transferring money out of Vanguard to WF and back for lower interest rates?
Replies: 19
Views: 1399

Re: Worth transferring money out of Vanguard to WF and back for lower interest rates?

We have had a Wells Fargo "portfolio" account with self-directed SEP-IRAs, plus taxable Brokerage and Roth IRAs for decades and like livesoft, are VERY happy with their products and phone support. If you have enough $ between all your accounts, you pay no fees on personal checking (including free wire transfers) and we get free trades. I only pay checking fees on my business accounts. Just last month I literally spent HOURS on the phone with Vanguard trying to simply add a cash account to our 401ks (so we could turn off reinvesting of dividends). Every time I would call, the wait time was long and I would opt to get a call back. Then when they called, I would get transferred 2 or 3 times. No one seemed to really know how to do it....
by PaddyMac
Sun Jan 30, 2022 11:19 pm
Forum: Personal Finance (Not Investing)
Topic: Are You Comfortable With Sharing Personal Finance Data w/ 3rd Party Aggregators and Why? - Incl Quicken, Mint, and Oth.
Replies: 104
Views: 8075

Re: Are You Comfortable With Sharing Personal Finance Data w/ 3rd Party Aggregators and Why? - Incl Quicken, Mint, and O

I found this thread interesting as I am against sharing any log in information. I'd rather take the time to hand enter it. As an example of the quality of the web developers that one company hired: You should be able to accidentally type an http:// domain and it will automatically resolve to the secure https:// domain. I didn't think any financial company would make that mistake, but I found this link in a newspaper article and followed it. I could believe it when I saw "Not Secure" by the domain name in the browser. The URL is http://incomestrategy.com https://i.imgur.com/DByueXV.png The domain should flip seamlessly to https:// and this is very simply done at the server level. I just emailed them to point this out, so maybe it's...
by PaddyMac
Fri Jan 28, 2022 10:57 am
Forum: Personal Finance (Not Investing)
Topic: Filed tax return off by $50
Replies: 14
Views: 1621

Re: Filed tax return off by $50

I would also sit on it. The IRS will write you if it catches it. I filed our business taxes for 2019 and amended the return 3 days later online via TaxAct, and the IRS included BOTH partnership returns on our 1040 and said we owed lots of taxes. So Amending is not foolproof either.
by PaddyMac
Fri Jan 28, 2022 10:49 am
Forum: Personal Investments
Topic: solo 401k more than one schedule
Replies: 5
Views: 495

Re: solo 401k more than one schedule

If it's less work for you, you can merge different types of income into one Schedule C. The "activity code" afaik is just a guide for the government to know what types of occupation people have. So you could pick the code that the majority of your income comes from. We have all sorts of income in our business and just pick "graphic design" as the code as it sort of encompasses half of it. I can't imagine filing different tax forms and splitting our out income into "zones" based on codes.

I should add that in our accounting software, we do create a list of Accounts and organize our income that way. So we can tell how much we make from books or giving demos etc. But we wouldn't file our return that way!
by PaddyMac
Fri Jan 28, 2022 10:41 am
Forum: Personal Finance (Not Investing)
Topic: Home Office Deduction... Repairs and Maintenance Deduction - what qualifies
Replies: 11
Views: 1147

Re: Home Office Deduction... Repairs and Maintenance Deduction - what qualifies

If the repair is to an item that is also used by the business, it goes on the worksheet.

The clothes washer does not because washing your work clothes is not deductible.

If you do a major renovation only to the office space, like changing from carpet to tile, you can include 100% of that but your accountant will probably make you depreciate it over 37.5 years.

But depending on how much space you exclusively use for an office, this deduction can be quite valuable.

Also, you don't have to depreciate the house itself. We never have.
by PaddyMac
Tue Jan 25, 2022 12:22 pm
Forum: Personal Consumer Issues
Topic: New Macbook Air M1 - chiming noise, anyone?
Replies: 7
Views: 849

Re: New Macbook Air M1 - chiming noise, anyone?

Are you sure it's not Apple Mail chiming that it got a new mail? Some apps will chime even if you have Notifications Sounds off.

In Mail, look under Preferences > General for Sounds. (Sometimes we forget when we get a new laptop that we turned these darn prefs off years ago...)

I just installed a new copy of SpamSieve (great app for filtering spam btw) and it has a Sound preference I had to disable after puzzling for a few days why my laptop was going "bong" every so often.
by PaddyMac
Tue Jan 25, 2022 12:17 pm
Forum: Personal Finance (Not Investing)
Topic: Simple QBI Solution? ROTH 401(k) for SP Wife, 401(k) for Me?
Replies: 4
Views: 356

Re: Simple QBI Solution? ROTH 401(k) for SP Wife, 401(k) for Me?

We're self-employed and optimizing income for investing can be complicated. I created a Numbers spreadsheet that replicates our return, so at tax time I can create a few "what-if scenarios".

I don't see a problem with your reasoning. I do a similar thing by choosing to depreciate new computers over 5 years, instead of taking them as a Section 179 write-off. That way we boost our income during the years where the QBI Deduction is available, and if it disappears we will have a few more years of a deduction with depreciating assets.

Also, you mention potential inheritances: We stuffed our Roth 401k to the max with inheritance money so that it would grow tax free.
by PaddyMac
Tue Jan 25, 2022 12:06 pm
Forum: Personal Investments
Topic: A first for me - Broker failed to execute trade
Replies: 11
Views: 2105

Re: A first for me - Broker failed to execute trade

In the 1990s, we had a stock broker who ignored our request to buy some Apple stock. When it didn't show up on our statement, he said that "Apple was going out of business...". And it was true that the press was bad, but we decided to put our money where our hearts were.

We fired him. We negotiated that his company buy the stock at the price it was on the day we put in our order (it had already gone up a bit).

The rest is history. Thank you Apple!
by PaddyMac
Mon Jan 24, 2022 12:50 pm
Forum: Personal Finance (Not Investing)
Topic: Starting a LLC for side gig - solo 401k
Replies: 15
Views: 1434

Re: Starting a LLC for side gig - solo 401k

Had another question about this. Can I start a solo 401k while the business is still in ramp up without any income? In other words, if the first year does not show any revenues, just expenses, can you still put money in a solo 401k associate with this side business? No unfortunately, you need to have earned income net of expenses and SE taxes to contribute to a solo 401k Specifically it is: gross income - expenses = Net income * 0.9235 - Self employment tax + 1/2 SE tax = net profit. The net profit being what is available to contribute Why do you multiply net income by 0.9325? When I use this calculator (assuming I max out my 401k elsewhere and am only making employer contributions): https://obliviousinvestor.com/solo-401k-contribution-cal...
by PaddyMac
Mon Jan 24, 2022 11:51 am
Forum: Personal Finance (Not Investing)
Topic: Sole Proprietorship - tools such as Square
Replies: 3
Views: 249

Re: Sole Proprietorship - tools such as Square

I haven't used Square for paying contractors, but I have used Zelle as my bank supports it.

Just read up on the differences between some of these payment vendors as some of them are reporting 1099-NECs to the recipients. So if you use PayPal and use Friends & Family to pay a contractor, then you need to issue the 1099. If you use "buying a service" the PayPal will issue them 1099-NEC.

This get complicates at tax time as you don't want them to receive two 1099s for the same income etc.
by PaddyMac
Mon Jan 24, 2022 11:47 am
Forum: Personal Finance (Not Investing)
Topic: Non-working or minimally-working spouse and retirement
Replies: 2
Views: 484

Re: Non-working or minimally-working spouse and retirement

1. You can contribute to an IRA or Roth IRA for your spouse even if they don't work in 2022. 2. FICA taxes are based on the self-employment income and has nothing to do with whether you saving in a 401k. Be careful with the "save 100%" in 401k though as when the income is low, there is a cut off that stops you saving 100%. You need to download a worksheet that will figure it out for you. A while back I recreated the Fidelity worksheet in a spreadsheet and it's been handy for working out the max. https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/customer-service/401k-self-employed-owner-only-business.pdf 3. 401k trumps IRA imho. Remember you can also do a Roth IRA + spousal Roth IRA as well, if you qualify. You can...
by PaddyMac
Fri Jan 14, 2022 9:55 am
Forum: Personal Consumer Issues
Topic: Online Yoga Classes
Replies: 20
Views: 2120

Re: Online Yoga Classes

You do need an Apple Watch for Apple Fitness+. On the other hand, it offers way more than just yoga. It's very customizable as to instructor, type of workout, and time, and because they have new classes weekly, it has more of a timely feel to it (like the recent workout that mentioned the "New Year"). I like it, but I'm not focused just on yoga.
by PaddyMac
Wed Jan 12, 2022 2:33 pm
Forum: Personal Consumer Issues
Topic: How do you document your HSA "stuff?"
Replies: 89
Views: 11758

Re: How do you document your HSA "stuff?"

Our experience: We saved in our HSA for a decade or so and hardly spent anything unless the bill was large and unexpected. The account grew to $75K last year. That's when DH broke his leg! We spent $25K from the HSA to cover the medical bills and to install a stair lift so he could get to work (he works downstairs). It was great to be able to withdraw all that tax free and treat him to a nice stair lift (custom installed to fit our staircase). We will have this for our later years, as we don't expect to move. Our plan now that we are 60 is to withdraw at least the growth of the fund each year, or our contributions (if we are in an HSA plan, as we are this year). I consider an HSA the only legal money-laundering gig available - it literally ...
by PaddyMac
Tue Jan 11, 2022 10:05 am
Forum: Personal Investments
Topic: Quick question about index funds in taxable
Replies: 16
Views: 1586

Re: Quick question about index funds in taxable

You didn't mention your tax bracket? Cap gains are free if they fit in your 12% bracket.

We managed to just stay inside the 12% bracket in 2021, and so I liquidated all our investments in taxable on 12/31 to harvest the gains tax free.

You could probably also bring your taxes down by opening a Vanguard Individual 401k and stop using the SEP-IRA. The 401k also has a Roth 401k option.

So theoretically you could take your taxable savings and move it over to the Roth 401k, or save new money there. Of course, you can't withdraw it without penalty until you are 59.5 and you have to have matching earned SE income.
by PaddyMac
Mon Jan 10, 2022 11:52 pm
Forum: Personal Finance (Not Investing)
Topic: Are HSAs that straightforward?
Replies: 13
Views: 1384

Re: Are HSAs that straightforward?

terran wrote: Mon Jan 10, 2022 11:45 am It also means that you're likely to find two very similar plans from the same insurer, one that costs less despite slightly better coverage, and one that costs more with worse coverage, but HSA eligible.
Very true. That was the case last year for us. It just wasn't worth the extra cost. One year the insurance company offered the HSA plan but OFF the Exchange, which means you didn't get a subsidy either.

That's why I was surprised this year to find our insurance company added a compatible plan that was only a few dollars more a month but the deductible was lower and the benefits were better. Very odd! We read it three times.
by PaddyMac
Mon Jan 10, 2022 11:46 pm
Forum: Personal Investments
Topic: Best options for "cash" in SEP-IRA and 401k?
Replies: 5
Views: 497

Re: Best options for "cash" in SEP-IRA and 401k?

terran wrote: Mon Jan 10, 2022 1:58 pm If you're otherwise happy with Ally Bank, perhaps you should roll all of your accounts into IRAs and then rollover the cash portion of your accounts to Ally IRAs, which have the same 0.5% rate as the Ally savings account?
Thank you. That's something I was not aware of, and worth exploring. I have been pleased with Ally Bank.

Thanks everyone. I like to have six months cash on hand, but right now most of our cash is inside our retirement funds. I'm busy trying to figure out withdrawal rates but taxes do have a habit of complicating things... :)
by PaddyMac
Mon Jan 10, 2022 12:29 pm
Forum: Personal Investments
Topic: Is my accountant wrong about SEP-IRA deadline?
Replies: 5
Views: 487

Re: Is my accountant wrong about SEP-IRA deadline?

He's probably confusing it with the deadline to open an Individual 401k.
Might be time to find a new accountant that is more used to working with small businesses and the self-employed.
by PaddyMac
Mon Jan 10, 2022 11:00 am
Forum: Personal Investments
Topic: Best options for "cash" in SEP-IRA and 401k?
Replies: 5
Views: 497

Best options for "cash" in SEP-IRA and 401k?

Background: We have always been self-employed, are now 60 years old, and have built up large SEP-IRA and decent Individual 401k balances. Now that we are almost retired, we are starting to withdraw funds from our SEPs to live on. Our total portfolio is around $3 million across all accounts, including taxable. We expect to withdraw about 4% per year in our sixties, and have good SS income at 70. In the largest SEP, we liquidated some riskier assets and after withdrawing $30K for 2022 cashflow, we still have $60K in the cash settlement fund which we may not need until next year. We recently stopped all reinvesting of dividends and cap gains in all accounts, so these will flow into the cash settlement funds. We want to follow the basic princip...