Questions on Savings,taxes and finance

[aolsuxs]

I started a savings account with Wells Fargo a few years ago, started with a thousand and have added money to it on and off since I am currently unemployed. It is currently only at 1,500 ish and I would like to place it somewhere that would get me a lot more interest then it is at Wells Fargo savings, which is about 50 cents if that in the past two or three years. Are there any other options? I don't plan on using the money for a long long time, IE 10 or so years and if it is possible a place I can put it where it is tax free and I don't have to report it to IRS. Also note I am 18, I have no knowledge of finance, taxes, IRAs etc etc so excuse my newbieness in the matter

Second over the summer I worked the dreaded job as the knife salesmen for Cutco which I am sure many of you have heard of. One of the bennefits, at the time, was that none of our earnings are taxed, instead we must file a report of some sort to IRS. Supposedly since we are independent contractors we get money back for business expenses, such as lunches and miles traveled etc. I have no idea how to do this. I was planning on going to H&R block and just giving them all my stuff and go from there. Any other ideas? Looking to get this done ASAP so I can perform my FAFSA.


Thanks in advanced,

 

[Viper GTS]

How about a Roth IRA?

As for your second question, I dunno...

My taxes are very simple.

Viper GTS

 

[kranky]

Don't get hung up on tax-free interest. If you invest in mutual funds you don't pay taxes until you sell; with an IRA, you don't pay taxes until you withdraw the money. Before you invest it where you might have to pay taxes when you sell, do you have 3-6 months of living expenses in savings? Take care of that first.

Your independent contractor job will require you to provide all the documentation to H&R Block - mileage, expenses, office supplies, etc. You have to come up with those records. Give them to H&R Block and they'll know what to do with them. You know it will be expensive to use H&R Block for that type of return, right?

 

[aolsuxs]

Originally posted by: kranky
Don't get hung up on tax-free interest. If you invest in mutual funds you don't pay taxes until you sell; with an IRA, you don't pay taxes until you withdraw the money. Before you invest it where you might have to pay taxes when you sell, do you have 3-6 months of living expenses in savings? Take care of that first.

Your independent contractor job will require you to provide all the documentation to H&R Block - mileage, expenses, office supplies, etc. You have to come up with those records. Give them to H&R Block and they'll know what to do with them. You know it will be expensive to use H&R Block for that type of return, right?

How expensive is expensive? Are there any options besides H&R Block which may be cheaper?

 

[Maetryx]

Get a Taxcut or some other tax software. Last time I used one, it was kind of interactive like an interview. I suspect that the knife pyrmaid scheme misled you a bit. They were using *wink* *wink* *nod* *nod* *saynomore* tactics to indicate that if you don't tell the IRS they gave you money, you weren't likely to get caught.

Since you were a private contractor, you should have already sent in quarterly taxes (businesses, such as private contractors like yourself, are supposed to pay taxes every 3 months), and you should have been sending in 14.90% for social security (your part is 7.45% and your employer's part is 7.45%.... except you were self employed so you get both). Isn't it grand being a private contractor? They did this to you to make your pay look better than it would if they hired you outright. They probably expect that most of their employers, ummmmm, I mean contractor

will simply put the money in their pocket and whistle while they stroll to Wells Fargo and put the money in their savings account.

Anyway, like Viper GTS said, put your money in a Roth IRA. That's the kind that you don't pay taxes on when you withdraw it 37 years from now. Meanwhile, earnings inside an IRA aren't taxed, whereas the 50 cents that Wells Fargo gave you will be subject to your income tax.

 

[kranky]

Like Maetryx said, you can use software to prepare your return. If the knife outfit filed a 1099 with your name on it, it will have to be accounted for. If there was no 1099 form, follow your conscience. Did the knife company require you to provide your Social Security number?

 

[aolsuxs]

I am not sure if I provided a SSN or not, it was during the summer. How much would it cost to get all this done by H&R Block. Also if my parents are paying out of state fees for my tuition do they get that back? Finally regarding the ROTH IRA, how would I set one up? Any other options besides the IRA? It seems you can only withdraw your earnings from IRA when your in your 60's or so. Is that true?

 

[aolsuxs]

Any more opinions?