Saturday, January 17, 2004
How to Pocket a Free $1,000. (For Servicemen and Families Only)
Psst. Hey, soldier. Yeah, you. C’mere.
Stand at ease.
Got deployed to Iraq or Afghanistan in February, March, or April? Or are you expecting to be deployed this coming spring?
Ok. How’d you like to make an easy $1,000 bucks?
Here’s how you do it.
Call up your favorite mutual fund company. Personally, I like Vanguard, which is where I stash my investment money. I started with Vanguard Total Stock Market, but there are other ways to skin that cat, too. For beginners, the important thing is to get started.
Sign up for a Roth IRA. Contribute every penny you can. You have until April 15th to contribute for tax year 2003, or you can contribute for 2004, or do both. It makes great sense financially.
Your future will be more secure.
Your spouse will feel more secure.
Your spouse will therefore want to have more sex.
With you.
And so will a lot of other people.
Trust me. It’s a good idea.
The Roth IRA, I mean. I can’t vouch for the sex.
So where does the free thousand bucks come in?
Most income earned in a combat zone is free of federal income tax. Which means it doesn’t count toward your adjusted gross income (AGI), according to Barbara Pietrowski, a CPA in Kensington, Maryland, and mother of a Fort Campbell soldier now deployed in Mosul.
If you leave for a combat zone early in the year, then, and stay until the end of the year, you only have a few weeks or months of taxable income from the military or from your civilian job, as a reservist.
So if you're a working stiff like me, and you made less than $25,000 in taxable income last year (or if you and your spouse file jointly and your combined taxable incomes are less than $50,000), then you may qualify for the low-income IRA tax credit, according to Pietrowski.
You can find the eligibility table here.
If you're a head of household, you can find your income limits here.
Depending on your income level, you may be eligible for a tax credit (not a deduction, a credit) of up to 50 cents on every dollar you contribute up to $2,000. So if you made less than $15,000 (or $30,000 for married couples filing jointly) in taxable income last year, you may qualify for the max.
You may not get a refund--but the credit will reduce your taxes by up to a thousand bucks.
For doing nothing more than something you ought to be doing anyway.
It's not something you're going to read in Money Magazine. Money's only published one chintzy little letter on the combat zone exclusion, and they punted. (C'mon--is a link to the generic IRS home page really the best you can do, people?)
But don't take it from me. I'm just a dumb grunt with a laptop and a rifle. Take it from Barbara Pietrowski: "The ROTH IRA is the greatest gift ever given to the taxpayer that I have seen in 17 years of practice as a CPA and 30 in financial services," she says. "How fabulous!"
What a deal, huh?
Get your Roth started. Open one for both of you if you're married and otherwise qualify.
Now, don't be a "blue falcon."
Share this link with your buddies.
Splash, out
Jason
Stand at ease.
Got deployed to Iraq or Afghanistan in February, March, or April? Or are you expecting to be deployed this coming spring?
Ok. How’d you like to make an easy $1,000 bucks?
Here’s how you do it.
Call up your favorite mutual fund company. Personally, I like Vanguard, which is where I stash my investment money. I started with Vanguard Total Stock Market, but there are other ways to skin that cat, too. For beginners, the important thing is to get started.
Sign up for a Roth IRA. Contribute every penny you can. You have until April 15th to contribute for tax year 2003, or you can contribute for 2004, or do both. It makes great sense financially.
Your future will be more secure.
Your spouse will feel more secure.
Your spouse will therefore want to have more sex.
With you.
And so will a lot of other people.
Trust me. It’s a good idea.
The Roth IRA, I mean. I can’t vouch for the sex.
So where does the free thousand bucks come in?
Most income earned in a combat zone is free of federal income tax. Which means it doesn’t count toward your adjusted gross income (AGI), according to Barbara Pietrowski, a CPA in Kensington, Maryland, and mother of a Fort Campbell soldier now deployed in Mosul.
If you leave for a combat zone early in the year, then, and stay until the end of the year, you only have a few weeks or months of taxable income from the military or from your civilian job, as a reservist.
So if you're a working stiff like me, and you made less than $25,000 in taxable income last year (or if you and your spouse file jointly and your combined taxable incomes are less than $50,000), then you may qualify for the low-income IRA tax credit, according to Pietrowski.
You can find the eligibility table here.
If you're a head of household, you can find your income limits here.
Depending on your income level, you may be eligible for a tax credit (not a deduction, a credit) of up to 50 cents on every dollar you contribute up to $2,000. So if you made less than $15,000 (or $30,000 for married couples filing jointly) in taxable income last year, you may qualify for the max.
You may not get a refund--but the credit will reduce your taxes by up to a thousand bucks.
For doing nothing more than something you ought to be doing anyway.
It's not something you're going to read in Money Magazine. Money's only published one chintzy little letter on the combat zone exclusion, and they punted. (C'mon--is a link to the generic IRS home page really the best you can do, people?)
But don't take it from me. I'm just a dumb grunt with a laptop and a rifle. Take it from Barbara Pietrowski: "The ROTH IRA is the greatest gift ever given to the taxpayer that I have seen in 17 years of practice as a CPA and 30 in financial services," she says. "How fabulous!"
What a deal, huh?
Get your Roth started. Open one for both of you if you're married and otherwise qualify.
Now, don't be a "blue falcon."
Share this link with your buddies.
Splash, out
Jason
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