Tax planning-questions

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date Tax planning-questions jIM 08-29-2008  Re: Tax planning-questions Ron Peterson 08-29-2008  Re: Tax planning-questions joetaxpayer 08-30-2008  Re: Tax planning-questions Elle 08-30-2008  Re: Tax planning-questions jIM 08-31-2008  Re: Tax planning-questions Elle 08-31-2008  Re: Tax planning-questions jIM 08-31-2008  Re: Tax planning-questions Elle 08-31-2008  Re: Tax planning-questions Ron Peterson 08-31-2008  Re: Tax planning-questions jIM 08-31-2008  Re: Tax planning-questions Ron Peterson 09-01-2008  Re: Tax planning-questions Will Trice 09-03-2008  Re: Tax planning-questions jIM 09-03-2008  Re: Tax planning-questions joetaxpayer 09-03-2008  Re: Tax planning-questions jIM 09-03-2008  Re: Tax planning-questions Will Trice 09-03-2008
Posted by jIM on August 29, 2008, 9:25 pm I have been researching my personal income taxes. What I had in 2007, what I will have in 2008, and some go forward issues. Some questions and comments 2007 AGI 103k taxable income 63k federal tax owed $8700 8.4% effective tax Ohio state tax owed $3800 **net- refund of $3000+ federal and owed state ~$300** For last 3 years we get a larger federal refund each year and owe state more and more each year. We have adjusted state withholdings each year and it doesn't seem to work. Meaning we owe $120, so we withhold $10 per month and next year we owe $240, so then we withhold $20 per month extra and next year we still owe more than the $240 the previous year. 2008- will add 2 dependants (kids) income will drop slightly (one year thing- wife was on disability for about 16 weeks). The raises we receive might offset this, not sure yet. In June of 2008 wife adjusted withholdings so she has less federal tax withheld and take home was increased. In 2009 this should result in 0 federal refund. Issue- I cannot find Ohio tax tables which look like the ones on fairmark. First two pages of google search found nothing like these: http://fairmark.com/refrence/index.htm I found one site which would allow be to build my own spreadsheet for the tables, but I am not sure if the information on the site is current or accurate. Anyone know of a good reference which shows state tax tables like fairmark? Second issue- taxable income is in 15% tax bracket (63k). 401ks are NOT maxed. Roths ARE maxed. 40k of deductions coming from mortgage and property taxes, plus some unreimbursed business expenses. Would it make sense to not put money in 401k and leave extra investment dollars in taxable accounts because paying 15% now is better than paying 25% or more in retirement? Fine line because if I reduce 401k contribution percentage for taxable accounts, I risk being put in 25% bracket. **aside- 20% of gross pay is set aside for retirement in Roths or 401ks, the question is maybe taxable accounts are better than 401k provided we stay in 15% bracket** Third- I am considering some 529 plans which give state tax deductions but no federal tax deductions. Would the state tax deduction in any affect my federal tax liability? >From a tax standpoint, is there an advantage to moving 401k contributions to a 529 contribution to gain a deduction? I don't think so (money would be taxed at federal level), but thought I would ask. Any comments welcome. Thank you. -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by Ron Peterson on August 29, 2008, 11:59 pm > Anyone know of a good reference which shows state tax tables like > fairmark? http://www.retirementliving.com/RLstate3.html has some of the information. > Second issue- taxable income is in 15% tax bracket (63k).  401ks are > NOT maxed.  Roths ARE maxed.  40k of deductions coming from mortgage > and property taxes, plus some unreimbursed business expenses.  Would > it make sense to not put money in 401k and leave extra investment > dollars in taxable accounts because paying 15% now is better than > paying 25% or more in retirement?  Fine line because if I reduce 401k > contribution percentage for taxable accounts, I risk being put in 25% > bracket. > **aside- 20% of gross pay is set aside for retirement in Roths or > 401ks, the question is maybe taxable accounts are better than 401k > provided we stay in 15% bracket** > >From a tax standpoint, is there an advantage to moving 401k There is a liability advantage to having your assets in retirement accounts. By moving your funds to a 401k, you can avoid state taxation by moving to a low income tax state. You will want to convert your 401k funds to Roth eventually. -- Ron -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by joetaxpayer on August 30, 2008, 4:14 pm jIM wrote: > Issue- I cannot find Ohio tax tables which look like the ones on > fairmark. First two pages of google search found nothing like these: > http://fairmark.com/refrence/index.htm Your governor suggested a 4.2% overall decrease from 2007 to 2008. Given the minor changes in Federal, the slight increase in exemptions, and bracket changes, why not just use the 2007 turbotax to start your forcasting? I agree your goal should be to top the 15% bracket, then go Roth. Getting it dead on is tough, but within $1000 is a worthy goal. Joe www.blog.joetaxpayer.com -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by Elle on August 30, 2008, 8:32 pm > Second issue- taxable income is in 15% tax bracket (63k). > 401ks are > NOT maxed. Roths ARE maxed. 40k of deductions coming > from mortgage > and property taxes, plus some unreimbursed business > expenses. Would > it make sense to not put money in 401k and leave extra > investment > dollars in taxable accounts because paying 15% now is > better than > paying 25% or more in retirement? Fine line because if I > reduce 401k > contribution percentage for taxable accounts, I risk being > put in 25% > bracket. What are the matching terms, if any, on the 401(k)? -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by jIM on August 31, 2008, 7:27 am > > > Second issue- taxable income is in 15% tax bracket (63k). > > 401ks are > > NOT maxed.  Roths ARE maxed.  40k of deductions coming > > from mortgage > > and property taxes, plus some unreimbursed business > > expenses.  Would > > it make sense to not put money in 401k and leave extra > > investment > > dollars in taxable accounts because paying 15% now is > > better than > > paying 25% or more in retirement?  Fine line because if I > > reduce 401k > > contribution percentage for taxable accounts, I risk being > > put in 25% > > bracket. > > What are the matching terms, if any, on the 401(k)? Both 401ks at least meet the match. My match is 66% of first 6% I think (might be 50% of first 6%). I contribute 11%. Wifes match is 100% of first 4% and 50% of next 2% I think. She contributes 6%. Both Roths are maxed Have EF of 12k (3 months expenses) have additional taxable investments of 1k in PRPFX, looking to increase this to 12k within 2 years as secondary EF. age 35/34 ~200k in retirement accounts. -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.