Taxes

• mcburg93

  

  LJ;1390771 wrote:I'm only responding to posts directed at me. If you get it, why don't you move on?

  Because you are doing your normal know everything again. I mean we were told to quit pointing it out but here you are again doing it. Thanks for all your help.
• Automatik

  

  LJ;1390771 wrote:I'm only responding to posts directed at me. If you get it, why don't you move on?

  My post was directed at you.
  
  Still waiting for advice from the financial guru...
• LJ

  

  mcburg93;1390772 wrote:Because you are doing your normal know everything again. I mean we were told to quit pointing it out but here you are again doing it. Thanks for all your help.

  
  I guess any tax planner that would tell you the exact same thing I am "knows evetything" too huh?
  
  I've never claimed to know everything. There are a shit ton of things I know nothing about, but I will post on things I do know about, or things I have experienced in life. I guess maybe I could crawl into a hole and never do anything in my life, or learn anything, but what good does that do me?
• dlazz

  LJ;1390774 wrote:I guess any tax planner that would tell you the exact same thing I am "knows evetything" too huh?

  is that English?
• jmog

  Pick6;1390743 wrote:You guys are horrible with your finances for missing out on that whole $17 you could have gained in interest!! GTFO
  
  
  You ideally want to avoid big returns, but using a savings account to prove your point is laughable.

  That's why I use the 401k and IRA argument
• Automatik

  

  LJ;1390452 wrote: Tax returns are savings accounts for people who can't handle their money.

  Nice sweeping generalization.
  
  Still waiting for tips on how to better "handle" my money...
• jmog

  Automatik;1390767 wrote:I have a 401k, savings account, and got a decent return.
  
  Am I doing it right?
  
  Please LJ, give me some tips on how to manage my finances.

  Are you maxing out all $17k into the 401k and $5k into an IRA? If not then a higher tax return is costing you money.
• LJ

  

  Automatik;1390779 wrote:Nice sweeping generalization.
  
  Still waiting for tips on how to better "handle" my money...

  
  It was already said. Fund your emergency acct, then max your 401k. If there is anything left, max your IRA. use child credits to pay for daycare and medical costs for the kid to not impact your pre-kid budget as much (if applicable). A CPA can show you how.
• Automatik

  

  401k is not maxed, I can't do that at this time, but I am increasing it yearly.
  
  My return wasn't outrageous by any means, I just think it's hilarious that LJ assumes everyone receiving a return "can't handle their money."
• LJ

  

  Automatik;1390784 wrote:401k is not maxed, I can't do that at this time, but I am increasing it yearly.
  
  My return wasn't outrageous by any means, I just think it's hilarious that LJ assumes everyone receiving a return "can't handle their money."

  
  Everyone? No. There are sometimes credits that pop up late year due to unforseen expenses (energy credits and so on). But anyone who knowingly wants and chooses to get a big return is doing it wrong. Any tax planner or CPA will tell you the same.
• sportchampps

  As a tax preparer I'll give you a few reasons why it's good to get a return.
  1. Protects against Tax surprises ie. let's say you sell some stocks at the advice of your advisor and you get hit with a tax penalty
  2. If you happen to lose your job and your calculations are off you will end up paying outta pocket at a bad time in your life and if you can't make the payment the penalties are way more then the interest.
  3. The opportunity cost is very low. Let's say it amounts to $100 a paycheck using current bank rates you would earn 6$ a year in interest.
• Automatik

  

  LJ;1390785 wrote:Everyone? No. There are sometimes credits that pop up late year due to unforseen expenses (energy credits and so on). But anyone who knowingly wants and chooses to get a big return is doing it wrong. Any tax planner or CPA will tell you the same.

  Then maybe you should have clarified that before you came out looking like a know-it-all blowhard.
  
  And I've met with my family's CPA on several occasions. I'm on the right track.
• sportchampps

  As a CPA I recommend getting a small refund maybe a middle ground each year.
• LJ

  

  sportchampps;1390787 wrote:As a tax preparer I'll give you a few reasons why it's good to get a return.
  1. Protects against Tax surprises ie. let's say you sell some stocks at the advice of your advisor and you get hit with a tax penalty
  2. If you happen to lose your job and your calculations are off you will end up paying outta pocket at a bad time in your life and if you can't make the payment the penalties are way more then the interest.
  3. The opportunity cost is very low. Let's say it amounts to $100 a paycheck using current bank rates you would earn 6$ a year in interest.

  
  If you are w2 and lose your job, wouldn't your tax bracket already be much lower than planned to begin with, basically negating any chance of underpayment with a planned 0 to -$100 balance.
• sportchampps

  And if your company doesn't match your 401k contributions which sadly many companies are moving away from then your much better off investing on your own if you have knowledge of the market.
• sportchampps

  The gaps in tax brackets are often so big that it wouldn't matter to most people if they worked 6 or 12 months they will be the same.
  
  Example... You make 80k a year.... Fired after 6 months so you made 40k your gonna be in the same income level.
• LJ

  

  sportchampps;1390792 wrote:And if your company doesn't match your 401k contributions which sadly many companies are moving away from then your much better off investing on your own if you have knowledge of the market.

  
  Self directed is nice if you can handle it, but I would say they are not really for most.
• sportchampps

  If you can do the calculations to figure out how much to put back each year with a little studying you can invest in smart stocks.
• LJ

  

  sportchampps;1390793 wrote:The gaps in tax brackets are often so big that it wouldn't matter to most people if they worked 6 or 12 months they will be the same.
  
  Example... You make 80k a year.... Fired after 6 months so you made 40k your gonna be in the same income level.

  
  Yes it would, marginal on 40k is approx 10.2% and marginal on 80k is approx 17%. If you were planned on 80k you were withholding 17% and only end up owing 10.2%
• sportchampps

  Ok I'll put it this way for you to better understand why it's not always best. You lose your job and need money for your family to keep their house and to eat. Your only option is so sell some stocks you had and cash out some of your 401k to close the gap between unemployment and your salary. Do you think the extra 6% will cover the penalties for cashing out your 401k and the additional taxes for selling stock. I've seen this happen to families during my intership and instead of getting a decent check they get a decent amount owed that is the straw that breaks the camels back.
• LJ

  

  sportchampps;1390804 wrote:Ok I'll put it this way for you to better understand why it's not always best. You lose your job and need money for your family to keep their house and to eat. Your only option is so sell some stocks you had and cash out some of your 401k to close the gap between unemployment and your salary. Do you think the extra 6% will cover the penalties for cashing out your 401k and the additional taxes for selling stock. I've seen this happen to families during my intership and instead of getting a decent check they get a decent amount owed that is the straw that breaks the camels back.

  
  The 401k taxes should be withheld at the time of the withdrawal (its law). You can set aside the stock proceeds for taxes (some acct types will do this for you) as well as the 3k extra withholding you already had. Also because of the new laws, if you keep your marginal under 15% you may not owe any tax on a ltcg
• hasbeen

  

  The savings argument is a shitty one, but the premise is correct. I'd prefer not to give the government a 0% loan when I could be investing that money.
  
  I think more people agreed with LJ, but they wanted to call him a know-it-all douche anyways. smh
• mcburg93

  

  hasbeen;1390823 wrote:I think more people agreed with LJ, but they wanted to call him a know-it-all douche anyways. smh

  If the shoe fits
• sportchampps

  I guess my knowledge as a CPA and experience of real life situations mean nothing as you are an expert on what everyone should be doing with their money. Forget that I get my salary based on my knowledge in this area. The best situation is a middle ground where your tax return will allow you a small bubble to cover any unforeseen circumstances.
• LJ

  

  sportchampps;1390976 wrote:I guess my knowledge as a CPA and experience of real life situations mean nothing as you are an expert on what everyone should be doing with their money. Forget that I get my salary based on my knowledge in this area. The best situation is a middle ground where your tax return will allow you a small bubble to cover any unforeseen circumstances.

  
  I don't doubt you have seen it, but its not going to be the norm due to the facts that I stated, esp the mandated 401k withholding. They HAVE to withhold double your estimated penalty on an early withdraw. You could possibly lie about your income and have less withheld, but that would be the person's own stupid fault.
  
  Everyone should be reviewing their taxes quarterly. I do, and have never had an unexpected tax due in almost 10 years of owning a business.