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 […]
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 […]
Solo 401k For Part-Time Self-Employment
Calculate how much you and the business can contribute to your solo 401k plan when you also contribute to a 401k plan at a different employer.
Bond Proposals on Ballot
I have quite a few bond proposals on my November 4th ballot. I voted (by mail) for one measure for public transportation, another for public schools and against the others. What’s interesting to me is that the proposals all say there is no tax increase because the bond repayments will be paid out of the […]
A Non-Deductible IRA Is Worth It For Me
In Alternatives to a High Cost 401k Or 403b Plan , I mentioned non-deductible IRA as one of the options. If you are not eligible to contribute to a Roth IRA, you can still contribute to a Traditional IRA. Even though the contributions are not tax deductible, the money in the IRA still grows tax […]