Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next
Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121316  
Subject: Re: Shelters Date: 12/30/2004 1:36 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 23
DH's salary is increasing. We need more protection from taxes as we inch into the higher bracket.

Why?

I'm not being flip here. You do realize, don't you, that a dollar deducted still costs you 65 cents if you're in the top bracket? If you consider that a good deal, such a deal I have for you, with apologies to JAFO (I think) who originated it.

Loan me $100,000. I'll sign a note. I'll default. Sue me to establish judgment. (I didn't collect taxes for 25 years for nothing--try to collect.) Voila! You have a $100,000 deduction for bad debt. Meanwhile I'll happily pay the income tax on the $100,000 of forgiven debt. No need to thank me--I'm just a nice guy.

Like everyone else I suppose you're looking for tax breaks that don't cost you anything. Sorry, but they don't (legally) exists. You want to pay less tax? Have children and buy a house. You'll be in the hole in terms of net bucks in your pocket, but the children will bring you joy in your declining years, and you have to live somewhere, so why not let Uncle Sugar share the burden?

Unfortunately you have little option regarding retirement savings. Since your husband isn't covered by a retirement plan, each of you can contribute the maximum ($3,000 if you're under 50 for 2004; $4000 for 2005) to a traditional IRA and deduct it.

Beyond that you can take advantage of the special tax rates for long-term capital gains and qualified dividends. No tax will be due on your gains until you sell, and the dividends are taxed at a reduced rate in the interim.

I understand that everyone thinks she pays too much tax, but I strongly urge you to put tax considerations at the bottom of the list when you're planning your financial future. Once you have clear goals and a plan to get there, minimizing taxes will be a lot easier, when there are options available.

Phil
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next

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.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Value Hounds

Netflix Riles Investors
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
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