MUNCIPAL BONDS ARE OF NO USE TO YOU IN YOUR 401K!!! MIGHT AS WELL GO CORPORATE
Wow, excellent example. Up to $75K is TAX-FREE from investment income.
Note: Data is for joint taxpayers.
Doing a manual conversion June 23 of 8K. Should be no tax consequences.
Need to write down Roth IRA number in memo field on check when you get it.
Unsure about how the contributions will get tracked. Might need to do that manually, or just keep updating the spreadsheet with details.
Noodled around on this one back and forth. Most cards have a promotional APR of 0% for 15 months. It's what Warren Buffett / insurance companies do!
|Normal month||Pay 1% of balance, auto-transfer||I feel like no|
|$10K in 0% debt, normal scenario||Make average of 8% on it, so $800 in taxable income a year||Too little money for my sanity|
|$50K in 0% debt, normal scenario|| Make average of 8% on it, so $4000 in taxable income a year |
Monthly min payment of $500
| Now we're talking
So easily I am swayed…
Yet the amount of work/headache is X 5. Hmm…
|Lose job with $10K of debt coming due in next 3 months||Sell stocks to cover balance after unemployment||Not so bad with savings|
Useful when self-employed. Allows you to give the full amount (~$50k or whatever) to 401k. However, there's still a “traditional” / elective deferral / “don't pay taxes” limit of the typical 19K. So there's no benefit to trying to do this method as a contractor because Intel now supports the mega backdoor roth. (the same benefit as above)
Spousal loans are great for income-splitting and tax reduction in a household where you and your mate earn widely differing amounts. By making the less-taxed person the investor, more of the gains can be kept, so loaning that partner money makes sense. The loan rate has to be at least 2% (the current CRA level) with interest paid annually, added to the taxable income of the lending spouse. The costs are deductible, however, in the hands of the borrower. There will be no attribution of investment gains back to the lender – which is the whole point of this exercise.
So if there’s an income disparity in your house, Curtis, you should stop co-mingling your net incomes, pay all of the household expenses yourself then loan her a pile of cash for a non-reg account. And, of course, be a model husband. That may involve flowers and manners. Be prepared.
It's uhh…complicated. Basic reason to care is that for some strange reason, the “income” for these benefits that you receive from your company is counted in your W2 as income, but is not reported as an adjusted basis in your official 1099-B documents. So you're double-taxed on that money, first on the W2 income and then on that income as short/long-term capital gains unless you do something about it!
It's weird, because on e-trade it knows about the adjusted basis! But for some reason, they don't report it that way on 1099-B!
The complicated rules for ESPP and RSU taxation are summarized by Intel on internal un-printable pages here:
There are more complicated cases where the stock price is below the sale price, changing the tax. But if you do Quicksale you avoid all that!
Don't double pay income tax on foreign investments! (I don't have a lot though).
Are you a Hobby or business? It makes a difference. A hobby is by far the easiest way to report income. But no expenses are allowed while SE tax is avoided.
Living Trust lets you avoid probate fees. Need a piece of paper, with community property agreement.
On death, giftees get the stepped up tax basis.
Can gift up to 11.4 Million for free as part of estate (community property with right of survivorship, different for joint tenants). But capital gains still count.
Also, good to review stuff with a professional. Like the guy on money matters call.
email@example.com. Mark Drobny
Charitable Remainder Trust
Charitable Remainder Unit Trust, Charitable Remainder Annuity Trust
|Liability Avoidance||None||Yes (https://passiveincomemd.com/put-rental-properties-llc/)||Yes?|
|Effort/cost to prepare||Very little|
|Tax Advantages|| Pass-through income |
Business expenses are deductible from personal income
|Same as S.P. except you can choose to be taxed as Corp|
MMM switched from LLC to S-Corp, works at scales > $50K profit. http://www.mrmoneymustache.com/2016/02/10/should-you-do-your-own-taxes/
Other MMM forum folks said stay with sole proprietorship unless you need liability avoidance. If you're just consulting, can probably do sole proprietorship.
As a way to shield your investments from taxes? Probably not as much? IDK
When figuring your payment dates and the amounts to enter on line 19 of each column, apply the following rules.
For withheld federal income tax and excess social security or tier 1 railroad retirement tax (RRTA), you are considered to have paid one-fourth of these amounts on each payment due date unless you can show otherwise.
One more thing, you need records of this transaction. Pay1040.com makes it really annoying to get receipts after the fact (must enter credit card number), but thankfully the IRS keeps payment history.
“Cool spreadsheet man”
2% max fee. Can spread it out among vendors! https://frequentmiler.boardingarea.com/2018/02/19/pay-taxes-via-credit-card-2018-edition/
Also an option. Flat ~$2.50 fee, and some cards give you 1% or more back.
Buying debit gift cards probably not so much, since the limit is $500 and they have a $5 fee to open, etc. Unless you can buy them for 5% off at a grocery store. Not willing to do the work :)
Should figure out the minimum number of allowances so that no money is withheld so that W4 is accurate and one-time. “about 20” isn't good enough.
Domes recommended reading it.
I have tax liability, so I can't be exempt. Now, can I claim 20 allowances to get no taxes withheld and pay quarterly instead?
Also, there's no requirement for employers to send in W4 with over 10 allowances anymore. The IRS will figure it out on their end and send a notice if needed to employer.
Cool with it
The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. There are two ways to pay as you go. Withholding and Estimated tax. If you don’t pay your tax tax that way, you might have to pay estimated tax. People who are in business for themselves generally will have to pay their tax this way. You may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rents, and royalties. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax.
In general, you may owe a penalty for 2017 if the total of your withholding and timely estimated tax payments didn’t equal at least the smaller of: 1. 90% of your 2017 tax, or 2. 100% of your 2016 tax. (Your 2016 tax return must cover a 12-month period.)
Minimum required each period. You will owe a penalty for any 2017 payment period for which your estimated tax payment plus your withholding for the period and overpayments applied from previous periods was less than the smaller of: 1. 22.5% of your 2017 tax 2. 25% of your 2016 tax. (Your 2016 tax return must cover a 12-month period.)
Estimated tax payments aren’t a substitute for withholding.
~2% processing fee to do it, but outweighed by signup bonuses. Trick is to match the quarterly expense (~$15K tax liability / 4 = $4K) with the size of the bonus.
For when you don't have a credit card bonus to use…Can pay Federal for $2.59 on a debit card, and some debit cards (M1 Finance in particular) give you 1% back! Awesome.
Oregon says it's $2.59, but they charge you 1.8% or whatever, so can't do it that way.
Want to avoid wash sale, which is when you buy substantially identical (same base index) funds/stocks within 30 days of a sale in:
So, disable automatic reinvestment for IRA and brokerage when you're going to do this!
Also, you can move away from VTSAX into the corresponding individual mutual funds with no wash sale rule, except for the original VTSAX reinvestment, which you need to turn off. Which you wanted to do anyways eventually.
Not going to do it because I anticipate selling next year before drop and want to limit my capital gains….hmmm
Municipal bonds in your state are federal and state tax free. However, there isn't one for Oregon in an index fund, just Franklin Oregon Tax Free (.67% fee).
So, basically state discount is a 10% bump on return.
That's not nearly enough to make up for the performance difference between VWLUX and FRORX. 15,560 * .9 ~ 14004, worse than FOFZX. Overall though, it is worth it to get muni bonds relative to VBTLX, as federal is 25% discount whereas Treasury bond interest is taxable.
Interestingly, interest rates for NJ and others are *higher* than “less safe” cities like NY and CA. (source, vanguard) Well, sounds like it's time to diversify and find out.
Probably don't want to DIY buying your own bonds if you want to sell them as that's some work and it's much easier to sell mutual/index fund.
On the other hand, if you plan on holding them, your time has to beat VWLUX expense ratio of .09%.
Have to pay federal income tax, but don't have to pay Oregon income tax for up to $2330 of it.
Earnings grow tax-free when used for qualified educational expenses.
$150 tax credit, reached when contributing $600 for my tax bracket. Just doing $1K.
4-year carryforward of excess contributions for Oregon deductions. Ohh, probably doesn't matter if you don't have income in Oregon. Hmm…
$2375 for 2018 tax year Oregon deduction - 1250 - 1000 = $125 left allowed Put some money in a 529 savings account for college expenses, an ESA for private school expenses. You have to invest after-tax money, but the growth isn't taxed (so like a Roth IRA).
Morningstar rankings of 529 plans?! http://www.morningstar.com/articles/775806/morningstar-names-best-529-collegesavings-plans-fo.html
|Oregon College Savings Plan (TIAA)||Vanguard (AZ, CO, etc)||Author JohnWDefeo (NY)||Conclusion|
|Fees||.22%||.12% - .17%||.16%|| Because of the state tax deduction, worth it to stay with Oregon for the near future
Maybe look into transferring later
|Funds||They have a US market index!||Vanguard funds||Vanguard Funds|
Need to use “rebalance” to change investments.
Might want to do 72(t) instead. Just a lot more flexible and don't have to worry about 5-year rules. Can drop a payment? Might want to read more.
Downside of Roth is that you can only take out contributions before 59. Also can't harvest capital losses, but you can only harvest $3k of capital losses per year.
Downside of taxable brokerage account is that unless your tax bracket is 0% for dividends (~$40K single, $90K married), you'll pay taxes of 15% every year on them, whereas on Roth you wouldn't.
Since my tax bracket is higher than 0% for dividends, doing the Roth.
Can do a Traditional to Roth IRA conversion “ladder”. You pay taxes on the amount converted (low in a low-income situation) and you have to wait 5 years to touch the converted money, but then you can withdraw the contributions early tax-free.
Contribute $5500 to a non-deductible traditional IRA, but then you can convert it later. It's only helpful if you're above the income brackets for a roth IRA ($118K for single in 2018). https://www.fidelity.com/retirement-ira/contribution-limits-deadlines
After-tax contributions will be stopped at the IRS annual additions limit ($57,000, or $63,500 if age 50+ for 2020) if the sum of your year-to-date pre-tax/Roth contributions, the year-to-date pay-period 401(k) match, and your year-to-date after-tax contributions reach that limit during the plan year. Your pre-tax/Roth 401(k) contributions and the applicable pay-period 401(k) match will continue until you have reached IRS limits for those items ($19,500, or $26,000 if age 50+ for 2020 for your pre-tax/Roth 401(k) contributions).
I just talked to Fidelity today about after-tax conversion. They told me I have 2 choices. One is in-plan conversion from after tax to Roth, the money will still be under my 401K savings plan but just show as Roth, and I will have to choose from core investment options. After my call, Fidelity will automatically convert my after-tax to Roth each time they received my contribution.
Another choice is to roll over my after-tax to another Roth IRA, then I have more investment options. The roll over can't be set to happen automatically, I will have to call each time I received a paycheck with after-tax deductions, but there's no limit on how many times and how much per year I can roll over my after-tax.
I was also told if I do in-plan conversion, I will not be able to withdraw from converted Roth money before 59.5 years old and while I am still working. If I do roll over, I can withdraw from converted Roth money early, but may have penalties and tax consequences.
Your 401k contributions will automatically be stopped when you hit the IRS limit ($19,500 in your case). You will not need to change any elections for this to take place.
What will not stop is the after-tax contribution.
The IRS maximum of all contributions combined (401k + Intel match + after-tax) is $57,000 for 2020.
You will need to figure out how much you will be able to contribute to after-tax without going over that limit.
If you are trying to contribute to pre-tax 401k up to $19,500 max and then start contributing to after-tax, you will need to adjust your after-tax contribution % once you hit the pre-tax max.
Using a hypothetical eligible earnings of $150,000, you would be able to contribute $57,000 - $19,500 - $7,500 = $30,000 in after-tax money.
Hope this helps.
Good question! The exact information needed to determine how much after-tax contributions you can make will not be available until after the plan year ends (primarily due to the 401(k) match true-up), so estimates are required. After-tax contributions will be stopped at the IRS annual additions limit ($56,000, or $62,000 if age 50+ for 2019) if the sum of your year-to-date pre-tax/Roth contributions, the year-to-date pay-period 401(k) match, and your year-to-date after-tax contributions reach that limit during the plan year. Your pre-tax/Roth 401(k) contributions and the applicable pay-period 401(k) match will continue until you have reach IRS limits for those items ($19,000, or $25,000 if age 50+ for 2019 for your pre-tax/Roth 401(k) contributions). If it is determined after the match true-up is calculated that contributions were made in excess of the IRS annual additions limit, there is an annual process to refund the excess amounts. You should also be aware that non-discrimination testing could result in a reduction of permissible after-tax contributions. If this happens, excess amounts will be refunded.
To estimate your potential after-tax contribution maximum, you need to start with the IRS annual additions limit (above) and subtract your anticipated pre-tax/after tax contributions (max $19,000, or $25,000 if age 50+ for 2019), estimated match (maximum 2:1 on pre-tax/Roth contributions up to 5% of eligible pay). What is left is your estimated potential after-tax contribution. Because your regular pay and/or bonus exact amounts are not known in advance, your after-tax deferral election for regular pay and/or bonus requires you to make your best estimate. If you have a financial advisor, consider engaging them to help with your estimate.
Intel doesn't automatically switch
What is the VAC/PA CASH OUT PRE-TAX thing?
Roth Basic, is the normal Roth 401k money. But Intel doesn't allow withdrawal until 59.5
Roth In-Plan Conversion withdrawal is allowed, however.
How will it switch over from Traditional 401k at 19K to RIPC?
Set up transfer to external Roth IRA? (M1 finance). Is it difficult, or should I just not bother with it?
It's the 401k “mega backdoor” roth.
For example, say you’re under 50, earn $100,000, and you’re contributing $19,000 to your 401(k) plan this year. Let’s say your employer matches your contributions 100%, up to 3% of your salary. That means it’s putting in $3,000 this year. The maximum amount you can put in the after-tax portion of your plan this year is $56,000 minus $19,000 minus $3,000, which is $34,000.
Roth IRA ($6K) is separately counted
Can't they do this for Traditional 401k too? Convert it to an IRA you can keep anywhere, including M1?
More to do here…what is the benefit of an IRA if you're just going to pay taxes on principal and interest later?
|401K||IRA||Roth IRA||Taxable||Cash Balance Acct.|
|Features|| Tax-deferred |
Employer often matches
| Tax-deferred |
If employer non-matching, deductible?
|Pay taxes on principal only|| Can tax-loss/gain harvest |
Ordinary dividends (held 90 days) and long-term gains are tax-free up to a joint income of 75K (as of 2017)
|Can put a bunch of money into it|
|Max Yearly Contribution|| $18,000 |
~$60K with after-tax
|$5,500 total|| Lots (>$100K per year)
But has to be the same every year, despite downturns
|Early Withdrawal (particularly required minimum)||Can rollover to IRA when leaving company. So look at IRA rules.||10% penalty on early withdrawal of principal and interest, on top of ordinary income tax. Have to do RMD||Can withdraw principal at any time with no penalty. No RMD's, cool!||Can take out at any time.||Not sure|
|Retirement Withdrawal||Everything taxed as ordinary income||No taxes on everything||Not sure|
|On death||Unless your spouse is alive, you can't directly gift an IRA. However, it looks like you can do a trustee-to-trustee transfer that you maintain for the deceased and you can pull from it. https://www.irs.gov/publications/p590b#en_US_2016_publink1000230542. Weird! Also, stuff about withdrawing over a lifetime. Ehh, I'll get to it later.||Not sure|
|Can loan money from||Yes, up to 50K||No|
Go curry cracker on how roth burns your money… https://gocurrycracker.com/roth-sucks/
If you have 401K at work NOLAN DOES!, and you make more than $71K net! (after taxes, screwed that one up), you can't deduct taxes on traditional IRA. However, you can fund a Roth IRA still. IRS source.
Interestingly, you can contribute “post-tax” to a 401K in excess of the 18K limit, up to a $50K+ limit. However, your employers plan must support it, which mine doesn't.
Bogleheads wiki page is great for this.
If your retirement tax bracket will be lower than when working, then traditional will probably win, especially if you are not maxing out your IRA/401K. If you are maxing out your IRA/401k, then you need to take into account the leftover money that now needs to go into a taxable account to grow, where each transaction/dividend is taxed according to some rules. (basically, contradictory to below, it's not 0% taxes for leftover money).
Balance(Y) = P(1 + r)Y + c[ ((1 + r)Y - 1) / r ], moneychimp
Each allowance is worth $4150 (2018 annual basis allowance) / 26 (pay periods per year) = $160 not calculated for withholdings from your gross income. That amount is subject to the marginal federal income tax rates.
Rolled my own and it lines up good with IRS calculator. https://docs.google.com/spreadsheets/d/1EZtnL0C-SE4XJi9uZSjrt1-CW3u8YiJktHPyD1HXhDg/edit?ouid=112588767989536456583&usp=sheets_home&ths=true
Here's a great calculator for this https://turbotax.intuit.com/tax-tools/calculators/w4/, separate from the IRS calculator. https://www.irs.gov/individuals/irs-withholding-calculator. Turbotax says 6 is bringing me about $500 underneath, we should be good from there…hopefully.
Make a calendar reminder to recompute in the summer after you contributed to 401k.
Payment + Fee = Minimum Spend –> Spend/1.02 = Payment (includes fee)
Should deduct expected W2 tax withholdings too…. Was over Federal 2019 return by $5K and Oregon by $4k.
| Apr 15 |
Need to pay $2678 w/ cash, rest w/ CC's
| $250 w/ Delta Amex on Pay1040 |
Due July 15 here
| 62 paid already using alliant CC
$171 with work bonus debit
979 on PNC CC, 699 on BBVA CC
Oregon is not extended
|Jun/Jul 15|| Extended to July 15 |
Paid $142.50 from Wirecard June 18 on PayUSATax website
$2000 off of Sofi Debit on Pay1040 on June 22
$2997.42 via Pay1040 and Discover Card
2850 via PayUSATax and Discover on July 2
|Paid $2000 via checking on June 9|
|Sep 15||$1300 paid 8/25|
Better figured and documented on the spreadsheet: https://docs.google.com/spreadsheets/d/1jIZkq4E1rHqPdO0nj6-WUV8bFsqBsg9qdbwU2ENpHQs/edit#gid=2117520066
Pay on PNC (2% fee). Rather get a new card, do auto-transfer of minimum payments and get 0% APR?
$10K credit limit, 0% until July 2021
$50 Feb 4 for West Valley trip $785 Mar 28 for Kickstart.
Sold $18K of VOO ($3K of short term losses) for VTI on April 6. Will increase VTI allocation to ensure incoming money doesn't go into VOO.
Turned off auto invest for Roth IRA and taxable account, just in case. Only need to worry about wash sale for VOO.
Did a number of stock sales on Robinhood in June in anticipation of buying car and finishing LTCG.
It's helpful for Mr. Domes to review the numbers with all the forms and individually indicated on the Schedule … D?
Get W2 box 1 and box 5 breakdown from Workday. Workday → Pay → My W2 Breakdown. Also helpful is printing out the last payslip to make sure Oregon withholdings are correct (Oregon WBF and Transit Tax).
Make sure that the 1099's from the banks match what you expected for signup bonus income.
|Chase checking/savings and brokerage||X, brokerage X|
|SoFi Invest (probably under apex)|
|Ally Bank Trading||X|
|US Bank (250)||X|
|Wells Fargo ($400)||X|
|Capital One Savings||X|
| Discover Savings (||X|
What about small interest? → (less than $10 interest is not reported to IRS!)
|Bank of the West|
Look under “benevity” under email for receipts.
$200 to Liberty Robotics, matched $200 by Intel.
$750 to Liberty Robotics for payments for Houston robotics trip. I will attempt to volunteer the whole time.
$200 to Elevate Oregon for Chromebook. +300 for general donation.
$300 for Liberty Robotics Santa Clara trip. Volunteering the whole time.
$1276 for Kickstart International. Paid on CC
Payment + Fee = Minimum Spend –> Spend/1.02 = Payment (includes fee)
|Mar. 27||Done (Pay1040)||Done|
|Jun 15||Done (Pay1040) 1.87%||Done June 7|
|Sep 15|| 696 out of $3750 Jul 8. |
Paid 4418 on Aug. 6
for travel expenses
|Done Jul 8. 1792 total.|
|Jan 15|| $1354 / $3750 already paid |
$1261 on Wells Fargo
Need to add $1446 (LTCG) + $300 (income) for signup bonuses
$2881 paid + $53 fee on Alliant CC
| $1750 + $954 (LTCG) + $75 (income)
Paid $879 on Fidelity.
$1900 even remaining
Paid with checking transfer
Not necessarily the best idea to pay $2K in taxes to gain $1K in brokerage opening fees, but I do get some capital losses on the way back down…
$9643 in Nov 2019 LTCG. For Fed at 15% it's $1446, for OR it's 9.9% income tax so: $954. Both are DONE!
Checking account signup bonuses:
Pay Q3 with withholding ($900 * .4 = $360). DONE! Pay Q4 with CC: ($750 * .4 = $300). DONE!
Technically .4 amount includes federal and state income tax and done the same below, but whatevs.
Setting Federal withholdings in december 1 to be 10. Used to be 28, need 12 minimum delta for $500 bi-weekly withholding according to https://turbotax.intuit.com/tax-tips/tax-refund/fatten-your-paycheck-and-still-get-a-tax-refund/L5HaySdDP. So only technically need 16, but going to 10 in case things are off.
Had an issue with entering a 0.09 sale price at a cost of 0.10. They both rounded down to 0, and I needed an entry. So made the 0.10 cost to be 1.00 so the fed would be happy.
Overall changes because of Tax Cuts and Jobs Act: https://www.irs.gov/pub/irs-pdf/p5307.pdf
79293, 15334 * .9 = 13800 - 8461.62 = $5.35K ouch, should be $3750. Did I underpay federal?? Better calculate 2018 obligation and go for 90% of it. I hope not…
79612, 6929. * 1 = 6929 - 4784 = $2200. Also less than $1750, hmm. Calculate Oregon.
Let's go 1700 federal direct pay (done) and
$500 $600 oregon direct pay (done, Sep 10).
$1250 to Kickstart. $750*2 for bills, gifts and expenses…$300? = $3K + $5.5K for taxes = $8.5K, which requires 3 paychecks of $3300 each. Leaves buffer of $1.4K, should be fine investing November 1st paycheck in the market dip.
If you have stock options be sure to report on your schedule D for capital gains that the 1099 from the brokerage firm which handles the stock options is NOT accurate. Brokerage firms are now NOT allowed to report a cost basis for your stock option which includes a correction for the amount of the option that is reported as income. Even though it is reported on your W-2 that you have income from stock options (look at box 12), the IRS ignores this information and looks only at the uncorrected 1099. Hence unless you make it explicitly clear in your return they will count twice the income you made from the stock option and send you a rather large bill which reflects this error
Vanguard supposedly sent me Form 5498. Ahh, IRA contribution document.
Don't forget to discount vbtlx income from state income tax…somehow. It has some treasuries in there.
Probably going to use free fillable forms (https://www.freefilefillableforms.com/#/fd) for both federal and oregon, but not sure which form I should use yet…