Page 3 of 4 FirstFirst 1234 LastLast
Results 25 to 36 of 38

Thread: Reducing Tax Liability

  1. #25

    Join Date
    Sep 2004
    Location
    Missouri
    Posts
    8,619

    Default Re: Reducing Tax Liability

    DAMN, I've been infiltrated.


    Quote Originally Posted by James48843 View Post
    Too late.

    They know EVERYTHING now.



  2.  
  3. #26

    Default Re: Reducing Tax Liability

    "You know what the difference is between you and me..... I make this look good." MIB

    grandma, we have our methods. Show-Me, keep talking........

    All, have a Merry Christmas.

  4.  
  5. #27

    Default Re: Reducing Tax Liability

    Well personally, this is what I do! I first Max out my Bonds. Which is 5000 per year. I max out the TSP of course 16500 or something like that. Since I have a child I also max out on FED spending plan which takes non taxed dollars out of your check and helps to pay for day care and medicine. I then can voucher what I spend and get my money back. so in total. 5K + 5K + 16.5K=26.5K. This drops me back into a modest tax bracket. I love it.


  6.  
  7. #28

    Join Date
    Sep 2004
    Location
    Missouri
    Posts
    8,619

    Default Re: Reducing Tax Liability

    Yea, I love tax season. By the time I deduct TSP and FSA, I'm so poor I barely pay any taxes. Now I just have to hide my retirement money. Roth TSP!

  8.  
  9. #29

    Default Re: Reducing Tax Liability

    Quote Originally Posted by mudigha View Post
    Well personally, this is what I do! I first Max out my Bonds. Which is 5000 per year.
    mudigha, are you talking about Savings Bonds? If so I don't believe they come out pretax. Also, savings bonds would generally not be anywhere in my investment portfolio. It is convienient to have it taken out of your check, but the return on the EE bonds is lousy. I might understand the I bonds at 3% currently.
    I am shring my opinion and I would like to hear your reasons for maxing out bonds? Also, are you using the I bonds and what purposes?

    Thanks

    Jack

  10.  
  11. #30

    Join Date
    Dec 2009
    Location
    Oregon
    Posts
    3,599

    Default Re: Reducing Tax Liability

    Looking for some advice. I have maxed out my TSP contributions this year and have some savings that I need to do something with. We plan to max out my wife's IRA contribution as well. I am considering dumping as much of my wages as I can into Catch-Up contributions in TSP over the last 2 bi-weekly pay-periods to reduce my 2012 tax liability further, and put that money to work.

    But I also need to replace my roof next summer. I just don't want all of my savings sitting unproductive in a bank account till then. If I go the catch-up route, I'll probably have to do a home equity loan to pay that part of the re-roof costs (say, $5000). The 2012 tax savings would be what - $1250? On the other hand, I'll potentially end up paying interest on the home equity.

    Any thoughts/suggestions on this?

  12.  
  13. #31

    Join Date
    Apr 2005
    Location
    Gainesville, Florida, USA
    Posts
    24,244

    Default Re: Reducing Tax Liability

    Interest on a home equity line of credit is still tax deductable. To keep your life simple put the extra savings in your check book even if there is no growth - that's the way I'd do it. Keep building your savings account over the years because when you take it out it's not part of your adjusted gross income - money you can spend to keep yourself in a lower tax bracket. Money you can't control like an annuity or social security, will keep your adjusted gross income taxable at higher rates. You are not required to take your minimum distribution from TSP until you are 70 years old - a great tax deferral for awhile. Open a Roth IRA and invest with impunity because there is no paper work - the IRS is out of the equation.

  14.  
  15. #32

    Join Date
    Dec 2009
    Location
    Oregon
    Posts
    3,599

    Default Re: Reducing Tax Liability

    Quote Originally Posted by Birchtree View Post
    Interest on a home equity line of credit is still tax deductable. To keep your life simple put the extra savings in your check book even if there is no growth - that's the way I'd do it. Keep building your savings account over the years because when you take it out it's not part of your adjusted gross income - money you can spend to keep yourself in a lower tax bracket. Money you can't control like an annuity or social security, will keep your adjusted gross income taxable at higher rates. You are not required to take your minimum distribution from TSP until you are 70 years old - a great tax deferral for awhile. Open a Roth IRA and invest with impunity because there is no paper work - the IRS is out of the equation.
    Thanks Birch. You captured the reasons I was ambivalent about this perfectly. Good advice and duly appreciated!

  16.  
  17. Default Re: Reducing Tax Liability

    Can I get a more clear explanation to deducting my contributions to TSP. Can I subtract the amount I put into this account from my total taxable income?

    Another question I have... When is it a good idea to start a Roth IRA? They are available with my employment.

  18.  
  19. #34

    Join Date
    Feb 2007
    Location
    San Diego, CA
    Posts
    6,950

    Default Re: Reducing Tax Liability

    Quote Originally Posted by gooster32 View Post
    Can I get a more clear explanation to deducting my contributions to TSP. Can I subtract the amount I put into this account from my total taxable income?

    Another question I have... When is it a good idea to start a Roth IRA? They are available with my employment.
    Your contributions are classified as tax-deferred if you put in your regular TSP. These will be in your W-2 Box 12 (with the dreaded Health Care cost designated DD)

    If you have alternate income then it will be added into the equation at tax time.

    If you contribute any/part/ all to a Roth TSP or IRA, this is after tax dollars and not a taxable item. EXCEPT when you are addressing limits.

    Roth IRA's are a nice way to get tax-free on the gains at retirement withdrawal. MEaning, dependent on your tax position at time of investment and after retirement will drive your decision on When/If a Roth is good for you. If you try and lower your tax footprint on the load side or withdrawal side.

    But if you need all the dedcutions you can get now, I would stay away from ROTH. If you have all you can take and you are happy with what you pay, then ROTH could be viable. I highly recommend that you read a bit and study your own goals and expectations to make the best decision. But I guess you've realized it is unique to each person.
    THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
    Tracker =
    100%- I Fund

  20.  
  21. #35

    Join Date
    Oct 2008
    Location
    Stinking desert valley of bad air quality, AZ
    Posts
    2,791

    Default Re: Reducing Tax Liability

    Quote Originally Posted by gooster32 View Post
    Can I get a more clear explanation to deducting my contributions to TSP. Can I subtract the amount I put into this account from my total taxable income?
    Everything Frixxxx said is true, even if he did used to live in the PRK.

    I think you are looking for a simple answer. No. The amount you contribute to your regular (not Roth) TSP is not part of the wages listed in block 1 of your W-2. As Frixxxx stated it is in block 12 coded as D. DD is your health care cost, as stated. A quick check of this is to look at your last December LES. Not the pay date last one but the pay period end last one. Mine was Dec 27. Yours may be different. There will be a block (21 for me but I have found these forms differ from agency to agency) that lists Gross Pay, Taxable Wages and Nontaxable wages. These should match blocks 1, 3 and 12 of your W-2. Well, maybe not block 3 depending on your income.

    Code D in block 12 means tax deferred. This means when you finally draw funds out of the TSP you will pay taxes at the rate appkicable to you when you withdraw them. Theoretically a lower rate since you will be old and retired. A theory I have yet to test though I do meet the old part.

    Quote Originally Posted by gooster32 View Post
    Another question I have... When is it a good idea to start a Roth IRA? They are available with my employment.
    The contributions you make to a any Roth you will pay taxes on for the year you earned them. When you withdraw Roth funds at a later date, the original contributions and any gains on those contributions are tax free. At least under the rules in place now. The answer to when is it a good idea depends on your situation. If you can afford to pay the taxes now it might be nice to have some money saved that was tax free. Keep in mind that the current rules could be changed by people who do not care about those who elected them.

    I hope this answers your first question. If I am not correct on any of this I am sure someone will correct me.

    Best of luck with the career and TSP.

    PO

  22.  
  23. Default Re: Reducing Tax Liability

    Appreciate the response to both my questions.


  24.  
Page 3 of 4 FirstFirst 1234 LastLast

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
SPY (C Fund) (delayed)
Reducing Tax Liability
(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)
Reducing Tax Liability
(Stockcharts.com Real-time)
EFA (I Fund) (delayed)
Reducing Tax Liability
(Stockcharts.com Real-time)
AGG (F Fund) (delayed)
Reducing Tax Liability
(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes