Dark One
The Tainted Dogma
Sure, I hear you there - but if you make that $500 and keep adding to that CD over time, the interest would continue to pile on itself. It's really as simple as going to the bank and opening a checking account.
Income Tax Returns
- Thread starter Krilons Resa
- Start date
Sure, I hear you there - but if you make that $500 and keep adding to that CD over time, the interest would continue to pile on itself. It's really as simple as going to the bank and opening a checking account.
skyrefuge
Member
There are two separate issues here.
#1: Yes, the actual amount that you could earn by temporarily keeping your money out of the hands of the government is quite small (especially since they won't let you keep THAT much out of their grubby hands anyway). But it's a matter of principle. I don't know anyone who likes the idea of giving the government anything more than they have to. But then they're all "OOH IM GETTING TEH BIG REFUNDZ!!!" like they won the lottery or something. No you dumbass, you just got screwed (rather gently, but you still got screwed). So it's really just about being aware that getting a refund is technically a bad thing for you financially, not a good thing.
#2: Compounding of interest is an amazing thing. Regardless of where you find the money to save, even a small amount will become huge given enough time. When I was a tyke, my mom had the foresight to put all the money I got for my baptism, communion, birthdays, etc. into CDs and stuff, and kept rolling them over for years, earning interest on the interest. When I graduated college at 21, I used that money to buy a brand new Mazda Miata, for $22,000. Cash.
heh...going to the bank? The only time I've gone to a bank in the last 5 years is to replace a lost ATM card! It's even a lot easier than that: http://home.ingdirect.com/products/products.asp?s=OrangeCD for one example. You might be able to find better rates somewhere else, but rates are just really bad right now overall, so I'd put my money in stocks instead. But even a low-rate CD is infinitely better than doing nothing.
Neil
wildfyr
unus spiritus est
Jim: You don't have dual (US/FIN) citizenship do you?
If you're still under the US Social Security system, the years 2005, 2006, and 2007 will have 0 [zeros) next to them. Any previous years without income will be zero as well. This decreases your credits, which will mean less cashola for you if/when you come back and work and retire at 65. You could retire at 62 also but that means less cashola as well. You can also work up until 70 I think it is and try to make more towards the credits.
But it may not matter anyway. According to my latest SS statement the well might run dry by 2041 if things don't change.
And so it goes...
If you're still under the US Social Security system, the years 2005, 2006, and 2007 will have 0 [zeros) next to them. Any previous years without income will be zero as well. This decreases your credits, which will mean less cashola for you if/when you come back and work and retire at 65. You could retire at 62 also but that means less cashola as well. You can also work up until 70 I think it is and try to make more towards the credits.
But it may not matter anyway. According to my latest SS statement the well might run dry by 2041 if things don't change.
And so it goes...
skyrefuge
Member
The APY (Annual Percentage Yield) is the number you want to look at. If the APY is 5.00%, then yeah, you'd have $5,250 at the end of the year. But then if that CD isn't in an IRA or 401(k), you're taxed on that $250 interest, so you only get to keep $212.50 (assuming 15% tax).
Say you make $50,000/year, and start to save 10% of that. If you keep that 10% under your mattress as you're saving it, then use it to get a $5,000, 5% APY CD at the end of year 1, your total savings at the end of year 2 will be $10,212.50 ($10,000 saved + $250 interest - $37.50 tax)
On the other hand, let's look at a 401(k). In that case, 10% gets deducted from your (monthly) paycheck and immediately invested in a fund earning the same 5% APY. Your employer matches 50% of your contribution, up to 6% of your income. So in a year, your total contribution is $6500 ($5000 from you, $1500 from your employer). At the end of year 2, $13,000 has been put in the account, and it's earned $669 in interest (which is not taxed) for a total of $13,669.
But wait, there's more! The $10,000 you contribute to your 401(k) reduces your taxable income by the same amount, so you pay less income tax. Again assuming 15% tax, that's another $1500 saved. We'll even assume that you just keep that extra money under your mattress, and still your total saved by the end of year 2 is $15,169 ($13,699 + $1500).
$15,169 vs. $10,212.50. Damn.
That's almost $2,500/year in free money that you'd be throwing away by not investing in a 401(k). And that differential only grows bigger as the years go on.
Ok, class dismissed!
Neil
Reign in Acai
Of Elephant and Man
Papa Josh
Minister of Propaganda
Reign in Acai
Of Elephant and Man
Anybody file their taxes yet? I regret not having 6 kids right about now. I've donated thousands to nignation this year, and I'm readily expecting to throw a couple hundred bucks more to the pot come April 15th. This would all be fine and dandy if my suspension wasn't battered by a battalion of potholes, I didn't have to see the sight of mud men, and I didn't have to hear "press 2 for Espanol", every time my cable goes out.
Exactly.
I just did mine on the H&R Block website. Federal was free and State was $29.95.
Getting back $1700.
Wait. I got $1700 back then. Fuck this shit.
rms
Active Member
Tranquillian
Svartmetallist
How much tax do you pay per dollar?
In Sweden we pay something like 30 cents out of every dollar equivalent in income tax.
In Sweden we pay something like 30 cents out of every dollar equivalent in income tax.
Disgustipated
Cynical.
Sweden has one of the most intensely high income tax rates in the world huh. Here we pay from 10 - 25 %ish depending on which tax bracket you belong to, which depends on how much you earn.
MFJ
Active Member
Reign in Acai
Of Elephant and Man
EricT
Don't you ever get...
I just filed, I get a whopping 315 back, most of that from the "making work pay" credit.
I need to make a few shitty kids so I can start getting those writeoffs.
On the state side, I get back about 10 bucks. I requested it in check form.
I need to make a few shitty kids so I can start getting those writeoffs.
On the state side, I get back about 10 bucks. I requested it in check form.
yeah, kids help A LOT. plus my wife is not working either (finishing school)
I run my own biz ... all equates to basically not paying much taxes.
getting any back ... forget that.
Hell Mike
fuck melodic black metal
and MOMS and BENSINSKATT and ENERGISKATT and a million other taxes too to make sure that no matter how much you work you won't have any more money than your neighbour, just the possibility of more loans.
We also have free medical care and dental care until the age of 20 and heavily subventioned (if that's a word) after that as well as free schools including universities and good roads (well, many of them at least) as well as a bunch of other good stuff.
Disgustipated
Cynical.
Ya man I know. Infrastructure and social services in Sweden are tip top. If not sometimes over the top. I knew of someone who became sjukskriven by their psykolog for a social disorder (when really said person was just too lazy to get a job), and was provided with a lägenhet free of charge. But, I suppose we do have commission housing here which is given out under similar circumstances. Roads in Sweden are alot better maintained than those here. Our roads are sun damaged, cracked, pot-holed messes.
Hell Mike
fuck melodic black metal
I think that is a social disorder here. Not in the sense that it's very uncommon or something like that, but in the sense that you can make a good living off it.
dorian gray
Returning videotapes
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