YATT: That probably shouldn't be here, but it's just a rant really.....

[redgtxdi]

So between the wife and I, we did pretty good last year.

But I found a few things out...........

Because we're aggressively trying to pay down the mortgage, refi'd a few years ago & dropped it to a 15yr loan and have stayed the course since we did it.......we don't have a whole lot of mortgage interest to write off anymore.

Increased income = higher tax bracket.........grrrr.

And the one I totally WASN'T expecting......

This last year I wanted to do something other than my company's IRA. (It's a SIMPLE IRA but I also have a traditional IRA I'd also neglected since we started this SIMPLE plan). Soooooooooooooooo I started contributing $100/mo to my other IRA.

Well......................guess how much of it is deductible...............ZIP, ZILCH, NADA!!

I had to read up to find out why, but basically, because I made over a certain amount of money, not only was SOME of it not deductible..........ALL of it was not deductible.
:|
/rant

 

[Tuktuk]

Being unemployed

 

[tbike06]

Originally posted by: Tuktuk
Being unemployed

have fun not making money. lol

 

[j00fek]

welcome to america

 

[redgtxdi]

Ya, no kiddin!


The IRA thing just kinda' ticks me off 'cuz I could simply ask my employer to contribute more to my IRA and it's all pre-tax.

But if I contribute to the same exact plan, but on my own........I have to use my after-tax money with no reimbursement.

So the whole year long I'm assuming I get to deduct it.......but I don't.

 

[Tuktuk]

Originally posted by: tbike06

Originally posted by: Tuktuk
Being unemployed

have fun not making money. lol

Yes, but I pay less in taxes and do whatever I want all day!

 

[K1052]

So you're making over the income limits for deductible IRA contributions and we are supposed to feel bad for you?

 

[JasonE4]

That's one reason you should never pay extra toward your mortgage. Also, you could have put that money into another investment that makes better returns than your mortgage interest rate (accounting for the tax deduction).

 

[spidey07]

Originally posted by: JasonE4
That's one reason you should never pay extra toward your mortgage. Also, you could have put that money into another investment that makes better returns than your mortgage interest rate (accounting for the tax deduction).

Yep. Sounds like OP needs to seriously work this out and understand the tax and long term implications.

 

[Dirigible]

Don't worry, OP. I have a lot of sympathy for you.

Since we're all friendly now, can I borrow some cash?

 

[redgtxdi]

Originally posted by: spidey07

Originally posted by: JasonE4
That's one reason you should never pay extra toward your mortgage. Also, you could have put that money into another investment that makes better returns than your mortgage interest rate (accounting for the tax deduction).

Yep. Sounds like OP needs to seriously work this out and understand the tax and long term implications.

Ya sure about that??

(Engineer enters from side-door and peers into the eyes of spidey and jason while removing home title from his trench pocket, then proceeds to open both sides of the trench exposing expansive hardware in the form of auto and semi-auto guns and other explosives)

 

[redgtxdi]

Engineer in lobby of Title Co.

 

[Specop 007]

Roth IRA FTW.

No, it wont help you now, but if you think your mad at paying INTO your IRA, wait'll your takin out.....

 

[SampSon]

Ah yes, you fell into the classic fallacy that having your house paid off is totally beneficial.
The money the typical person pays extra on their mortgage is much better used in other investment vehicles.
Some people pay their mortgage off so fast that they never truely realize the benefit of good debt.

 

[grohl]

Give more money to charity - give to those who don't have as much as you, and it will help you at tax time.

I went through the same thing a few years ago. I was angry about it for a while but life is too short....be grateful for how fortunate you are to worry about taxes and not where your next meal will come from.

 

[Sluggo]

Hate to kick you while you are down but....

As you make more money, you will find out that ALL deductions (mortgage interest included) are on that sliding scale, the more money you make, the less the deductions will help you out.

 

[spidey07]

Originally posted by: Sluggo
Hate to kick you while you are down but....

As you make more money, you will find out that ALL deductions (mortgage interest included) are on that sliding scale, the more money you make, the less the deductions will help you out.

but, but...there are loopholes that rich people use to pay no taxes!

Sure it's a little bit of a troll, but trying to point out the ridiculousness of what many people believe. HCE's get screwed over royally. Especially because I'm single - I'm thinking I should get married and have a few kids just to save on taxes and build wealth.

So redgtxdi - figure out where you want to be and when and make your moves accordingly.

 

[JasonE4]

Originally posted by: Specop 007
Roth IRA FTW.

No, it wont help you now, but if you think your mad at paying INTO your IRA, wait'll your takin out.....

He probably makes too much to be eligible for a Roth.

 

[redgtxdi]

Well, as I said before.....

I can let my employer contribute all of it & it'll all be pre-tax.

I do it myself (absolutely no difference whatsoever, imho) in a separate IRA (heck, even the same employer's IRA) and I'm not allowed to deduct the tax that the IRS got to hold onto ALL YEAR LONG & MAKE INTEREST ON ALL YEAR ANYWAY.......

I'll probably just swing it over to my SIMPLE IRA and quit contributing to my personal, traditional IRA.

 

[spidey07]

Originally posted by: redgtxdi
Well, as I said before.....

I can let my employer contribute all of it & it'll all be pre-tax.

I do it myself (absolutely no difference whatsoever, imho) in a separate IRA (heck, even the same employer's IRA) and I'm not allowed to deduct the tax that the IRS got to hold onto ALL YEAR LONG & MAKE INTEREST ON ALL YEAR ANYWAY.......

I'll probably just swing it over to my SIMPLE IRA and quit contributing to my personal, traditional IRA.

You have limits on what you can do. Use the system to your advantage, make your decisions accordingly. This is why I advocate not paying down your mortgage.

 

[DaveSimmons]

Originally posted by: redgtxdi
This last year I wanted to do something other than my company's IRA. (It's a SIMPLE IRA but I also have a traditional IRA I'd also neglected since we started this SIMPLE plan). Soooooooooooooooo I started contributing $100/mo to my other IRA.

Well......................guess how much of it is deductible...............ZIP, ZILCH, NADA!!

I had to read up to find out why,

And the lesson is:
Next time read up on the tax implications before you change your investment strategy, not after. It's right there in the 1040 instructions.

This is a bit like the threads in General Hardware saying "I just ordered all of the parts for my new PC, now that it's too late tell me how I did."

PS - a higher tax bracket only applies to your additional income, it's a mistake to think you pay any more on the existing part your salary after a raise. (It could cost you eligibility in other aid programs if you're moving up from below the poverty level.)

 

[redgtxdi]

Hmmm.........

Well after reading up a bit I'm curious about something.


I *do* qualify for a Roth based on the $156K combined income limit........(wife and I made well under that).........sooooooo

Should I just start a new Roth IRA or should I take the money in the traditional IRA and and transfer it over to the new Roth IRA????

(I'm not maxing out my SIMPLE IRA w/ my employer, but it seems as though a ROTH may be advantageous, if not simply a step in IRA diversity?)