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THE CASE OF “BILL AND COO” Newlyweds Bill and Coo filed their first joint income tax return in 2007. Between them they earned $30,000 for the year and lived in an apartment. They had no special deductions, only the standard deduction, and their 2 personal exemptions. While doing their return they asked for the best way for them to save to buy a house as they would like to start a family right away. Well, they sure asked the right question. Neither are covered by a pension plan at work so I suggested an IRA contribution in the amount of $1,200 each ($2400 total) because there were new tax incentives in effect now that would give them more money back on their tax returns. Refunds from that $2,400 investment would be $1,600 or 67% of the total amount they would put in. In other words, they would get a saving s account of $2,400 for an investment of only $800 of their cash. What’s more they could get the refunds in February and not have to put the money in until April 15. Well, when their parents saw these numbers they decided to each pony up $400 to cover their out of pocket. What a way to kick the kids off. And, if you missed the boat by filing without this “advantage” you have until April 15th to amend your returns for refunds and make this investment. Isn’t Uncle Sam a wonderful partner? |
Tracie Peck @ Jade' Salon |
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