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Posted by Sanlib on February 2, 2007, 1:51 am
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I make 105k, my wife makes 65k, we live in CA. For 2006,
the combined income comes to 170k. My wife has a 401k plan
but I dont have any IRA yet, was planning to get a ROTH IRA
account, but someone told me I don't qualify. I paid
Mortgage interest of 15k last year and property taxes of
maybe 6k. I'll contribute 4k to IRA if possible. If I dont
qualify still, is there any investment I can make NOW which
will bring down my taxable income down??
Please advice
Moderator:
Not for 2006. But that is excellent 2007 tax planning
question.
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Posted by Phil Marti on February 2, 2007, 7:56 pm
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> I make 105k, my wife makes 65k, we live in CA. For 2006,
> the combined income comes to 170k. My wife has a 401k plan
> but I dont have any IRA yet, was planning to get a ROTH IRA
> account, but someone told me I don't qualify.
I assume that you don't have a 401(k) or other such salary
deferral program at your job.
Roth eligibility hinges on Modified Adjusted Gross Income
(MAGI), not gross earnings. For example, your wife's 401(k)
contribution reduces her taxable wages, which is the
starting point for AGI.
Step one is to complete your 1040 to line 22, AGI. Then go
to IRS Publication 590 and compute your Roth MAGI. Then
you'll know exactly what your options are.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Ryan on February 2, 2007, 7:56 pm
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> I make 105k, my wife makes 65k, we live in CA. For 2006,
> the combined income comes to 170k. My wife has a 401k plan
> but I dont have any IRA yet, was planning to get a ROTH IRA
> account, but someone told me I don't qualify. I paid
> Mortgage interest of 15k last year and property taxes of
> maybe 6k. I'll contribute 4k to IRA if possible. If I dont
> qualify still, is there any investment I can make NOW which
> will bring down my taxable income down??
Also, if you dont qualify you might want to set up an IRA,
make non-tax deductible contributions and convert to a Roth
in 2010 when income doesnt matter.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by joetaxpayer on February 3, 2007, 2:14 am
Please log in for more thread options Ryan wrote:
>> I make 105k, my wife makes 65k, we live in CA. For 2006,
>> the combined income comes to 170k. My wife has a 401k plan
>> but I dont have any IRA yet, was planning to get a ROTH IRA
>> account, but someone told me I don't qualify. I paid
>> Mortgage interest of 15k last year and property taxes of
>> maybe 6k. I'll contribute 4k to IRA if possible. If I dont
>> qualify still, is there any investment I can make NOW which
>> will bring down my taxable income down??
> Also, if you dont qualify you might want to set up an IRA,
> make non-tax deductible contributions and convert to a Roth
> in 2010 when income doesnt matter.
But keep in mind that when you convert in 2010, that all IRA
money is aggregated for purposes of calculating tax. e.g. if
you have $10K pre-tax and $10K post tax in the IRA, 50% of
the converted amount is taxable.
JOE
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Ryan on February 4, 2007, 2:05 am
Please log in for more thread options > Ryan wrote:
>>> I make 105k, my wife makes 65k, we live in CA. For 2006,
>>> the combined income comes to 170k. My wife has a 401k plan
>>> but I dont have any IRA yet, was planning to get a ROTH IRA
>>> account, but someone told me I don't qualify. I paid
>>> Mortgage interest of 15k last year and property taxes of
>>> maybe 6k. I'll contribute 4k to IRA if possible. If I dont
>>> qualify still, is there any investment I can make NOW which
>>> will bring down my taxable income down??
>> Also, if you dont qualify you might want to set up an IRA,
>> make non-tax deductible contributions and convert to a Roth
>> in 2010 when income doesnt matter.
> But keep in mind that when you convert in 2010, that all IRA
> money is aggregated for purposes of calculating tax. e.g. if
> you have $10K pre-tax and $10K post tax in the IRA, 50% of
> the converted amount is taxable.
Of course you have to pay tax on the tax-deductible
converted amount - but after paying the tax it grows tax
free, you withdraw tax free and you can have early
withdrawal of principle without penalty. For people under
40 this 2010 conversion feature is a gold mine, assuming tax
laws dont change.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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