sonja
New Poster
Cash: $ 0.45
Posts: 2
Joined: 21 Mar 2018
Location: st petersburg
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| IRA choice assistance |
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I am 69 female married to younger man. We keep our finances separate. we file jointly. in 2016 i sold some timer off 10 acres. I got a 1000 deposit that year. it was counted as income on taxes. In 2017 I got the rest, 7000. I have to pay almost 1500 tax on this. Was an inheritance from my father about 30 years ago. If i put in an IRA...if I can...when can I withdraw all of it without paying taxes? Want to eventually buy a 5th wheel to live in. Is this a reasonable course for me to take to avoid these taxes? I receive about 1050 soc sec a month so money is tight. My husband works but i cannot relay on that. thank you much. Confused
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Tue Mar 27, 2018 3:11 pm |
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EveryDayMoney-Blog
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Cash: $ 0.40
Posts: 2
Joined: 29 Mar 2018
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Hi Sonja - Because you have already paid income taxes on these funds, you will not have to pay them again under any circumstances. There is no double taxation.
Because of your age, you are only eligible to contribute to a Roth IRA. Contributions to Roth IRAs are made with after tax money, which is exactly what your funds are.
Any withdrawal from the Roth account will be completely tax free after you leave the funds in the account for 5 years. If you withdrawal the funds before 5 years, then any earnings or gains on your investments will be taxed...but you're original contributions will not be.
If you plan on using the funds within 5 years, then there is no point in contributing to a Roth. It will give you no tax advantage. You might as well just invest the funds using a regular brokerage account. If you plan on using the funds in more than 5 years then by all means open a Roth.
Hope this helps!
-Everyday Money Blog
https://everyday-money.webnode.com
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Thu Mar 29, 2018 3:42 am |
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sonja
New Poster
Cash: $ 0.45
Posts: 2
Joined: 21 Mar 2018
Location: st petersburg
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Thank you so much. I only paid tax on the $ 1,000 deposit in 2016 on stumpage. I received the remaining payout of $ 7, 000 in 2017 when they actually cut the timber.. Tax preparer is saying i need to pay $1500 tax on the $7,000 that i received in 2017. I tried to examine the timber laws regarding reforestation: and other tax defferment but don't think I qualify. I still work as a independent contractor making only about 100 a week, even though retired. So, in essence i have not yet paid taxes on the $ 7,000...only thee $ 1000 deposit.
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Thu Mar 29, 2018 2:24 pm |
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GardenCat
Full Member
Cash: $ 12.80
Posts: 63
Joined: 07 Dec 2014
Location: Colorado
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You probably need a good tax accountant, not "just" a preparer. A good person to try and find is a CPA that knows tax law and does taxes and also understands business law.
You tax debt will depend on your total income, less deductions (medical, etc.). Social Security income only comes into play as taxable after you reach a certain income threshold.
You can only invest funds into a ROTH IRA that are part of your Earned Income, not passive income . If you can't use a ROTH, a regular IRA will be useful as the deposited amount can be deducted from your income...
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Thu Mar 29, 2018 9:42 pm |
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