This article explains the difference between refundable and non-refundable tax credits with illustrative charts.
The Origin of Solo 401k
Solo 401k was made possible when employee’s contributions didn’t have to be counted in the maximum tax deduction by the employer.
What Is Your Marginal Tax Rate?
If I ask you point-blank "what is your marginal tax rate?" do you know the answer? If you think you know, write it down. If you are not sure, take your best guess. After you finish reading this post, see if you got it right. The marginal tax rate is the tax you pay on […]
Marriage Tax Penalty and Unit of Taxation
The marriage tax penalty refers to the fact when two people marry, they pay more taxes than they do when they are single. This happens when the two persons have roughly the same income. The mirror image of the marriage tax penalty is the marriage tax bonus, that is when two spouses have disparate income […]
Rollover IRA to Solo 401k
In preparation for converting my non-deductible IRA contributions to Roth IRA, I’m rolling over the pre-tax portion of my traditional IRA to my solo 401k. I set up the solo 401k last year primarily for this purpose — to provide a harbor for my pre-tax IRA money so I won’t get taxed proportionally on my […]
IRS Taxing Employer Provided BlackBerry or Cell Phone
Does your employer provide you a BlackBerry or cell phone or pay for your wireless service? Do you use that device for personal purpose too? The IRS is considering three ways to tax you for that. Certain employee benefits, like health care, are not taxable. Personal use of an employer provided BlackBerry or cell phone […]
Bartering and Taxes
While catching up on old news, I heard a story about bartering on the Marketplace Money podcast. It’s called a Time Bank. Basically you do something for someone else and earn some Time Dollars. Then you use your Time Dollars for services you want from another person. It’s an indirect bartering system because direct bartering […]
Retirement Plans Galore: 401(a), 401(k), 403(b), 457, SEP, SIMPLE
A reader sent me an e-mail some time ago about the interplay between a 401(a) plan and a Roth solo 401(k) plan. You probably heard of 401(k), 403(b), and 457 plans. The names of these plans come from the section numbers in the tax code which specify the rules for these plans. 401(k) plans are […]
Tax Deductions: Above-the-Line, Standard, Itemized, and Miscellaneous
I wrote about tax credits last week. This time let’s look at tax deductions. First a recap of the difference between a tax credit and a tax deduction: A tax credit directly reduces your tax dollar for dollar. If you are supposed to pay $5,000 in tax, a $500 tax credit reduces your tax to […]
Refundable Tax Credit and Non-Refundable Tax Credit
Don’t confuse a tax credit with a tax deduction. If you are not sure about the difference, it’s a good time to clear up some tax terms. For the sake of length, this post will only cover tax credits. I cover tax deductions in Tax Deductions: Above-the-Line, Standard, Itemized, and Miscellaneous. A tax credit directly […]
Tax Cuts in Fiscal Stimulus Package
Update on Feb. 14: The stimulus package has been passed by both the House and the Senate. The President is expected to sign it shortly. See the follow-up post for updated information.
3 Reminders About Year-End Mutual Fund Distributions
I wrote on Tuesday that I bought PIMCO CommodityRealReturn Strategy Fund D (PCRDX) on Dec. 5, 2008. It’s a good segue to today’s post. As luck had it, only a few days later, my jaw dropped when I saw the price of the fund dropped 25% in one day. It turned out it was just […]