A New Variation of a Costly Tax-Time Offer by Ann Carrns at New York Times
Here’s a deal from TurboTax:
Paying for your tax preparation is easy:
If you don’t want to use a credit card, you can subtract the fee from your federal tax refund and have the balance of your refund deposited directly to your bank account.
There is a one-time fee of $29.99 to process this service.
Let’s say you are short in cash or you don’t have a credit card. Let say the cost of using TurboTax is $100. To save you the trouble from ponying up $100 up front, TurboTax will charge you another $30 if you let them deduct the $100 from your refund, expected a few weeks from now. Is that predatory on the cash crunched or math challenged or what?
Sunk Costs and Mutual Fund Sales Loads by Mike Piper at Oblivious Investor
It’s very hard to act rationally about sunk cost. People just hate waste, so much so they are willing to sink more into it. I’m not an exception. Here’s my story from a few years ago.
Your 401(k) Is Out to Get You by James Kwak at The Atlantic
A study showed that a poorly-performing fund is much less likely to be dropped from a menu controlled by its sponsoring fund company than from a menu controlled by a third party. Dropping a fund after poor performance isn’t necessarily such a good idea. As much as I don’t like expensive 401k plans with poor investment options, I would say we should be careful not letting perfect be the enemy of good. The alternative — not saving for retirement, limiting oneself to only the IRA, or skipping the 401k in favor of taxable investing — would be much worse.
Financial advisors exposed by Allan Roth at CBS MoneyWatch
I haven’t read the book; I got the gist from the reviews and interviews. Suze Orman, David Bach, and Dave Ramsey are far from perfect, but I would come to their defense. Anybody following any one of them — just pick one, Suze, David, or Dave — would be far better off than otherwise. So what cutting out lattes won’t solve all your problems or having some debt would be OK? It still beats wasting money on lattes or carrying a lot of debt. Again, don’t let perfect be the enemy of good. What’s the alternative? Wait for pie in the sky from the government?
The Taxation Of Social Security Benefits As A Marginal Tax Rate Increase? by Michael Kitces at Nerd’s Eye View
It’s true a retiree’s marginal income tax rate can be as high as 46% when the taxation of Social Security benefits is taken into account. However, a broader perspective is in order here. The high marginal tax rate is a direct result of the beneficial treatment of Social Security benefits not being taxed at lower income levels. If Social Security benefits are taxed from the very first dollar just like any other income, retirees will not face the 46% marginal tax rate but they will pay more tax.
What would you prefer: (a) 46% marginal tax rate but lower total tax in dollars or (b) 15% marginal tax rate but higher total tax in dollars? Retirees do very well when it comes to taxes.
TreasuryDirect, TIPS and the dreaded 1099-OID by David Enna at TIPS Watch
I agree the tax on so-called "phantom income" isn’t so bad but the figuring out part is quite an ordeal if you have multiple individual TIPS in a taxable account at TreasuryDirect. I punt by not buying individual TIPS in taxable accounts.
When A Famous Hospital Didn’t Want An Expensive New Drug by David Kestenbaum at NPR Planet Money
I’m always amazed by the way we simply write blank checks for health care.
How to Run a Successful Kickstarter Campaign by Matthew Amster-Burton at MintLife
Personal finance columnist Matthew Amster-Burton also writes about food and travel. He ran a successful Kickstarter campaign for his upcoming eBook Pretty Good Number One: An American Family Eats Tokyo. It’s not listed in Amazon yet; otherwise I would pre-order it.