I owe Uncle Sam money this year, any way to avoid this?

[s0me0nesmind1]

I think thats true for FAFSA related loans but I don't think thats true for private - you just need a co-signer

Same shit, I'm not going to cosign any huge loans for my kids. It's their choice and their risk if they want a stupid major in an out of state school or a private school. I'm not going to take that risk.

 

[CPA]

Same shit, I'm not going to cosign any huge loans for my kids. It's their choice and their risk if they want a stupid major in an out of state school or a private school. I'm not going to take that risk.

My oldest is going in the Air Force. He signs the final papers in March. My next (16, 10th grade) has already decided she wants to be a cosmetologist and our school district offers a two-year program to get her state license at a reduced cost. My youngest (13, 7th grade) has, of course, no idea what he wants to do other than stream his video games for money. lol. I may get out of paying for any college altogether.

 

[Engineer]

Government doesn't want intelligent people. Government wants dependents.

Government writes the laws. Law favor redistribution of money from the middle class to the lower class. Lower class increases in size. Middle class shrinks. Upper class funds political campaigns -- they can buy favors.

Best of luck with avoiding paying the $300. Government defense contractors don't need it for their forever war anyway...

Uno

That's just poetry.

:thumbsup:

 

[ControlD]

How the fuck do any of you owe ANYTHING? Your employer makes your deductions. Unless you are lying on your W4, they always overly deduct by far for me. I'm calling BS.

That only works before your spouse's income is added to the equation. If both you and your spouse make a decent wage, your combined household income will put you into a different tax bracket all together. In one year's time I went from getting $4000 back to paying something like $5000. The only thing that changed was me getting married. Even now both of us claim zero deductions and withhold at the higher single rate, but unless I cut a check to the government every three months for estimated taxes I will owe at the end of the year.

The other choice is for one or both of us to have extra taken out of each paycheck. I should have done that a long time ago, but my salary fluctuates a lot from year to year so I never got around to figuring it all out.

 

[LegendKiller]

Have you ever been laid? Do you really have nothing better to do with your life then post hateful useless garbage on a computer forum?

My company only started matching $2000 last November. Before that I was getting a .4% match per year which is $300.

Says the guy who racked up 166k in student loans on his parent's dime.

I have 3 kids, all of whom will be a hell of a lot more financially literate than you are.

Ohh, and one other thing. I haven't done my taxes yet but I am pretty sure I paid probably your entire gross income in federal income taxes last year.

So yeah, shut the fuck up sparky.

 

[Mai72]

I have $166k of student loans. Quite frankly, the government is making billions of dollars off of people like me who did things correctly, so I have zero incentive to play nice with them. They allow banks to get loans at low interest, but they won't even let a person who is steadily paying off his loans refinance to a lower rate.



Problem with the IRA is that I can't get a deduction since my AGI is above $70k.



I am a consultant, so I mean, I feel like I should be able to expense having to travel 66 miles roundtrip when I have another office just 5 miles away.

You should run away to Asia.

I met a few backpackers who owed over 6 figures in student loans and they had no intention to every pay it back.

 

[Engineer]

Says the guy who racked up 166k in student loans on his parent's dime.

I have 3 kids, all of whom will be a hell of a lot more financially literate than you are.

Ohh, and one other thing. I haven't done my taxes yet but I am pretty sure I paid probably your entire gross income in federal income taxes last year.

So yeah, shut the fuck up sparky.

I love you LK! :wub:

:$:$

:biggrin:

 

[SeductivePig]

Says the guy who racked up 166k in student loans on his parent's dime.

I have 3 kids, all of whom will be a hell of a lot more financially literate than you are.

Ohh, and one other thing. I haven't done my taxes yet but I am pretty sure I paid probably your entire gross income in federal income taxes last year.

So yeah, shut the fuck up sparky.

If I recall correctly, my parents merely cosigned the loan since at 17 years old, I did not qualify to borrow $166k for the government (sorry, I couldn't save that much money, merely made min wage at 17). Where in my post did I say they paid for any of it?

And you know how I know you're a loser? You're bragging about your income on an anonymous internet forum and acting like you're the shit because you make more than a kid barely 3 years out of college.

Get a life old man.

And for the record, I have enough saved to put down $45k on that loan, and am on track to have $75k paid down by mid next year. So I don't get why people are making a big deal out of this.

 

[LegendKiller]

If I recall correctly, my parents merely cosigned the loan since at 17 years old, I did not qualify to borrow $166k for the government (sorry, I couldn't save that much money, merely made min wage at 17). Where in my post did I say they paid for any of it?

And you know how I know you're a loser? You're bragging about your income on an anonymous internet forum and acting like you're the shit because you make more than a kid barely 3 years out of college.

Get a life old man.

And for the record, I have enough saved to put down $45k on that loan, and am on track to have $75k paid down by mid next year. So I don't get why people are making a big deal out of this.

Co-signing doesn't equate to you not being able to deduct the interest as far as I know.

I'm not bragging but this is quite fun. You're so twisted up about $300 and you saying you've saved that much. You don't even know your head from your ass.

LOL - can't even figure out tax efficient strategies and maximize return for low interest rate loans but he can save up that much. Sure chuckles.

 

[brianmanahan]

LOL - can't even figure out tax efficient strategies and maximize return for low interest rate loans but he can save up that much. Sure chuckles.

thats not uncommon

i have seen people with millions of $ post on bogleheads who dont have a clue about money or finance, other than how to make a lot of it

 

[SeductivePig]

Co-signing doesn't equate to you not being able to deduct the interest as far as I know.

I'm not bragging but this is quite fun. You're so twisted up about $300 and you saying you've saved that much. You don't even know your head from your ass.

LOL - can't even figure out tax efficient strategies and maximize return for low interest rate loans but he can save up that much. Sure chuckles.

Who said I'm twisted up about it? I figured there's a lot of smart people here who know ways to get a better return, so I figured why not ask about it. It's not the fact that $300 is a lot for me, it's the fact that I pay a ton of money in interest to the government already, so I don't like the idea of owing money for taxes.

Simply put, I earned a good degree and have a well paying job and make my payments on time, and have excellent credit. I should qualify for a lower interest rate on my student loan - I'm hardly a risk for the government. Yet they won't fucking budge, that's why I don't like to budge on taxes, because I know how much of government spending is wasted on complete bullshit.

As for the whole financial literacy argument - I chose not to take the 401k because I value cash far more than retirement savings right now. I look at it as a cushion in the scenario where I either lose my job or switch careers. Last thing I want to do is have savings in retirement, lose my job, and make my parents foot the bill for my loan, since they cosigned. I look at every dollar I have in immediate, liquid savings as a dollar that will save my parents from having to foot the bill if something unexpected happens to me.

 

[LegendKiller]

Who said I'm twisted up about it? I figured there's a lot of smart people here who know ways to get a better return, so I figured why not ask about it. It's not the fact that $300 is a lot for me, it's the fact that I pay a ton of money in interest to the government already, so I don't like the idea of owing money for taxes.

Simply put, I earned a good degree and have a well paying job and make my payments on time, and have excellent credit. I should qualify for a lower interest rate on my student loan - I'm hardly a risk for the government. Yet they won't fucking budge, that's why I don't like to budge on taxes, because I know how much of government spending is wasted on complete bullshit.

As for the whole financial literacy argument - I chose not to take the 401k because I value cash far more than retirement savings right now. I look at it as a cushion in the scenario where I either lose my job or switch careers. Last thing I want to do is have savings in retirement, lose my job, and make my parents foot the bill for my loan, since they cosigned. I look at every dollar I have in immediate, liquid savings as a dollar that will save my parents from having to foot the bill if something unexpected happens to me.

Ahhh, the smell of entitlement.

Of course they won't budge. The student loan program is an entitlement program, it is blind to degree or credit quality since all students are shitty credits with relatively poor prospects coming in. You deserve nothing more than anybody else, regardless of your job or credit quality. Why? Because you don't seem willing to do your own research and take it yourself.

You want to refi your loans and be smart about it? Look into Commonbond or SoFi. Both risk base price based upon Free Cashflow and the end of the month and credit score, but mostly FCF. The rates can be significantly lower and they do a very good job (so far) at underwriting. They fund themselves cheaply through the securitization market (at least SoFi) and pass that on to borrowers. You can drop the co-signer and it is still 100% recourse back to you with no bankruptcy exclusion (2005 bankruptcy law, IRS code defined this for refi private loans).

I know the program very well.

A supposedly smart guy like you would know this already.

Retirement savings should always be a priority. You get an automatic tax savings plus compounding returns.

 

[SeductivePig]

Ahhh, the smell of entitlement.

Of course they won't budge. The student loan program is an entitlement program, it is blind to degree or credit quality since all students are shitty credits with relatively poor prospects coming in. You deserve nothing more than anybody else, regardless of your job or credit quality. Why? Because you don't seem willing to do your own research and take it yourself.

You want to refi your loans and be smart about it? Look into Commonbond or SoFi. Both risk base price based upon Free Cashflow and the end of the month and credit score, but mostly FCF. The rates can be significantly lower and they do a very good job (so far) at underwriting. They fund themselves cheaply through the securitization market (at least SoFi) and pass that on to borrowers. You can drop the co-signer and it is still 100% recourse back to you with no bankruptcy exclusion (2005 bankruptcy law, IRS code defined this for refi private loans).

I am aware of these programs - commonbond is only for students who will be refinancing graduate and undergrad loans, but it doesn't work only for undergrad loans. Sofi didn't accept parent plus loans (we tried) which is what my $166k is classified as. The only real option is citizens bank which I am pursuing, but the loan refinance limit is $90k for undergrad which is why I'm waiting until next year to put down $75k and refinance the remainder with citizens bank.

I know the program very well.

A supposedly smart guy like you would know this already.

Retirement savings should always be a priority. You get an automatic tax savings plus compounding returns.
I do agree, but my circumstances are highly abnormal. I'm planning to switch careers which will be quite a paycut so I need savings if I don't cut it for whatever reason. And as I said before, the company only started matching $2k last November. Before that it would've been .4%, or $300.

Comments in bold.

I don't think it's entitlement complex. If I got a degree in basket weaving then sure, I agree that I don't deserve a break. But I struggled to get my electrical engineering degree and did things correctly after college. Student loans should be able to be refinanced just like cars, homes, and other loans - based on income, credit score, and likelihood of repayment.

You can't honestly tell me that you believe the education system isn't flawed, with it's ridiculous salaries paid to employees, ridiculous amenities being built (multi million dollar gyms???), and crazy tuition hikes? Technology is getting far more advanced yet education is getting far more expensive. It just doesn't make sense.

 

[LegendKiller]

Comments in bold.

I don't think it's entitlement complex. If I got a degree in basket weaving then sure, I agree that I don't deserve a break. But I struggled to get my electrical engineering degree and did things correctly after college. Student loans should be able to be refinanced just like cars, homes, and other loans - based on income, credit score, and likelihood of repayment.

You can't honestly tell me that you believe the education system isn't flawed, with it's ridiculous salaries paid to employees, ridiculous amenities being built (multi million dollar gyms???), and crazy tuition hikes? Technology is getting far more advanced yet education is getting far more expensive. It just doesn't make sense.

Ohh, I fully agree. I have many insights into the student loan sector, I speak with the CFO/Treasurers of Sallie, Nelnet, among others, on a regular basis. I think the entire situation is abhorrent, but it's what we have.

The problem is that going IN you can't know who will succeed, so it is more difficult to price risk. Furthermore, we have this fucking insane idea that all kids need to college, regardless of ability, or major. The economics of an education isn't tied to the economics of the degree in the real world. The schools don't share in the risk of the education, thus they don't care about the price. If they held the first 10% of default risk they'd be acting differently. all of them think they need to be top-tier research, or sports, or this or that rather than filling a simple mandate, provide the best education at the lowest reasonable cost.

As the student loan program took over for state funding the purse strings were lost and rationality left. I agree on the buildings. My undergrad has been building pretty buildings, loading up on admin staff, and they have raised tuition over 100% since I left.

 

[stlc8tr]

How the fuck do any of you owe ANYTHING? Your employer makes your deductions. Unless you are lying on your W4, they always overly deduct by far for me. I'm calling BS.

I guess you only have W2 income? No investments or 1099 income?

I like to give the Fed interest free loans, cause it seems they can use all the money they can get......and im a patriot.....fan.

Back in the days of 5+% interest this mattered. But these days? Meh.

 

[purbeast0]

damn i am glad that i got out of college when i did, and that i went to a state school. graduated in 2004 with like 19k in loans consolidated at 2% interest. the cost of schools and the rates now a days are ridiculous. gonna make my kid just learn a damn trade!

 

[Engineer]

Retirement savings should always be a priority. You get an automatic tax savings plus compounding returns.

Plus a decent employer match in many cases. Hard to beat guaranteed returns up to 100% of the first few percent that you put in, even if you only put it a guaranteed zero risk fund.

(P.S. I know you know this...just putting it out there in text format! )

 

[purbeast0]

Plus a decent employer match in many cases. Hard to beat guaranteed returns up to 100% of the first few percent that you put in, even if you only put it a guaranteed zero risk fund.

(P.S. I know you know this...just putting it out there in text format! )

i wish i started my 401k earlier, but i too thought like the OP. i didn't start it until i was like 25. wish i started it right when i got to my first job when i was 22.

by not contributing and getting that free match, you are also missing out on extra money they contribute. so basically you are giving up free money. yeah ... not very bright in the long run.

 

[brianmanahan]

i wish i started my 401k earlier, but i too thought like the OP. i didn't start it until i was like 25. wish i started it right when i got to my first job when i was 22.

same here... i always contributed, but only like %5 or so. should have started throwing as much money in as i could back in 08/09, but i didnt learn what i was doing until 2011

 

[jagec]

I chose not to take the 401k because I value cash far more than retirement savings right now. I look at it as a cushion in the scenario where I either lose my job or switch careers.

You can take out a 401k loan to access your retirement savings down the road in an emergency, but you can't replace the lost match, lost compounding, and lost tax-advantaged space if you don't contribute.

 

[Engineer]

i wish i started my 401k earlier, but i too thought like the OP. i didn't start it until i was like 25. wish i started it right when i got to my first job when i was 22.

by not contributing and getting that free match, you are also missing out on extra money they contribute. so basically you are giving up free money. yeah ... not very bright in the long run.

I was just tinkering with the OP's $2,000 contribution along with a matching $2,000 contribution.

If the OP contributed $2,000 per year and received a match of $2,000 from ages 22-25 (3 years) and did not put another dime in, with an average mutual fund market return of 7% (YMMV) will grow to $217,123.32 with ZERO extra contributions from age 25 to 65.

Yes, I agree and wish I had done the same. From the looks of it, I left over 200K on the table by missing those first three years too.

You can take out a 401k loan to access your retirement savings down the road in an emergency, but you can't replace the lost match, lost compounding, and lost tax-advantaged space if you don't contribute.

Was going to post this but you did a much better job. 100% agree!

 

[LegendKiller]

I was just tinkering with the OP's $2,000 contribution along with a matching $2,000 contribution.

If the OP contributed $2,000 per year and received a match of $2,000 from ages 22-25 (3 years) and did not put another dime in, with an average mutual fund market return of 7% (YMMV) will grow to $217,123.32 with ZERO extra contributions from age 25 to 65.

Yes, I agree and wish I had done the same. From the looks of it, I left over 200K on the table by missing those first three years too.



Was going to post this but you did a much better job. 100% agree!

Best decision I ever made during 07-10 was to fully fund my 401k when all of my coworkers took out huge mortgages pre-crisis and got screwed when we got $0 bonuses, they stopped contributing. I made a killing on it. Got crazy employer match (100% of Fed max when you included their "pension" contribution). It is now a decent portion of my retirement.

 

[Engineer]

Best decision I ever made during 07-10 was to fully fund my 401k when all of my coworkers took out huge mortgages pre-crisis and got screwed when we got $0 bonuses, they stopped contributing. I made a killing on it. Got crazy employer match (100% of Fed max when you included their "pension" contribution). It is now a decent portion of my retirement.

I agree 100%. As painful as 07-10 was, I changed my contribution to max allowed and kept watching as my overall value went down 64%. I just kept putting it in though, realizing that if it went to zero, we would have far bigger problems than worrying about retirement. Expected a bounce back but nothing like what we have had for the last 4+ years.

Haven't had a mortgage for over 9 years! :biggrin:

 

[stlc8tr]

As for the whole financial literacy argument - I chose not to take the 401k because I value cash far more than retirement savings right now. I look at it as a cushion in the scenario where I either lose my job or switch careers. Last thing I want to do is have savings in retirement, lose my job, and make my parents foot the bill for my loan, since they cosigned. I look at every dollar I have in immediate, liquid savings as a dollar that will save my parents from having to foot the bill if something unexpected happens to me.

That's actually a good argument. Having an emergency fund is almost always the #1 priority. You should have led with this.

 

[s0me0nesmind1]

I guess you only have W2 income? No investments or 1099 income?



Back in the days of 5+% interest this mattered. But these days? Meh.

Correct, my only investments are in retirements. I have no reason to touch taxable investments until I can max out an IRA and 401k for both myself and my wife every year.

Maybe I'll dip into some savings bonds at some point, but that would be for different reasons.

Edit: And obviously, that amount of maxing out retirement investments yearly would currently be at a total of 47k for myself and my wife combined.