Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Re: Marriage Penalties? Date: 10/8/2000 11:09 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
1) As to the IRA question - as I understand the law, if either Bill or Mary are already contributing to a 401K through their jobs - the only IRA they can sign up for is a Roth - further it appears that their combined income may put them over the top for a Roth (??)

Not true. Coverage by a retirement plan affects only the deductibility of traditional IRA contributions. Anyone under 70 1/2 with $2,000 taxable compensation can contribute $2,000 to some sort of IRA, even if it's just a nondeductible contribution to a traditional IRA.

2)I learned something new here. I've never heard of preference items. I thought AMT kicked in automatically at a certain income level. Can you pls provide examples of what these preference items are?

At a high income level standard tax rates are going to way exceed AMT rates. Preference items include some itemized deductions, capital gains, and ISO's, among other things. You'll find basic information about AMT in the instructions to Form 6251. I think there's also an article in the FAQ, but I'm not sure about that.

3) While I appreciate the need for procreation of the species - my husband and I have found that having a child basically only provides an additional exemption (not that there's anything wrong that....:) ) Because our combined household income is on par with that of Bill and Mary - we find that our childcare credit is somewhat limited - further I may be mistaken- but I think we may also be precluded from opening an educational IRA for our child. Please point me to the real tax savings you are referring to.

At a high income level you do lose most of the tax benefits of children, but my mother tells me they bring you joy in your declining years.

One note about Education IRAs. There's a loophole the size of a small Central American country in the law. Anyone who meets the AGI limits can contribute to an Ed IRA, even if the contributor has no income. You can always give the little nipper $500 and have him make the contribution, even if he's not moved to strained vegetables yet.

TMF ExRO
Phil Marti
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement