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Re: Why do you get taxed on savings? [Re: AU7MM08] #2768769
03/23/19 07:25 AM
03/23/19 07:25 AM
Joined: Mar 2012
Posts: 2,453
Mississippi
R
riflenut Offline
10 point
riflenut  Offline
10 point
R
Joined: Mar 2012
Posts: 2,453
Mississippi
Originally Posted by 2Dogs
Can you have both a 401k and a Roth?

Originally Posted by AU7MM08
Yes, you can but there is an income limit. So, if you're over the below, you're not eligible for both.

"For 2019, the numbers are higher. The modified adjusted gross income for singles must be under $137,000; contributions are reduced starting at $122,000.
For married filing jointly, the MAGI is less than $203,000, with phaseout starting at $193,000."


AU7MM08, as usual your financial advice is only part true. I assume that's because you have a wealth of book knowledge but very little real world experience.

High earning folks can absolutely contribute to both a 401k and a Roth. They need to directly contribute to a nondeductible traditional IRA then convert or "back door" into a Roth. IRS form 8606 needs to be filled out or uncle Sam will come screaming for his cut. Doing the conversion AND proper tax reporting eliminates the income limits.


"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." Thomas Jefferson

"I ask, who are the militia? They consist of now of the whole people, except a few public officers." George Mason
Re: Why do you get taxed on savings? [Re: riflenut] #2768796
03/23/19 08:06 AM
03/23/19 08:06 AM
Joined: Jun 2015
Posts: 13,978
Some Marriott/Auburn
A
AU7MM08 Offline
Booner
AU7MM08  Offline
Booner
A
Joined: Jun 2015
Posts: 13,978
Some Marriott/Auburn
Originally Posted by riflenut
Originally Posted by 2Dogs
Can you have both a 401k and a Roth?

Originally Posted by AU7MM08
Yes, you can but there is an income limit. So, if you're over the below, you're not eligible for both.

"For 2019, the numbers are higher. The modified adjusted gross income for singles must be under $137,000; contributions are reduced starting at $122,000.
For married filing jointly, the MAGI is less than $203,000, with phaseout starting at $193,000."


AU7MM08, as usual your financial advice is only part true. I assume that's because you have a wealth of book knowledge but very little real world experience.

High earning folks can absolutely contribute to both a 401k and a Roth. They need to directly contribute to a nondeductible traditional IRA then convert or "back door" into a Roth. IRS form 8606 needs to be filled out or uncle Sam will come screaming for his cut. Doing the conversion AND proper tax reporting eliminates the income limits.


In simple English, yes there is an income limit for Roth IRAs.
If someone wants to go down the financial rabbit hole, no there isn't an income limit through a somewhat lesser known conversion process.

I would be curious to know the number of Alabama households that are going with a Backdoor Roth each year, as a percentage it would be well into the single digits would be my guess.

Re: Why do you get taxed on savings? [Re: SouthBamaSlayer] #2768817
03/23/19 08:38 AM
03/23/19 08:38 AM
Joined: Oct 2009
Posts: 5,641
Henry county
coldtrail Offline
12 point
coldtrail  Offline
12 point
Joined: Oct 2009
Posts: 5,641
Henry county
Originally Posted by SouthBamaSlayer
Roth IRA withdrawings are tax free.



Not tax free on state


"And the days that I keep my gratitude
Higher than my expectations
Well, I have really good days" Ray Wylie Hubbard
Re: Why do you get taxed on savings? [Re: Skinny] #2768822
03/23/19 08:42 AM
03/23/19 08:42 AM
Joined: Aug 2001
Posts: 63,355
Luverne, AL
Skinny Offline OP
GUVNER
Skinny  Offline OP
GUVNER
Joined: Aug 2001
Posts: 63,355
Luverne, AL
ROTH or even Traditional or even backdoor Roth there are still damn gubburment limits on after tax savings. That is the damn problem. I can save and invest only up to the prescribed limit before I get taxed again. That is the damn problem.
We should only be paying tax on earnings once. This is the thing that needs to be fixed. If folks want to see good growth, let the middle class save as much as possible without any kind of tax penalty.


Never Trust Government

"You can be broke but you cant be poor." Ruthie-May Webster
Re: Why do you get taxed on savings? [Re: Skinny] #2768828
03/23/19 08:49 AM
03/23/19 08:49 AM
Joined: Sep 2014
Posts: 3,126
KY
AUstan23 Offline
10 point
AUstan23  Offline
10 point
Joined: Sep 2014
Posts: 3,126
KY
Originally Posted by Skinny
ROTH or even Traditional or even backdoor Roth there are still damn gubburment limits on after tax savings. That is the damn problem. I can save and invest only up to the prescribed limit before I get taxed again. That is the damn problem.
We should only be paying tax on earnings once. This is the thing that needs to be fixed. If folks want to see good growth, let the middle class save as much as possible without any kind of tax penalty.


That is not the goal though. The goal is to keep as little out of your pocket as possible. A slow march of taxes plus inflation that results in the pooling of wealth and a serf class.


It is easier to fool a man than to convince him he has been fooled.
Re: Why do you get taxed on savings? [Re: AU7MM08] #2768833
03/23/19 09:01 AM
03/23/19 09:01 AM
Joined: Mar 2012
Posts: 2,453
Mississippi
R
riflenut Offline
10 point
riflenut  Offline
10 point
R
Joined: Mar 2012
Posts: 2,453
Mississippi
Originally Posted by AU7MM08
Originally Posted by riflenut
[quote=2Dogs]Can you have both a 401k and a Roth?

Originally Posted by AU7MM08
you're not eligible for both.


In simple English, yes there is an income limit for Roth IRAs.

no there isn't an income limit through a somewhat lesser known conversion process.


The correct answer is yes, you can contribute to both regardless of income if you simply follow IRS guidelines.


"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." Thomas Jefferson

"I ask, who are the militia? They consist of now of the whole people, except a few public officers." George Mason
Re: Why do you get taxed on savings? [Re: Skinny] #2768837
03/23/19 09:06 AM
03/23/19 09:06 AM
Joined: Mar 2012
Posts: 2,453
Mississippi
R
riflenut Offline
10 point
riflenut  Offline
10 point
R
Joined: Mar 2012
Posts: 2,453
Mississippi
Originally Posted by Skinny
ROTH or even Traditional or even backdoor Roth there are still damn gubburment limits on after tax savings. That is the damn problem. I can save and invest only up to the prescribed limit before I get taxed again. That is the damn problem.
We should only be paying tax on earnings once. This is the thing that needs to be fixed. If folks want to see good growth, let the middle class save as much as possible without any kind of tax penalty.


Correct. Problem is the politicians who created our progressive tax structure want to punish high earners and savers and most of the non-savers are good with that.


"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." Thomas Jefferson

"I ask, who are the militia? They consist of now of the whole people, except a few public officers." George Mason
Re: Why do you get taxed on savings? [Re: riflenut] #2768842
03/23/19 09:19 AM
03/23/19 09:19 AM
Joined: Aug 2001
Posts: 63,355
Luverne, AL
Skinny Offline OP
GUVNER
Skinny  Offline OP
GUVNER
Joined: Aug 2001
Posts: 63,355
Luverne, AL
Originally Posted by riflenut
Originally Posted by AU7MM08
[quote=riflenut][quote=2Dogs]Can you have both a 401k and a Roth?

Originally Posted by AU7MM08
you're not eligible for both.
if you simply follow IRS guidelines.


Problem identified...


Never Trust Government

"You can be broke but you cant be poor." Ruthie-May Webster
Re: Why do you get taxed on savings? [Re: Skinny] #2768846
03/23/19 09:22 AM
03/23/19 09:22 AM
Joined: Aug 2001
Posts: 63,355
Luverne, AL
Skinny Offline OP
GUVNER
Skinny  Offline OP
GUVNER
Joined: Aug 2001
Posts: 63,355
Luverne, AL
taxing capital gains should also be considered treason.


Never Trust Government

"You can be broke but you cant be poor." Ruthie-May Webster
Re: Why do you get taxed on savings? [Re: Skinny] #2768853
03/23/19 09:30 AM
03/23/19 09:30 AM
Joined: Mar 2012
Posts: 2,453
Mississippi
R
riflenut Offline
10 point
riflenut  Offline
10 point
R
Joined: Mar 2012
Posts: 2,453
Mississippi
Originally Posted by Skinny
taxing capital gains should also be considered treason.



thumbup


"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." Thomas Jefferson

"I ask, who are the militia? They consist of now of the whole people, except a few public officers." George Mason
Re: Why do you get taxed on savings? [Re: Skinny] #2769121
03/23/19 06:28 PM
03/23/19 06:28 PM
Joined: Nov 2012
Posts: 2,546
North Alabama
BamaPlowboy Offline
10 point
BamaPlowboy  Offline
10 point
Joined: Nov 2012
Posts: 2,546
North Alabama
Forget being the governor Skinny you should be President as long as you abolish the personal income tax..

Re: Why do you get taxed on savings? [Re: Skinny] #2769145
03/23/19 07:02 PM
03/23/19 07:02 PM
Joined: Aug 2001
Posts: 63,355
Luverne, AL
Skinny Offline OP
GUVNER
Skinny  Offline OP
GUVNER
Joined: Aug 2001
Posts: 63,355
Luverne, AL
We should not be taxed on anything we earn, that really is like indentured servitude or dare I say slavery. We should only be taxed on what we spend. Therefore, we have the option to make for ourselves or pay at the register. Property taxes are a crime against humanity, why do we have to pay rent to the gubberment just to have a place to live? Yes, we have to pay for sewer, electric, and so forth. Insurance is also a must, but the tax just to have a place to live is evil and a not Christian thing.


Never Trust Government

"You can be broke but you cant be poor." Ruthie-May Webster
Re: Why do you get taxed on savings? [Re: Skinny] #2769147
03/23/19 07:09 PM
03/23/19 07:09 PM
Joined: Nov 2008
Posts: 10,274
Alabama
W
whack-n-stack Offline
Booner
whack-n-stack  Offline
Booner
W
Joined: Nov 2008
Posts: 10,274
Alabama
I think the only fair tax is one based upon consumtion.

Re: Why do you get taxed on savings? [Re: whack-n-stack] #2769163
03/23/19 07:38 PM
03/23/19 07:38 PM
Joined: Nov 2012
Posts: 2,546
North Alabama
BamaPlowboy Offline
10 point
BamaPlowboy  Offline
10 point
Joined: Nov 2012
Posts: 2,546
North Alabama
Originally Posted by whack-n-stack
I think the only fair tax is one based upon consumtion.


Fair Tax! Though that being said I wouldn’t be opposed to a flat tax on corporations.

Re: Why do you get taxed on savings? [Re: Skinny] #2769463
03/24/19 09:02 AM
03/24/19 09:02 AM
Joined: Feb 2015
Posts: 7,168
Meridianville
DryFire Offline
14 point
DryFire  Offline
14 point
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Posts: 7,168
Meridianville
A flat tax of 20% with zero deductions or credits. Both personal and corporate.

Re: Why do you get taxed on savings? [Re: Skinny] #2769515
03/24/19 10:09 AM
03/24/19 10:09 AM
Joined: Feb 2017
Posts: 1,539
FL-AL
Scout308 Offline
8 point
Scout308  Offline
8 point
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Posts: 1,539
FL-AL
12% Flat tax and everyone pays And no deductions.


"America First! Nothing Else Matters"
Re: Why do you get taxed on savings? [Re: DryFire] #2769604
03/24/19 12:26 PM
03/24/19 12:26 PM
Joined: Nov 2011
Posts: 21,751
USA
R
Remington270 Offline
Freak of Nature
Remington270  Offline
Freak of Nature
R
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Posts: 21,751
USA
Originally Posted by TexasNative
A flat tax of 20% with zero deductions or credits. Both personal and corporate.


So if a corporation has $100 in revenue and $80 is expenses, their entire 20% profit margin goes away and they make $0 for the whole year

Re: Why do you get taxed on savings? [Re: Remington270] #2769644
03/24/19 02:14 PM
03/24/19 02:14 PM
Joined: Aug 2001
Posts: 63,355
Luverne, AL
Skinny Offline OP
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Skinny  Offline OP
GUVNER
Joined: Aug 2001
Posts: 63,355
Luverne, AL
Originally Posted by Remington270
Originally Posted by TexasNative
A flat tax of 20% with zero deductions or credits. Both personal and corporate.


So if a corporation has $100 in revenue and $80 is expenses, their entire 20% profit margin goes away and they make $0 for the whole year


And democrats just cant seem to figure out why corporations work so hard at hiding money.


Never Trust Government

"You can be broke but you cant be poor." Ruthie-May Webster
Re: Why do you get taxed on savings? [Re: DryFire] #2769817
03/24/19 06:58 PM
03/24/19 06:58 PM
Joined: Nov 2012
Posts: 2,546
North Alabama
BamaPlowboy Offline
10 point
BamaPlowboy  Offline
10 point
Joined: Nov 2012
Posts: 2,546
North Alabama
Originally Posted by TexasNative
A flat tax of 20% with zero deductions or credits. Both personal and corporate.

Damn 20% is more than I’m paying now, even under Obama..I can see the logic in a flat tax on net but not gross

Last edited by BamaPlowboy; 03/24/19 06:58 PM.
Re: Why do you get taxed on savings? [Re: Skinny] #2770042
03/25/19 03:19 AM
03/25/19 03:19 AM
Joined: Dec 2013
Posts: 22,473
Lickskillet, AL
Irishguy Offline
a.k.a. Dingle Johnson
Irishguy  Offline
a.k.a. Dingle Johnson
Joined: Dec 2013
Posts: 22,473
Lickskillet, AL
The problem with taxes is two fold:

1. Every government agency has to get their cut, so we pay all sorts of taxes at every step along the way:

Income tax
Property tax
Sales Tax
Rental Tax
Use tax
Employment tax
Capital gains tax

You earn money that is taxed before you ever get it, then you pay tax to keep that money in a savings account until you are ready to buy something with it, then then when you buy something with it, you are taxed on the purchase of that item, and the you keep that item and in many cases you are taxed on simply owning it.

2. Once a government agency starts getting a revenue stream off of you it will never stop. It will only increase. And they like to do it in such a way that it is kind of hidden from you like in a payroll deduction. Other commercial businesses have learned from this plan which is why all sorts of business want to get you on a subscription plan for everything, where that money is coming out of your bank account or credit card every month, in hopes that eventually you will quit feeling the pain.

I have long since thought that if we could would abolish payroll deductions and instead make everyone write a big fat check to the government at the end of the year so it was painful as all hell, people would be marching on Washington to make damn sure where every last penny of that money was spent, but the way it is now people just accept it for what it is and have given up any semblance of hope that their tax dollars are going to be spent wisely.

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