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

[stlc8tr]

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.

FYI, mutual funds (in a taxable account) can easily generate thousands of dollars in hard to predict dividends and cap gains even if you never touch them.

 

[s0me0nesmind1]

FYI, mutual funds (in a taxable account) can easily generate thousands of dollars in hard to predict dividends and cap gains even if you never touch them.

I have a family friend whom is a broker that I've talked to. He has simply flat out told me no matter how good he is that he can't beat 25% (referring to taxes). Nothing can.

It's opened my eyes lately that I need to shove my max in retirement. If I truly need cash I can simply take a loan out of my 401k for chump change interest.

 

[brianmanahan]

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.

i wish i had a wife so i could max out her IRA and 401k 🙁

 

[brianmanahan]

I have a family friend whom is a broker that I've talked to. He has simply flat out told me no matter how good he is that he can't beat 25% (referring to taxes). Nothing can.

It's opened my eyes lately that I need to shove my max in retirement. If I truly need cash I can simply take a loan out of my 401k for chump change interest.

i invested in taxable for a few years because i didnt have any more room in my 401k/IRA.

but at my latest employer, they allow after-tax (not roth) 401k contributions that i can roll over to a roth IRA without any tax or penalties. BOOM, increases annual roth IRA limit from 5.5$k to 30$k. so no more taxable investing for me.

 

[s0me0nesmind1]

i wish i had a wife so i could max out her IRA and 401k 🙁

Heh, it was hard enough for me to get her to bump up her 401k contributions past 10%. That is tough since it affects her take home pay and "fun money". whereas the ROTH IRA I opened under her I can contribute at anytime with any of our after taxed dollars. Wives are often a pain on retirement accounts, mine isn't too bad 😉

 

[CPA]

I have a family friend whom is a broker that I've talked to. He has simply flat out told me no matter how good he is that he can't beat 25% (referring to taxes). Nothing can.

It's opened my eyes lately that I need to shove my max in retirement. If I truly need cash I can simply take a loan out of my 401k for chump change interest.

Just hope that 25% isn't 45% when you retire. 401K withdrawals are taxable. Of course, that's speculation, so I'm not trying to dissuade you from putting money in there, but it's not guaranteed either.

 

[brianmanahan]

Just hope that 25% isn't 45% when you retire. 401K withdrawals are taxable. Of course, that's speculation, so I'm not trying to dissuade you from putting money in there, but it's not guaranteed either.

'tis why i split between 401k and roth ira

not to say that both wont be taxed someday :\

 

[s0me0nesmind1]

Just hope that 25% isn't 45% when you retire. 401K withdrawals are taxable. Of course, that's speculation, so I'm not trying to dissuade you from putting money in there, but it's not guaranteed either.

Hence, diversify. Our IRAs will remain ROTH while our 401k's will stay pretax. At the same time, I would suspect we would have enough warning to do a quick ROTH rollover if need be should the tax brackets drastically change.

But Regardless of being taxed before or after, there is a reason it is called a tax advantage.

 

[CPA]

Hence, diversify. Our IRAs will remain ROTH while our 401k's will stay pretax. At the same time, I would suspect we would have enough warning to do a quick ROTH rollover if need be should the tax brackets drastically change.

Got it. didn't see where you were in Roth, as well.

 

[Engineer]

'tis why i split between 401k and roth ira

not to say that both wont be taxed someday :\

Sales taxes for the loss when it comes to Roth. Better hope that we don't get a federal sales tax.

 

[brianmanahan]

Sales taxes for the loss when it comes to Roth. Better hope that we don't get a federal sales tax.

yep

though, i dont spend that much, so i would prefer sales tax if it meant lower income tax

(not like that will actually happen though :biggrin🙂

 

[ViviTheMage]

I typically got back $2-4k a year until now so this is quite the shocker.

you must be a recent grad? no hope/school credit is what that probably is.

 

[s0me0nesmind1]

Sales taxes for the loss when it comes to Roth. Better hope that we don't get a federal sales tax.

How is a federal sales tax make a ROTH account for the loss? Unless a fed sales tax indirectly means a decrease in tax brackets that were already paid....

Either way Roth or pretax, sales tax will still apply. Or am I missing something?

 

[brianmanahan]

Either way Roth or pretax, sales tax will still apply. Or am I missing something?

its a tax that roth accounts will be unable to avoid

right now, they avoid any (federal) taxation

 

[Sonikku]

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

Become a Job Creator.

 

[s0me0nesmind1]

its a tax that roth accounts will be unable to avoid

right now, they avoid any (federal) taxation

Stupid question, how does ANY account avoid sales tax?

Spending money is inevitable, it's just a matter of when - hence am pretax IRA simply delays the income tax payment until you want to take it. Which is an advantage because it allows you to manipulate your tax brackets easily come retirement time, but in the end you will still be spending it... no? Unless you're just Mr. Burns from The Simpsons and just keep investing it all your life and keep passing it down to heirs..... to which I say you live a dad pathetic life if you never enjoy the money you earn.

 

[John Connor]

Quick facts:

I made $77k last year with bonuses, etc. I get reimbursed for mileage to my client (52 miles roundtrip), but not mileage to my home office (66 miles roundtrip).

My employer required me to commute to my home office twice a week despite having another office 5 miles away from where I live.

I contributed nothing to my 401k and nothing to an IRA, so now I owe $300.

Had no medical expenses, no student loan interest, etc.

My question is, can I use the commute to my home office as a business expense? Technically I had somewhere closer I could've gone but my job required me to travel that far. That would be close to 66 miles * 2 days/week * 48 weeks = 6336 miles, x the standard mileage rate of .56 cents/mile = $3548..

I paid a bunch of money for maintenance so I actually lost money with gas + maintenance on my car, even after reimbursements.

You made 77K and you are complaining about a lousy $300 bucks?

First world problems over here folks!

 

[John Connor]

Go on welfare. Works for millions!

109 million, isn't?

 

[John Connor]

Went to trade school and studied welding. Cost me nothing, it was on the fedeal dime through Job Corp. Almost went into the Navy (long story but I should have) Now I refuel planes and want to go to flight school. I sure hope the god! I don't have to pay 106K in loans. LMAO!

Where did you go to school, OP?