Just thought I'd drop a tax tip that might be useful to some of you. Traditional IRA's are not common, as young people tend to favor the ROTH, but you may know someone who actually has traditional IRA's - perhaps your parents. Although the stock market has been hurtful to retirement accounts, it's presented a great opportunity for those who have traditional IRA's and are in one of the lower tax brackets. I would recommend doing a conversion to a ROTH IRA during this year, and paying the taxes on the entire balance of your trad IRA for doing so. It's called a ROTH conversion. What's great is that you're paying lower taxes than you normally would, because retirement accounts have dropped in value so much during this year. It especially works great if you don't have much income (such as your near-retirement parents). Also, your earnings and ALL qualified withdrawals in the future will be tax free (unlike the traditional).
Also - if you're thinking about buying a home this year, take advantage of the first time homebuyer credit, which will give you $8,000 of free money.
Happy tax season!
By Young Hwang
1 comment:
wow.. Young, you sound so smart! honestly, your roth conversion thingy is beyond my comprehension... can you be my personal accountant? :)
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