does putting money in your 401k, roth ira and a 529 plan lower your tax braket?
ferl k asked:
Just say u made 155,000 a year and a certain % went into 401k like 15,000 and then another 1200 in 529.lowering u to another tax braket?
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Just say u made 155,000 a year and a certain % went into 401k like 15,000 and then another 1200 in 529.lowering u to another tax braket?
May 31st, 2009 at 9:03 am
Not with that income. Bracket for a single filer are: 0-7825
7825-31850
31850-77100
77100-160850
160850-349700
349700-no limit
The person’s tax liablity would go down though because their agi would be less. (Roth IRA does not change agi, but traditional IRA, 401k, and 529 plans do)
May 31st, 2009 at 9:50 pm
You should talk to your CPA, you have a very healthy income and there are some things that you can do to reduce your IRS obligation. Health plan, certain educational plans for children. With a few guide lines you can even give some of it away and and reduce your income, and not just to the heart fund. You can make a gift to one of your children and reduce your taxes that. I am not you, but if I had the income of $150K and wanted to enjoy most of it I would buy a second home. It has all of the tax advantage as a first home but remember that it increases in value, I would opt for an old farm as I love to hunt and like being in the country. We can try to give you answers in here but the truth is that with you CPA he can see everything that is going on and can give you advise that we can not, if anyone tells you otherwise they are not being fair to you.
June 2nd, 2009 at 10:58 am
401K, yes. The money will already be excluded from the amount on your W-2, box 1.
Roth IRA, no (your income may be too high to put any in anyway).
529, no. (The 529 is a GIFT to your child, gifts are never deductable.)