Search found 1494 matches

by teen persuasion
Sat Apr 17, 2021 8:06 am
Forum: Personal Finance (Not Investing)
Topic: Factoring tax credits towards being able to Semi-FIRE
Replies: 14
Views: 922

Re: Factoring tax credits towards being able to Semi-FIRE

I’m currently SAHD 29y/o with wife 25 y/o working full time earning 40k a year. With higher CTC and EITC we would have a negative tax liability of about 15k if wife dropped from full time to part-time. We think we can trade off working part time every couple of years and not touch any accounts. We ...
by teen persuasion
Fri Apr 16, 2021 5:53 pm
Forum: Personal Finance (Not Investing)
Topic: Factoring tax credits towards being able to Semi-FIRE
Replies: 14
Views: 922

Re: Factoring tax credits towards being able to Semi-FIRE

How do you get to $15k/yr, does that include state versions of each credit? You said "both kids", so I'm figuring on 2 young kids: $3600 CTC * 2 + $5920 max EITC for MFJ w/ 2 kids = $13120. Next issue: the increases are only approved for this year, right now. Not a great long-term plan un...
by teen persuasion
Fri Apr 16, 2021 3:21 pm
Forum: Personal Finance (Not Investing)
Topic: Factoring tax credits towards being able to Semi-FIRE
Replies: 14
Views: 922

Re: Factoring tax credits towards being able to Semi-FIRE

How do you get to $15k/yr, does that include state versions of each credit? You said "both kids", so I'm figuring on 2 young kids: $3600 CTC * 2 + $5920 max EITC for MFJ w/ 2 kids = $13120. Next issue: the increases are only approved for this year, right now. Not a great long-term plan unt...
by teen persuasion
Tue Apr 13, 2021 8:52 pm
Forum: Personal Finance (Not Investing)
Topic: First child entering college in the fall... need some advice
Replies: 174
Views: 10221

Re: First child entering college in the fall... need some advice

So, just got some great news, our oldest child has been accepted into two top US universities and will be choosing between them for her undergraduate education. (These are both private universities; we did explore our state university and we determined that for her field of study, the private schoo...
by teen persuasion
Tue Apr 13, 2021 8:14 pm
Forum: Personal Finance (Not Investing)
Topic: First child entering college in the fall... need some advice
Replies: 174
Views: 10221

Re: First child entering college in the fall... need some advice

So, just got some great news, our oldest child has been accepted into two top US universities and will be choosing between them for her undergraduate education. (These are both private universities; we did explore our state university and we determined that for her field of study, the private schoo...
by teen persuasion
Tue Apr 13, 2021 9:24 am
Forum: Personal Finance (Not Investing)
Topic: Second career / semi retirement math
Replies: 7
Views: 778

Re: Second career / semi retirement math

I'm planning for a variation of this - the higher earner is retiring this year, I plan to continue my part-time job. We have exceeded our target stash, but there's a few good reasons for me to continue receiving earned income. First, I'm still having fun at my job. Second, we still have a teen at ho...
by teen persuasion
Thu Apr 08, 2021 1:33 pm
Forum: Personal Finance (Not Investing)
Topic: Tax bill split between spouses
Replies: 81
Views: 4276

Re: Tax bill split between spouses

Not exactly the same scenario, but we have to do some coordination between our tax returns and our college student's returns, to maximize total family tax refunds. To maximize AOTC (which a dependent college student cannot claim themselves) we have the student claim a calculated portion of their sch...
by teen persuasion
Fri Apr 02, 2021 3:51 pm
Forum: Personal Finance (Not Investing)
Topic: Why do I owe so much in Taxes?
Replies: 55
Views: 6758

Re: Why do I owe so much in Taxes?

Quick and dirty first pass:

Difference between fed withholding divided by additional income on higher check:

6345 - 1684 = 4661

4661 / 21100 = ~.22 or 22%

So, yes, they are withholding 22% on the additional income.
by teen persuasion
Fri Apr 02, 2021 3:37 pm
Forum: Personal Finance (Not Investing)
Topic: Asking for more Merit aid? College decision day 5/1
Replies: 39
Views: 2352

Re: Asking for more Merit aid? College decision day 5/1

The student needs to make the request. In my experience, the colleges don't want to hear from helicopter parents, their customer is the student. The student gets the bills; if I, the parent, want to be on the billing account, I'm only on it for payment purposes. I can't see the breakdown, just the ...
by teen persuasion
Fri Apr 02, 2021 12:18 pm
Forum: Personal Finance (Not Investing)
Topic: Asking for more Merit aid? College decision day 5/1
Replies: 39
Views: 2352

Re: Asking for more Merit aid? College decision day 5/1

The student needs to make the request. In my experience, the colleges don't want to hear from helicopter parents, their customer is the student. The student gets the bills; if I, the parent, want to be on the billing account, I'm only on it for payment purposes. I can't see the breakdown, just the b...
by teen persuasion
Fri Apr 02, 2021 11:48 am
Forum: Personal Finance (Not Investing)
Topic: Asking for more Merit aid? College decision day 5/1
Replies: 39
Views: 2352

Re: Asking for more Merit aid? College decision day 5/1

We've had both good and poor results with this. DD1 was gapped a significant amount by her first choice school. When she petitioned for an increase in aid, they offered only parent loans. When we objected to loans at 50% of our HHI per year, they gently suggested she might be happier elsewhere. She ...
by teen persuasion
Thu Apr 01, 2021 10:38 pm
Forum: Investing - Theory, News & General
Topic: What am I missing? Don't max out your 401k.
Replies: 80
Views: 10594

Re: What am I missing? Don't max out your 401k.

I don't agree with many of the points here but could see why a low income worker up to maybe 60K couldn't afford to max out the 401K, if 19,500 is too much to save per year that is a valid reason. But if you are making 70K or more I think you can max out the 401K while also saving in taxable, there...
by teen persuasion
Wed Mar 31, 2021 8:47 pm
Forum: Personal Finance (Not Investing)
Topic: Starting a 5304-SIMPLE at different institution
Replies: 6
Views: 253

Re: Starting a 5304-SIMPLE at different institution

Thanks Duckie. I asked a couple people and they are primarily through Edward Jones and American Funds. My research of these institutions indicates their fees would about eat up any employer contributions to the point it would be senseless to set it up. However, apparently the local EJ office knows ...
by teen persuasion
Sun Mar 28, 2021 11:52 am
Forum: Personal Investments
Topic: With hitting zero owed federal taxes, should I allocate a % to Roth 401k?
Replies: 28
Views: 1972

Re: With hitting zero owed federal taxes, should I allocate a % to Roth 401k?

The increased child tax credits this year from the new American Rescue Plan Act are fully refundable, so you don't need a tax liability to claim the full amount of the credit. This means any traditional 401k tax deferral would still give you a deduction at your marginal tax rate. Can you explain mo...
by teen persuasion
Sun Mar 28, 2021 10:01 am
Forum: Personal Investments
Topic: Sell taxable investments to fund Roth IRAs? [EITC and CTC]
Replies: 17
Views: 1837

Re: Sell taxable investments to fund Roth IRAs?

The enacted law is summarized at this Congressional Research Service report. That is as good as any IRS publication. https://crsreports.congress.gov/product/pdf/R/R46680 (page 9) If you can get your AGI under $39,000 (2020 number; 2021 will be higher), you would then also get the full Saver's Credi...
by teen persuasion
Thu Mar 25, 2021 9:31 pm
Forum: Personal Finance (Not Investing)
Topic: Tax on Scholarship
Replies: 4
Views: 494

Re: Tax on Scholarship

We've had our dependents claim their taxable scholarships as income on their returns. Part of it was the portion of the scholarship exceeding tuition, and part was $4k so that we could say we had paid $4k in tuition OOP to be eligible for AOTC. The dependent student's standard deduction will depend ...
by teen persuasion
Thu Mar 25, 2021 10:39 am
Forum: Personal Finance (Not Investing)
Topic: American Rescue Plan - question about taxes
Replies: 3
Views: 279

Re: American Rescue Plan - question about taxes

I believe that higher CTC is for 2021, not the past year. They are discussing sending periodic prepayment, $250 or $300 monthly equivalent.

So nothing to do now, until the IRS gives more guidance on the IU issue.
by teen persuasion
Thu Mar 25, 2021 8:21 am
Forum: Personal Investments
Topic: What do most people do with a 401K upon retirement if they dont need it?
Replies: 169
Views: 15260

Re: What do most people do with a 401K upon retirement if they dont need it?

Thanks teen P. I think I get it. Tried searching for Roth conversion ladder on the wiki here. Didn't see any search results. Here are some explanations: https://www.madfientist.com/how-to-access-retirement-funds-early/ https://mindingmythirties.com/what-is-a-roth-conversion-ladder-and-why-you-might...
by teen persuasion
Wed Mar 24, 2021 9:41 pm
Forum: Personal Investments
Topic: What do most people do with a 401K upon retirement if they dont need it?
Replies: 169
Views: 15260

Re: What do most people do with a 401K upon retirement if they dont need it?

Edit: don't you pay the 10% penalty regardless of why you withdrew from Trad 401k? I.e. doing roth conversions before 59.5 would mean you *have* to pay the 10% penalty? If you convert the early distribution (pre 59.5 years old) to Roth IRA, there isn't a 10% early withdrawal penalty. If you spend i...
by teen persuasion
Wed Mar 24, 2021 9:11 am
Forum: Personal Investments
Topic: What do most people do with a 401K upon retirement if they dont need it?
Replies: 169
Views: 15260

Re: What do most people do with a 401K upon retirement if they dont need it?

@teen persuasion Thanks. We agree on two things: 1. Roth conversions are not universally advantageous 2. Roth conversions can be advantageous The question remains - under which conditions and to what extent are Roth conversions advantageous? The answer needs to include dollars, percentages and age ...
by teen persuasion
Wed Mar 24, 2021 7:53 am
Forum: Personal Investments
Topic: What do most people do with a 401K upon retirement if they dont need it?
Replies: 169
Views: 15260

Re: What do most people do with a 401K upon retirement if they dont need it?

@teen persuasion Thanks. We agree on two things: 1. Roth conversions are not universally advantageous 2. Roth conversions can be advantageous The question remains - under which conditions and to what extent are Roth conversions advantageous? The answer needs to include dollars, percentages and age ...
by teen persuasion
Tue Mar 23, 2021 7:58 am
Forum: Personal Investments
Topic: What do most people do with a 401K upon retirement if they dont need it?
Replies: 169
Views: 15260

Re: What do most people do with a 401K upon retirement if they dont need it?

@CloseEnough There is/was a thread a couple of weeks ago on this site or the FIRE site that fleshed this out. My simple question to Roth conversion supporters is/was this: What is the quantified benefit of Roth conversions during the life expectancy of the investor? The answer to the question is pr...
by teen persuasion
Mon Mar 22, 2021 12:50 pm
Forum: Personal Investments
Topic: What do most people do with a 401K upon retirement if they dont need it?
Replies: 169
Views: 15260

Re: What do most people do with a 401K upon retirement if they dont need it?

chassis » Sat Mar 20, 2021 10:50 pm Let it ride. And be prepared for RMDs as previously mentioned. You will see mentions of Roth conversions. I view them as gimmicky and unnecessary. The stated gain from Roth conversions, if this information can be squeezed out of the posters, is tiny in the big pi...
by teen persuasion
Mon Mar 22, 2021 8:57 am
Forum: Personal Investments
Topic: What do most people do with a 401K upon retirement if they dont need it?
Replies: 169
Views: 15260

Re: What do most people do with a 401K upon retirement if they dont need it?

chassis » Sat Mar 20, 2021 10:50 pm Let it ride. And be prepared for RMDs as previously mentioned. You will see mentions of Roth conversions. I view them as gimmicky and unnecessary. The stated gain from Roth conversions, if this information can be squeezed out of the posters, is tiny in the big pi...
by teen persuasion
Sun Mar 21, 2021 8:42 am
Forum: Personal Investments
Topic: What do most people do with a 401K upon retirement if they dont need it?
Replies: 169
Views: 15260

Re: What do most people do with a 401K upon retirement if they dont need it?

My wife and I are both state workers and are "expected" to have a combined pension of $170K a year once retired and plan to live on this amount. We currently max out our 401K's and put a decent amount into VTSAX through Vanguard as well as fund our daughters UTMA account. The 401K's shoul...
by teen persuasion
Sat Mar 20, 2021 9:15 am
Forum: Investing - Theory, News & General
Topic: Early Retirement and Absorbing the 10% Withdrawal Penalty
Replies: 46
Views: 4365

Re: Early Retirement and Absorbing the 10% Withdrawal Penalty

A couple of points: 1) A lower income family (50k), likely doesn't get a ton of benefit from tax deferrals, and paying 10% penalty on them likely wipes out the advantage of using the 401k to begin with (including a modest employer match). 2) Taxable investing is not too bad as long as you don't hol...
by teen persuasion
Fri Mar 19, 2021 4:06 pm
Forum: Investing - Theory, News & General
Topic: Early Retirement and Absorbing the 10% Withdrawal Penalty
Replies: 46
Views: 4365

Re: Early Retirement and Absorbing the 10% Withdrawal Penalty

A couple of points: 1) A lower income family (50k), likely doesn't get a ton of benefit from tax deferrals, and paying 10% penalty on them likely wipes out the advantage of using the 401k to begin with (including a modest employer match). 2) Taxable investing is not too bad as long as you don't hol...
by teen persuasion
Thu Mar 18, 2021 8:14 pm
Forum: Personal Investments
Topic: Best Way to Fund a Roth IRA
Replies: 9
Views: 1211

Re: Best Way to Fund a Roth IRA

What is your LTCG bracket? You might pay no or little taxes on the gains if your income is low enough to be/stay in the zero LTCG bracket. Would there be any short term gains? Those would be taxed at ordinary income rates. Are there any drawbacks to increasing your AGI - like ACA subsidy as mentione...
by teen persuasion
Thu Mar 18, 2021 8:27 am
Forum: Personal Finance (Not Investing)
Topic: Retire in early 40s?
Replies: 53
Views: 7882

Re: Retire in early 40s?

You do have plenty in taxable accounts to cover expenses, so you wouldn't need to use a Roth ladder to access the pre-tax accounts early, but you might want to Roth convert a bit every year, at minimum using up the zero bracket (up to the standard deduction), but possibly the 10% and into the 12% b...
by teen persuasion
Thu Mar 18, 2021 8:14 am
Forum: Personal Finance (Not Investing)
Topic: Early retirement math/taxes - am I thinking about this correctly?
Replies: 35
Views: 4107

Re: Early retirement math/taxes - am I thinking about this correctly?

I don’t quite get how you will do the 37k back door Roth rollover after you rollover your 401k to your Trad IRA. Any amount non-deductible amount you are trying to rollover to the Roth will be subject to the pro-rata rule. A few additional thoughts: - if you have good 401K options, don’t be quick t...
by teen persuasion
Thu Mar 18, 2021 8:02 am
Forum: Personal Finance (Not Investing)
Topic: Retire in early 40s?
Replies: 53
Views: 7882

Re: Retire in early 40s?

I’d love this group’s take on my situation. Am I being overly conservative? Age: 40, single, no kids and no plan to have any After tax investments: $1.3m (all in equity index funds) Retirement investments: $1.3m (all in equity index funds; $500k Roth, $800k non-Roth 401k) Renter in HCOL area Income...
by teen persuasion
Wed Mar 17, 2021 8:52 am
Forum: Personal Investments
Topic: Options for bridging the gap in early retirement?
Replies: 26
Views: 4384

Re: Options for bridging the gap in early retirement?

Correct me if I'm wrong - 457 funds are accessible pre-59.5 w/o penalty; otherwise, they are equivalent to the 403b funds, right? So you already have a tax deferred account to tap before 59.5, without any need for a Roth ladder or taxable. Is there some other reason to access them simultaneously? On...
by teen persuasion
Wed Mar 17, 2021 8:33 am
Forum: Personal Investments
Topic: Options for bridging the gap in early retirement?
Replies: 26
Views: 4384

Re: Options for bridging the gap in early retirement?

If you pull from the 457 plan, it will increase income taxed at 12%, and if it's large enough, it will bump LTCG from their zero bracket into the 15% bracket. So you could trigger a shadow 27% rate when the 12% stacks on top of the LTCG pushed into 15%. How big is the taxable balance, or how long u...
by teen persuasion
Sun Mar 14, 2021 10:41 pm
Forum: Personal Investments
Topic: Options for bridging the gap in early retirement?
Replies: 26
Views: 4384

Re: Options for bridging the gap in early retirement?

If you pull from the 457 plan, it will increase income taxed at 12%, and if it's large enough, it will bump LTCG from their zero bracket into the 15% bracket. So you could trigger a shadow 27% rate when the 12% stacks on top of the LTCG pushed into 15%. How big is the taxable balance, or how long un...
by teen persuasion
Sun Mar 14, 2021 9:46 pm
Forum: Personal Finance (Not Investing)
Topic: Marginal effective tax rates 100%+ this year for 150 - 160k AGI
Replies: 174
Views: 13162

Re: Marginal tax rates 100%+ this year for 150 - 160k AGI

Honestly @redmaw, at the income ranges I'm exploring I don't expect to owe any tax (well, federal anyway). I'm just trying to maximize refundable credits. So it's mostly knowing where the max/min points hit, where cliffs are to avoid, and pinch points to be wary of. I can look up where w2 wages hit ...
by teen persuasion
Sun Mar 14, 2021 9:25 pm
Forum: Personal Investments
Topic: Options for bridging the gap in early retirement?
Replies: 26
Views: 4384

Re: Options for bridging the gap in early retirement?

It is my understanding that he can withdraw Roth contributions but not the gains before 59 1/2. Is that correct? Correct If that is the correct understanding, not all of that $250k is accessible without penalty right? OP said $250k contributions, not balance. It might have been hypothetical, or he ...
by teen persuasion
Sun Mar 14, 2021 8:41 pm
Forum: Personal Finance (Not Investing)
Topic: Marginal effective tax rates 100%+ this year for 150 - 160k AGI
Replies: 174
Views: 13162

Re: Marginal tax rates 100%+ this year for 150 - 160k AGI

first, thanks for doing the math, I'm sure that's helpful for everyone reading to see, myself included. much appreciated. as others have said, i do think i (and others on this thread) have been guilty of arguing over semantics to some degree. no one here has doubted that the impact of this law for ...
by teen persuasion
Sun Mar 14, 2021 3:20 pm
Forum: Personal Finance (Not Investing)
Topic: Marginal effective tax rates 100%+ this year for 150 - 160k AGI
Replies: 174
Views: 13162

Re: Marginal tax rates 100%+ this year for 150 - 160k AGI

This is really a fairly simple and not debatable consequence of the law. If you think it's wrong or disengenous to call it more than 100% marginal rates, I suggest you carefully consider why you think that. It is simply a fact based in the rapid phase out of benefits that for a narrow range of inco...
by teen persuasion
Sun Mar 14, 2021 10:21 am
Forum: Personal Investments
Topic: Options for bridging the gap in early retirement?
Replies: 26
Views: 4384

Re: Options for bridging the gap in early retirement?

Say if one does not have a sizable enough taxable account to cover all of the initial 5 years of expenses (plus Roth conversion taxes) while setting up the Roth conversion ladder. Would it be a viable option to pull just Roth contributions to supplement and/or minimize taxes? For example, you retir...
by teen persuasion
Thu Mar 11, 2021 10:37 pm
Forum: Personal Investments
Topic: Have money but cannot access it - what are options?
Replies: 36
Views: 3920

Re: Have money but cannot access it - what are options?

I'm curious why he decided to choose 100% Roth, with only 500k and I assume a low income now, it seems he would have been much better off had he used all pre-tax. What is the reasoning behind this? If he's unemployed now, his income is low/zero. If he had used pre-tax, he could Roth convert at leas...
by teen persuasion
Thu Mar 11, 2021 12:00 pm
Forum: Personal Investments
Topic: Have money but cannot access it - what are options?
Replies: 36
Views: 3920

Re: Have money but cannot access it - what are options?

Friend has a really weird take on FIRE, if he's carrying CC debt and going 100% Roth. I can't even make sense of the $30k Roth loan - where did that cash go? But even doing FIRE suboptimally, he's eligible for unemployment benefits, and can tap Roth IRA contributions. He really should have used trad...
by teen persuasion
Tue Mar 09, 2021 8:55 am
Forum: Personal Finance (Not Investing)
Topic: 529 savings when retirement falls in the middle of kids' college
Replies: 6
Views: 886

Re: 529 savings when retirement falls in the middle of kids' college

No taxable account planned? That will count against you for FAFSA too. And any dividends on that account would count as income as well. Assuming it still exists, you’ll qualify for the AOTC etc. so you might want to take those into account. You can’t get those if everything is paid out of a 529. Ye...
by teen persuasion
Tue Mar 09, 2021 8:26 am
Forum: Personal Investments
Topic: No 529 plans in place
Replies: 9
Views: 1267

Re: No 529 plans in place

You can gift them shares regardless of whether you have a 529 plan or UTMA or anything else in place. The cost basis of gifted shares to your grandchildren would be YOUR cost basis. Whenever I gift shares to my children I tell them the date(s) I acquired those shares and what I paid for them. I als...
by teen persuasion
Sun Mar 07, 2021 12:12 pm
Forum: Personal Investments
Topic: How are my earnings computed?
Replies: 5
Views: 628

Re: How are my earnings computed?

Was the $16k the entire withdrawal, or was the $16k what you received after some percentage was also withheld for taxes?
by teen persuasion
Sun Mar 07, 2021 9:11 am
Forum: Personal Finance (Not Investing)
Topic: When to File 2020 Taxes (Stimulus Related)?
Replies: 19
Views: 1924

Re: When to File 2020 Taxes (Stimulus Related)?

I believe the issue is the new addition to the family, and the extra stimulus payment for an additional family member who doesn't show on last year's return.

Then there's the possible new exemption of UI income.

Hence the uncertainty : file soon to include extra child, wait for changes to shake out.
by teen persuasion
Sat Mar 06, 2021 7:09 pm
Forum: Personal Finance (Not Investing)
Topic: RMD and taxes
Replies: 19
Views: 1607

Re: RMD and taxes

I was reading through some old threads and it gets a bit confusing and over complicated. We will start next year. Please correct me if I am wrong. Just to make it simple.... SS payments 60,000 RMD 30,000 Other taxable 10,000 We take our RMD’s monthly with no withholding directly to our bank account...
by teen persuasion
Sat Mar 06, 2021 6:57 pm
Forum: Personal Finance (Not Investing)
Topic: How Do People Without Computer Access Prepare and File Their Taxes?
Replies: 94
Views: 9957

Re: How Do People Without Computer Access Prepare and File Their Taxes?

FYI: There's apparently an error in the print 1040 instruction booklet. I received an email from the IRS about it: The IRS will mail copies of Notice 1451 to partners who ordered the instructions for Forms 1040 and 1040-SR. Notice 1451 corrects an error found on the IRA Deduction Worksheet — Schedul...
by teen persuasion
Wed Mar 03, 2021 9:46 pm
Forum: Personal Finance (Not Investing)
Topic: Claiming college grad in regards to stimulus.
Replies: 23
Views: 1301

Re: Claiming college grad in regards to stimulus.

Hello all. My 22 year old child graduated from college in May of 2020. His wages for 2020 were $22,350. We received a 1098-t for 2020 for $5,872. We file jointly. We claimed him as an dependent in 2019 so he received no stimulus money. We will be under the proposed $150,000 income threshold for mar...
by teen persuasion
Tue Mar 02, 2021 8:12 am
Forum: Personal Finance (Not Investing)
Topic: Depreciate Solar Panels If Electric Utility Issues 1099 Misc
Replies: 45
Views: 3255

Re: Electric Utility Issued 1099 Misc - OK Taxmeisters, Now What?

My utility, also in MA, is Eversource. It would be a PITA to deduct the expenses associated with the "income," so I hope OP's son gets it cleared up. https://www.eversource.com/content/nh/about/about-us/doing-business-with-us/builders-contractors/interconnections/connecticut-net-metering ...