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  • #46










    I would open a taxable account at Vanguard.
    Click to expand…


    I second that emotion.

    First, make sure you’ve gotten all the tax-advantaged investments available to you. HSA if it makes sense for your family. Backdoor Roth. Then start buying a simple total stock market index fund. Create a simple IPS to guide further investments.

    Strong work, by the way. Meeting the challenge to Live on Half!
    Click to expand…


    I havent done the Backdoor Roth. Have read a little about it. So, if I have a current Roth IRA, would that be the first thing you would do then?
    Click to expand...


     

    1. Have $0 in all non-Roth IRAs, (traditional IRAs, SEP-IRAs, and SIMPLE-IRAs)

    2. Start a traditional IRA

    3. Contribute $5,500 to the traditional IRA (don't claim it as a tax deduction) and keep it in brokerage cash or a minimal-interest money market acct

    4. Convert that $5,500 into your Roth IRA a few days later

    5. File Form 8606 at tax time (tax due should be zero)


    Your currently existing Roth IRA is not affected by the "backdoor" contribution...well, I guess, other than it still gaining $5,500 each year.

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    • #47










      I would open a taxable account at Vanguard.
      Click to expand…


      I second that emotion.

      First, make sure you’ve gotten all the tax-advantaged investments available to you. HSA if it makes sense for your family. Backdoor Roth. Then start buying a simple total stock market index fund. Create a simple IPS to guide further investments.

      Strong work, by the way. Meeting the challenge to Live on Half!
      Click to expand…


      I havent done the Backdoor Roth. Have read a little about it. So, if I have a current Roth IRA, would that be the first thing you would do then?
      Click to expand...


      Yes. Do that before starting a taxable account. Make sure you have no traditional, tax-deferred IRA money in your name first. Otherwise, the pro-rata rule will wreak havoc on your plans. More from WCI here.

      Comment


      • #48
        Correct me if I am wrong, but the Backdoor Roth IRA won't provide me with any current tax benefits for 2016's taxes, right? Now that I have a higher salary since being an attending (since August 2016), should I be looking for options to decrease my tax return? I am married, wife is not working at the time, rent and have an ORP through my employer.

        Comment


        • #49




          Correct me if I am wrong, but the Backdoor Roth IRA won’t provide me with any current tax benefits for 2016’s taxes, right? Now that I have a higher salary since being an attending (since August 2016), should I be looking for options to decrease my tax return? I am married, wife is not working at the time, rent and have an ORP through my employer.
          Click to expand...


          Your Roth IRA won't help your taxes until it is time to start making withdrawals.  Maxing your ORP or any pretax investment vehicle is the easiest way to avoid paying taxes this year.  I think many people look around for magic fixes for deductions and the reality is that there aren't many if you don't have big changes going on in life.  Anytime you relocate, buy a house, or have some other major expense/life change it is worth looking for a deduction.  If you have a poorly performing stock or fund that could be sold for a loss, you could get a little more out of it.

          If your question really was "How do I decrease my tax return?", then I'd say you are paying in too much taxes and need to adjust withholding.  Otherwise I don't know why you'd want to decrease your tax return through any other method.

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