The simple answer is no. But a more nuanced answer will note that although Roth IRA contributions themselves are not tax deductible, you can claim a Roth IRA tax credit or a claim a loss on a Roth IRA if eligible.
So let’s take a look at the various options at your disposal.
Non-Deductible Roth IRA Contributions
Unlike 401k or Traditional IRA contributions, Roth IRA contributions are not tax deductible. According to the Roth IRA funding rules established by the IRS, all your contributions must be made with after-tax dollars.
For example, let’s say you earn $40,000, and you’re in the 25% tax bracket. If you want to make a $5,500 tax deductible 401k contribution, you’ll put $5,500 in your 401k first and then you pay your taxes, which leaves you with $25,875 (75% of $34,500).
However, if you make a $5,500 non-deductible Roth IRA contribution, you’ll pay your taxes first, which leaves you with $30,000 (75% of $40,000). Then you’ll make your $5,500 Roth IRA contribution, leaving you with $24,500 in disposable income. [click to continue…]
I can only imagine what would have happened if my parents would have given me access to a big chunk of money when I was still young.
I used to be really good at blowing my money on crap that I didn’t need, so I’m sure anything they would have saved would have been gone in an instant.
Sound familiar for any of you?
This is just one of the many reasons why custodial accounts were created.
If your scared that your child will blow through their savings, here’s what you need to know about custodial account rules.
Basically, a custodial account is established to protect the financial assets given to a minor child. In most cases, the account is created by the child’s parent or legal guardian for one of two functions.
Some custodial accounts can be established to make sure the child has sufficient resources throughout his or her adolescence. Other custodial accounts are created to cover educational expenses after high school graduations.
Additionally, the account can be established to provide a good financial foundation during the child’s adult life.
Custodial Account Rules
While there are multiple reasons that a parent or legal guardian may have to open a custodial account, the process to begin is the same. The account can be opened at a brokerage firm, a mutual fund company, bank or any other type of financial institution. An adult is assigned to manage the account until the child reaches the age requirement for to have full access to the account. [click to continue…]
One way to get extra money to keep your business running is through a merchant cash advance. With these deals, you get a lump sum payment in exchange for some of your future credit card sales.
While a merchant cash advance has a few nice benefits as a source of financing, it also has some serious disadvantages that you need to consider. [click to continue…]
When I say the word “Pension” to a 20 some year-old, most of them think I speaking some mythical language.
What the heck is a pension?
While most younger people are familiar with them, there are still some workers that still have them. The keyword is “some” though as pensions are becoming more and more rare being replaced by the 401k.
Recently, I had 2 different readers that both had pensions and had to make an important decision on what to do with them. In one case, her company was taking away her pension and, in the other; they were retiring and were exploring their retirement pension rollover options.
Just over a year ago, I had $3,000 in credit card debt… and I was not happy about it.
At the time, I had just made a career switch and had landed my dream job as a writer and blogger for ReadyForZero.
But I had spent a few months between jobs while I worked to jump start my new career and during that time I dipped into my savings and then began putting some of my monthly expenses on the credit card.
At the beginning of last year, I made a commitment to pay off that credit card by December, and to my great satisfaction, I was able to do it successfully. When I had finally made the last payment, I felt a tremendous relief and a conviction to avoid any debt in the future.
That’s why I was so excited when Jeff started the Debt Movement to help people pay off debt in 2013.
I knew that getting people together and sharing tips and experiences would help motivate many of them to stick with their plans and get to debt free ASAP. And that’s exactly what’s happened. So with the end of April approaching, I thought I’d talk about 4 secrets that I’ve learned for paying off debt faster [click to continue…]
But sometimes there just isn’t a good way to put into words how well a new financial tool works.
Being able to show Good Financial Cents readers exactly how to sign up for an account with Personal Capital, look at what the tool looks like, and giving an overall walkthrough would require a video.
“But Jeff, I’ve never done a video!”, I explained… mostly calm.
“You can figure it out. Just give it a try. I think this is really important for readers to see.”, he retorted.
It’s important to carefully consider your options, and then make a choice that will benefit you in the long run.
This is especially true if you end up with a big tax refund.
What are Your Options with a Tax Refund?
It’s true that many people see a tax refund as a windfall (even though, for some, it’s just getting their own money back after lending to the government interest-free). Since it’s viewed as windfall money, many consumers decide to spend it. A tax refund can pay for a vacation, a new TV set, or any number of other things. [click to continue…]
If you have any inkling of wanting to become an entrepreneur, then you should be doing one simple thing.
What’s the simple thing? Reading.
Reading is said to be the spark behind creative thinking, and is one of the most predominate traits of individuals said to pertain a level of “higher intelligence”.
Is the thought of gaining intelligence through reading actually viable? I believe that it is not intelligence that is gained through reading; rather it’s the exposure to other people’s thoughts and perception of events and processes that lead to you being better rounded thinker.
Reading other people’s thoughts and ideas are the key ingredients to being successful in life (beyond being very naturally intelligent). [click to continue…]
The next credit card statement arrives in your mailbox and you get sick knowing what’s inside. You begin to ask yourself when you let it all slip away.
You used to have control of your finances, but something bad happened.
Something terribly wrong.
All those innocent purchases and false reassurances that “you’ll eventually get ahead” were all just a lie.
You have over $100,000 of consumer debt and it’s only getting worse.
Travis Pizel found himself in this exact situation almost 5 years ago. Through reckless spending and always hoping that the next paycheck would allow him to get caught up, he found himself with $109,000 of consumer debt.
He could have waived the white flag and gave up. He didn’t
By working with CareOne Services, Inc, he has been able to payoff $84,000 of debt in just under 4 years.
When I tell people that I used to smoke, they are completely shocked. Being a health nut and Crossfitter, that’s the last thing that people would expect that I would do.
To my defense, it was during a stressful time in my life. While I was deployed to Iraq I smoked a cigarette at least every day. It even got to the point to where I was buying cartons of cigarettes.
My wife wasn’t keen on the idea, but I promised her when I returned I would quit for good. Since I got back home in 2006, I’ve smoked (I think) 3 cigarettes total.
How’s that for going cold turkey?
If you smoke, it’s going to hurt your life insurance rates. Since this habit carries so many health risks, smokers generally need to pay more for their coverage and also could have a more complicated application process.
If you handle your application properly though, you can minimize the extra costs you’ll need to pay. Here is a complete guide to life insurance for smokers to help you get prepared. [click to continue…]
This post is provided by Andrea Woroch from AndreaWoroch.com.
There’s nothing more frustrating than saving every dollar possible and still coming up short on your monthly expenses or barely making a dent when paying down debt.
Despite our best efforts to live frugally, clipping coupons and brown-bagging lunch doesn’t always cut it. Sometimes the only solution is to add more income to the mix and with the recent two-percent payroll tax increase, it may not seem realistic.
Luckily, there are several easy ways to beef up your cash flow without distracting from your regular 9 to 5. Review these 10 suggestions on how to make some extra money on the side. [click to continue…]
When you find yourself under a mountain of debt, there’s nothing more appealing than paying your credit cards off as fast as you can.
One of the most commonly used methods for paying off credit cards fast is The Debt Snowball, made popular by Dave Ramsey. The snowball gives you tangible results and helps motivate you to pay off your debts, but it is somewhat controversial in nature because it doesn’t have participants pay off their highest interest debts first.
Are Roth IRA contributions tax deductible?
