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I thought making the max contribution to your Roth IRA is supposed to be a tax benefit? That is why we do it! Our medical costs were greater than 7.5 % of our income so that also helped a little.
the amount we are short this year is twice what it was last year and I thought we would owe less since we made less. I am still hoping I am wrong. The government already takes enough of my money to use for the wrong things!
We are contributing to Roth IRA's. I switched from a Traditional to a Roth in 12 and the Roth my husband opened is new all together. I wonder is that is part of the problem?
Thanks for your thoughts everyone!
I think you do get a tax deduction for Roth contributions but there is also an income limitation. If your AGI is too high you're not allowed to contribute to them, and I believe in addition to your deduction being disallowed there would be penalties. Did you verify that your income wasn't too high to contribute to them?
When you say you switched do you mean rolled a traditional over to a Roth? Was this traditional originally a 401k? If it was a 401k(pretax) that you converted to traditional IRA, then converted to a Roth(after tax) there would be taxes owed on that transaction.
I thought making the max contribution to your Roth IRA is supposed to be a tax benefit? That is why we do it! Our medical costs were greater than 7.5 % of our income so that also helped a little.
the amount we are short this year is twice what it was last year and I thought we would owe less since we made less. I am still hoping I am wrong. The government already takes enough of my money to use for the wrong things!
We are contributing to Roth IRA's. I switched from a Traditional to a Roth in 12 and the Roth my husband opened is new all together. I wonder is that is part of the problem?
Thanks for your thoughts everyone!
Roth contributions are not tax deductible.
Roth distributions are tax free subject to certain rules:
Which type of IRA you choose depends on whether you expect to be in a lower or higher tax bracket when you retire. Most people expect to have less income after they retire and choose a traditional IRA. However, with the current economic situation, it is possible, even probable, that tax rates will increase, meaning more tax on less income.
But for your current tax bill, yes, the problem is you've lost the tax benefit of the traditional IRA.
That will be my next step. But actually, I found out I can handle my state income tax through the state revenue service online. Having done that, the numbers were much more in my favor. Not sure what the difference was exactly, guess I will have to research that further.
Thats interesting, up until this year I did my Fed. with Turbo Tax, but not state, becuase it always gave me incorrect figures for state, even though it imported the data (I compared by going to the state directly when things didn't look good). This year, for the first time, it matched.
I think you do get a tax deduction for Roth contributions but there is also an income limitation. If your AGI is too high you're not allowed to contribute to them, and I believe in addition to your deduction being disallowed there would be penalties. Did you verify that your income wasn't too high to contribute to them?
When you say you switched do you mean rolled a traditional over to a Roth? Was this traditional originally a 401k? If it was a 401k(pretax) that you converted to traditional IRA, then converted to a Roth(after tax) there would be taxes owed on that transaction.
Yes, we were told after meeting with tax advisor in August 12 that we were below the income requirement and that we could each contribute $5,000 in 2012.
I rolled over a traditional IRA to a Roth in 2012, and made an additional $5000 deposit. My husband and I both closed universal whole life policies in 2012, cashed them in and then he used that money to open up his Roth IRA. I think that is where I got my $5000 deposit from too. My traditional IRA was opened with 402 B money for an old job back in 1996 and transferred to a Roth in 2012. I think I'll send the financial advisor an email to verify the IRA issue. Any more comments? Thanks so much for your help!
Yes, we were told after meeting with tax advisor in August 12 that we were below the income requirement and that we could each contribute $5,000 in 2012.
I rolled over a traditional IRA to a Roth in 2012, and made an additional $5000 deposit. My husband and I both closed universal whole life policies in 2012, cashed them in and then he used that money to open up his Roth IRA. I think that is where I got my $5000 deposit from too. My traditional IRA was opened with 402 B money for an old job back in 1996 and transferred to a Roth in 2012. I think I'll send the financial advisor an email to verify the IRA issue. Any more comments? Thanks so much for your help!
Yeah I would take your info to a tax expert and have them look at all the IRA activity in 2012 and determine if that's causing your difference. Looks like you made alot of changes last year.
There may be tax implications from cashing out the life insurance policy too.
I had a very depressing phone conversation with my tax acct yesterday. The good thing is we had a good income and some nice capital gains (some short term though), the bad thing is, we are going to give the govt back well into the 5 figures......taxation sucks.
I had a very depressing phone conversation with my tax acct yesterday. The good thing is we had a good income and some nice capital gains (some short term though), the bad thing is, we are going to give the govt back well into the 5 figures......taxation sucks.
Do you prefer the alternative? No money, no taxes? As they say: "mo money, mo problems"
Do you prefer the alternative? No money, no taxes? As they say: "mo money, mo problems"
In my working days, my foreman used to say----------" when my wife and I complain how big a check we write for taxes plus with holding, I say we're sitting pretty darn good !"
I sometimes think the tax "complainers" are actually bragging about their income under the guise of complaining about their taxes.
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