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Old 10-01-2010, 02:09 AM
 
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Quote:
Originally Posted by evilnewbie View Post
Actually, I think its a good question... the bank probably already paid taxes on the interest that you earned as it was derived from their own profit which was taxed... so basically the interest is taxed twice (sort of like dividends are double taxed)...
all money is taxed multiple times... every large corporation pays taxes and then you pay taxes on any dividends you get .

think about your money is taxed when you earn it and sales taxes hit it again when you spend it.

Last edited by mathjak107; 10-01-2010 at 02:19 AM..
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Old 10-01-2010, 02:17 AM
 
106,060 posts, read 108,015,953 times
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Originally Posted by benn600 View Post
So contributing to a traditional IRA and then rolling it over, to roll it over you would have to pay tax on the original investment amount? In other words, it would potentially be expensive (but worth it in the long run).

I understand now...it's the value of an investment. I was comparing to a CD where you basically just get dividends and it doesn't further raise in value when you sell it. You don't pay tax on your investment's value....just on what its value is when you SELL.
a roth may or may not be worth it in the long run. it all depends if you will be in a higher bracket. truthfully i dont know many people in a higher tax bracket with no pay checks coming in then they are with paychecks or multiple paychecks..

considering that taxes have actually been falling for 40 years and more and more income is allowed to go through each year by about 3% at lower and lower tax brackets it may or may not be a better deal.

alot of folks retire from high tax states to low tax states making it even harder still to come out a head.

we cant predict future rates but with 80 million retired baby boomers eventually i cant imagine any political party telling the masses they are raising their income taxes. the upper income levels may get hit but not middle america in my opinion.


the real power of a roth is in its wealth passing ability .the fact that you can pass money on and if your kids get a fairly decent return on it they can actually end up with more money during their lifetime then they started with even after their mandatory withdrawls and pass it on again. .

the best deal of all may be tax efficiant stocks held outside in taxable money that appreciates . your heirs can inheirit that totally tax free as that gets a step up in basis with no taxes paid ever on it

Last edited by mathjak107; 10-01-2010 at 03:36 AM..
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Old 10-01-2010, 09:02 AM
 
Location: Victoria TX
42,579 posts, read 86,694,851 times
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Quote:
Originally Posted by evilnewbie View Post
Actually, I think its a good question... the bank probably already paid taxes on the interest that you earned as it was derived from their own profit which was taxed... so basically the interest is taxed twice (sort of like dividends are double taxed)...
Everything is double and triple and quadruple taxed. I earn money and pay tax on it. Then I pay my auto mechanic, who again pays tax on it. Then he pays his dentist who pays tax on it. The dentist pays his landscaper, who pays tax on it. And on and on.
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Old 10-01-2010, 10:58 AM
 
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Originally Posted by benn600 View Post
Threads explode in activity when inaccurate information is posted!
Thankfully !
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Old 10-01-2010, 11:05 AM
 
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Taxes on dividends are a joke when it comes to farmers and co-ops.

Every year I got taxed on my total dividends despite the fact I only recieved about 20% of the dividend that year.

The remaining 80% is retained by the co-op every year and you don't get it til 10 years later. ( even though taxes are paid in the first year)

Yes, when they start mailing you your dividend checks , the tax is already paid but some larger co-ops are not releasing your 80% until your heirs produce your death certificate.
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