The U.S. House passed a $69 billion tax cut for investors and 16 million households facing the alternative minimum tax, sending the measure to the Senate for action as early as tomorrow.
(And it's supposed to pass in the senate, too.)
Whine, whine whine:
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``If you want the AMT the way they are offering it, you have to swallow with that a tax cut bill that costs over $40 billion and this only would help a fraction of 1 percent of the wealthiest Americans in the world,'' said New York Representative Charles Rangel, the top Democrat on the Ways and Means Committee.
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The legislation also ensures the first $62,550 of a household's income will be exempted from the alternative minimum tax, a step necessary to prevent a $31 billion tax increase on 16 million families this year.
I wonder what this means. Is this an increase to $62,550 from $40,000?
Also, in the past there has been some phase out of this exemption. I wonder it that has changed?
I almost always run into AMT because of large capital gains. I guess that's a "good" problem to have, but it sure can be annoying to be stuck paying 26% on my income and non-qualified dividends and have all my charitable and other deductions go right out the window......
How is this good news. We are just piling up the debt to ever greater heights for Cool Dood and my kids to pay off. We are going to have to deal with this at some point and THAT will probably precipitate a decade long contraction that will cause some sleepless nights for your average retiree.
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The AMT exemption was raised for one year to $62,550 from $58,000 for married filing joint. If single, it went from $40,250 to $40,500.
If this temporary "fix" wasn't made, the AMT exemption was going to fall back to $45,000 for joint filers and $33,750 for single filers.
The tax bill also allows higher income people make ROTH conversions. Before there was a $100,000 income limit. The hope is to raise a bunch of money when those high tax rate people pay taxes on their IRA money to convert to a ROTH. Bird in the hand.
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Do not rely on the information provided--my posts are not to be taken as legal advice. Needless to say you must consult with your legal representative. I am not responsible for errors. If I offended you with cya I apologize. If I did not, I tried.
Could you please explain further on the Roth conversions and the income limitation?
Is it for combine income or single income? How much TAX would I pay out if I convert to ROTH?
Kindest regards,
VD
Quote:
Originally Posted by Martha
The AMT exemption was raised for one year to $62,550 from $58,000 for married filing joint. If single, it went from $40,250 to $40,500.
If this temporary "fix" wasn't made, the AMT exemption was going to fall back to $45,000 for joint filers and $33,750 for single filers.
The tax bill also allows higher income people make ROTH conversions. Before there was a $100,000 income limit. The hope is to raise a bunch of money when those high tax rate people pay taxes on their IRA money to convert to a ROTH. Bird in the hand.
Could you please explain further on the Roth conversions and the income limitation?
Is it for combine income or single income? How much TAX would I pay out if I convert to ROTH?
Kindest regards,
VD
Currently, a single or joint filers with AGI up to $100,000 can convert a traditional IRA to a Roth.* The legislation extending the capital gains rates needed a revenue raiser.* So, the legislation eliminates the income limits for IRA conversions.* What I am not clear on, and probably will check, is the timing.* I read one place that the removal of the income limits doesn't go into effect until 2010.*
The upside for high income taxpayers who are not eligible for a Roth IRA is that they could open a traditional, non-deductible IRA, which has no income limits, and then convert the IRA to a ROTH.*
EDIT: It looks like the $100,000 conversion income limit doesn't go away until 2010. So, a lot can happen before then.
__________________ .
Do not rely on the information provided--my posts are not to be taken as legal advice. Needless to say you must consult with your legal representative. I am not responsible for errors. If I offended you with cya I apologize. If I did not, I tried.
Thanks for answering Dallas' post, Martha. I always find your advice full of wisdom and thought. I'll look forward to hearing what else you can find out - I have been wondering if it would pay to convert our IRA's to Roth if the change in rules happen.
Thanks for the kind words SolidA. I updated my post to indicate that the income limits won't disappear until 2010. So, of course, congress could repeal it before that date.
Another part of the tax bill increases the "kiddie tax" age to 18. For children under the age of 14, investment income above certain levels has been taxed at the parents' marginal tax rate. This is a way of limiting the parents' ability to reduce the family's tax bill by shifting the ownership of investment assets to their children. The kiddie tax rules will now apply to children under the age of 18 beginning in 2006. There are exceptions for distributions from qualified disability trusts, and for your children who are married filing jointly.
__________________ .
Do not rely on the information provided--my posts are not to be taken as legal advice. Needless to say you must consult with your legal representative. I am not responsible for errors. If I offended you with cya I apologize. If I did not, I tried.
How is this good news. We are just piling up the debt to ever greater heights for Cool Dood and my kids to pay off. We are going to have to deal with this at some point and THAT will probably precipitate a decade long contraction that will cause some sleepless nights for your average retiree.
I don't think Cool Dude will be covering your debt. Canada is running a surplus. Probably one of the reasons (besides price of gold & oil) that the Canadian dollar is over $.90 now. One of the criticisms leveled at the Liberals in the last election was that they were taxing way more than they spent.
looks like your kids are left holding the bag.
Lots of things are affordable if you don't spend all your money bombing brown people and putting the cost of the bombs and planes on your credit line.....
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How is this good news. We are just piling up the debt to ever greater heights for Cool Dood and my kids to pay off. We are going to have to deal with this at some point and THAT will probably precipitate a decade long contraction that will cause some sleepless nights for your average retiree.
Yeah, my thoughts exactly! - Sigh. - Get the credit card out, go on a binge, everything's wonderful.
How is this good news. We are just piling up the debt to ever greater heights for Cool Dood and my kids to pay off. We are going to have to deal with this at some point and THAT will probably precipitate a decade long contraction that will cause some sleepless nights for your average retiree.
I'd rather have a Congress that has to face a spending cut than a Congress that's trying to decide how to deal with a surplus.
You know what'll happen to either party if they try to raise taxes!
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Does this mean the -0%- in 2008 is going away? I was hoping to dump my rentals and travel for a year.
I saw an article, i think from CNN, which said that 0% would be extended for 2 years also.
But, I'd try to get confirmation from a more primary source before basing decisions on it, or perhaps from a trusted source like Fairmark. For example, WSJ had an early document (i think after senate passed but before house?) which seemed to me to imply that the current lowest rate is 15%, not 5%.
Don't forget that the 0% only applies up til you hit the top of the 15% bracket. Several people on this board had me convinced otherwise for a few hours some months ago, but unfortunatly (or maybe fortunately) the tax break's not that good.
Currently, a single or joint filers with AGI up to $100,000 can convert a traditional IRA to a Roth.* ....
The upside for high income taxpayers who are not eligible for a Roth IRA is that they could open a traditional, non-deductible IRA, which has no income limits, and then convert the IRA to a ROTH.*
Martha, does this mean that irregardless of AGI right now, I could do a traditional, non-deductible IRA, and convert (actually combine with an existing ROTH that I currently have). I'm trying to build my current ROTH to a particular asset level, and my current AGI won't let me contribute directly. Is this a way around my current problem of too high an AGI for ROTH contributions?
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Exactly!!! Excellent article!!! I wish there would be more like them on CNN. Ya right!! :
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Lieutenant Dan got me invested in some kind of fruit company. So then I got a call from him, saying we don't have to worry about money no more. And I said, that's good! One less thing.* * * * ** Forrest Gump
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