Who has done their taxes & IRA?
"
02-27-2008, 04:45 PM
#32
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workin at a financial institution, so I hope to shed some light on a few subjects...
1. Without getting a lot more detail on the transfer, I can only say this: If it's in a Traditionally invested 401k, you will NOT get any year 2007 tax relief by transferring some of it into a Roth 401K.
As someone said, Roth and Roth 401k contributions are made with "post-tax" money. You can never use that particular contribution or conversion as a tax deduction on your tax return.
On the other hand, if you are actually moving funds ("converting") from a traditional 401k and moving it to a Roth type (either Roth 401k or Roth IRA), you may actually INCUR taxes (mean you have to PAY more taxes).
2. The suggestion to buy a home will make a big difference in your taxes, but only in the year you buy it. Not having a home in 07, means no benefit for last year.
3. uh, no way a mortgage rate for a FIXED mortgage is at 4.5%. okay, maybe if you pay like 3-4 full points in upfront (which turns into their commission). I think you might find this rate maybe with a really short term ARM (adjustable rate mortgage) or a Neg-Am (Negative Amortization, where you can pay less than you owe...but this is asking for BIG trouble if they even offer it still)
4. SOLUTIONS: I'm gonna assume you are single, or filing single, where no one can claim you as a dependant. It is correct that for tax year 2007 you can make a maximum contribution to a Traditonal IRA of $4000. If you are 50+ in 2007, you can make an additional "catch-up" contribution of $1000, for a total of $5000. You have until April 15, 2008 to still make a 'year 2007' IRA contribution.
5. To even get a "DEDUCTION" from your tax bill, your income needs to be $62,000 and under. Ideally, you earned less than $52000, so your IRA contribution is fully deductible.
There is a phase-out period for income range from $52K - $62K...the higher you go, the less that you can deduct from your taxes...
Hope this helps!
Cheston
1. Without getting a lot more detail on the transfer, I can only say this: If it's in a Traditionally invested 401k, you will NOT get any year 2007 tax relief by transferring some of it into a Roth 401K.
As someone said, Roth and Roth 401k contributions are made with "post-tax" money. You can never use that particular contribution or conversion as a tax deduction on your tax return.
On the other hand, if you are actually moving funds ("converting") from a traditional 401k and moving it to a Roth type (either Roth 401k or Roth IRA), you may actually INCUR taxes (mean you have to PAY more taxes).
2. The suggestion to buy a home will make a big difference in your taxes, but only in the year you buy it. Not having a home in 07, means no benefit for last year.
3. uh, no way a mortgage rate for a FIXED mortgage is at 4.5%. okay, maybe if you pay like 3-4 full points in upfront (which turns into their commission). I think you might find this rate maybe with a really short term ARM (adjustable rate mortgage) or a Neg-Am (Negative Amortization, where you can pay less than you owe...but this is asking for BIG trouble if they even offer it still)
4. SOLUTIONS: I'm gonna assume you are single, or filing single, where no one can claim you as a dependant. It is correct that for tax year 2007 you can make a maximum contribution to a Traditonal IRA of $4000. If you are 50+ in 2007, you can make an additional "catch-up" contribution of $1000, for a total of $5000. You have until April 15, 2008 to still make a 'year 2007' IRA contribution.
5. To even get a "DEDUCTION" from your tax bill, your income needs to be $62,000 and under. Ideally, you earned less than $52000, so your IRA contribution is fully deductible.
There is a phase-out period for income range from $52K - $62K...the higher you go, the less that you can deduct from your taxes...
Hope this helps!
Cheston
02-27-2008, 05:20 PM
#33
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Thanks Cheston.
I do make waaaaay below $62k and rolled over my 401k from another company I no longer work at to a tradtional IRA. I'm hoping that 4k I rolled over will be deductible. The overall scheme is to get more refund $$$ back
I do make waaaaay below $62k and rolled over my 401k from another company I no longer work at to a tradtional IRA. I'm hoping that 4k I rolled over will be deductible. The overall scheme is to get more refund $$$ back
lol
02-28-2008, 12:34 PM
#35
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As a reminder, the "rollover" portion is not considered 'FRESH' money or a 'contribution'...therefor this is not deductible per IRS for tax year 2007.
Only if you ADD money/make a contribution (from your 2007 salary, or a new contribution before April 15, 2008 with specific instructions for a 'Carry-back' contribution for tax year 2007) will the money be deductible. So you still have time to try and lower your taxable income level, but only if you've got some spare funds lying around. It's worth looking over!
Some final good news, if your AGI is less than $26,000 for tax year 2007, you are eligible for a 'non-refundable tax credit'. Quick and dirty: for income levels $17,000 - $26,000, 10% of your Traditional IRA contribution ($2k max to calculate for this credit) is applicable as a tax credit. You must be at least 18 in 2007, not be a dependent or full-time student, and have the AGI as listed above (or lower).
If you want more details about this credit, PM me and I can send you a copy of the info I have about the credit.
Good luck!
Cheston
02-28-2008, 01:31 PM
#37
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Hey maddhatteroo7,
As a reminder, the "rollover" portion is not considered 'FRESH' money or a 'contribution'...therefor this is not deductible per IRS for tax year 2007.
Only if you ADD money/make a contribution (from your 2007 salary, or a new contribution before April 15, 2008 with specific instructions for a 'Carry-back' contribution for tax year 2007) will the money be deductible. So you still have time to try and lower your taxable income level, but only if you've got some spare funds lying around. It's worth looking over!
Some final good news, if your AGI is less than $26,000 for tax year 2007, you are eligible for a 'non-refundable tax credit'. Quick and dirty: for income levels $17,000 - $26,000, 10% of your Traditional IRA contribution ($2k max to calculate for this credit) is applicable as a tax credit. You must be at least 18 in 2007, not be a dependent or full-time student, and have the AGI as listed above (or lower).
If you want more details about this credit, PM me and I can send you a copy of the info I have about the credit.
Good luck!
Cheston
As a reminder, the "rollover" portion is not considered 'FRESH' money or a 'contribution'...therefor this is not deductible per IRS for tax year 2007.
Only if you ADD money/make a contribution (from your 2007 salary, or a new contribution before April 15, 2008 with specific instructions for a 'Carry-back' contribution for tax year 2007) will the money be deductible. So you still have time to try and lower your taxable income level, but only if you've got some spare funds lying around. It's worth looking over!
Some final good news, if your AGI is less than $26,000 for tax year 2007, you are eligible for a 'non-refundable tax credit'. Quick and dirty: for income levels $17,000 - $26,000, 10% of your Traditional IRA contribution ($2k max to calculate for this credit) is applicable as a tax credit. You must be at least 18 in 2007, not be a dependent or full-time student, and have the AGI as listed above (or lower).
If you want more details about this credit, PM me and I can send you a copy of the info I have about the credit.
Good luck!
Cheston
02-28-2008, 08:14 PM
#38
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D'oh! 
dammit and the gov't wonders why we would want to make more money...
At least you're in line for a $600 refund check...but that's come in May or later, after you file.
dammit and the gov't wonders why we would want to make more money...
At least you're in line for a $600 refund check...but that's come in May or later, after you file.
03-02-2008, 02:05 AM
#40
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If you're SINGLE, no kids, then:
As long as your AGI (Adjusted Gross Income) is $75K and less, you will get the full $600 refund/Stimulus Package check.
If you have really lowwww income, it may affect the amount you get back, i.e. it may be less than $600 (but will be greater than $300).
Cheston
As long as your AGI (Adjusted Gross Income) is $75K and less, you will get the full $600 refund/Stimulus Package check.
If you have really lowwww income, it may affect the amount you get back, i.e. it may be less than $600 (but will be greater than $300).
Cheston
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