mutual fund

[disneysteve]

Does your DH have earned income? If so, you should be able to contribute to an IRA based on his income.

Thank you for that. I should have known better. I have funded a Roth for my wife for 12 or more years when she wasn't working. We still do that today as she doesn't currently work.

[mommycakes66]

Yes thank you for sharing that info. He does have earned income and we file taxes jointly. This could actually be a big breakthrough for our situation.

[mommycakes66]

Reading over that info it looks like I can either open or contribute to my own IRA $5,500.00 and also one that would be in his name?
And that this can then be used as a tax deduction?
Is this correct?

Taxes have been a major stress for us. We actually got a tax break when I was not working and he would get back about $6,000- $7,000 and he looked at this as his money. He stashed it all over the place and offered me nothing which is why I'm so secret now with him about what I have and what I do with it. I need to explain that within 3-6 months he would spend all of it. It would be gone.

So the year I was awarded my disability he hassled me that entire year about what it would do to our taxes so I volunteered to pay anything we owed. We filed jointly and when she came up with the amount I burst into tears because it was $7,000.00. A huge chunk for me. I thought quick and decided to just make payments. My husband viewed this as "my tax" all me getting benefits did in his eyes was take away his tax refund. For me and the kids however it's been food and clothing that would have not been afforded to us in the same generous way. Even with that as I described before I bargain hunt by second hand etc etc. raising four kids is just expensive.

So I decided not to pay the $7,000.00 up front. How did I know he wouldn't also start making it my job to pay our joint taxes. I paid about $1300 right then and there and started making $150 payments per month out of my monthly benefits. We were never told if we made an IRA contribution it would help eliminate that amount we owed. Would this be the case? I did understand though that future refunds would go towards that tax debt and he did not share so it was the only way to get him to help contribute.
Fast forward to this year. 2014 tax same thing he started nagging me to pay that debt because he wanted HIS tax refund. I told him I was doing what I needed to do making my monthly payments. He wanted me to go in and give them say $5,000 so he could get back $3,000.00. Totally stupid if it is truly our money. Why would anybody do that. But guess what happened? No tax refund not because of me this time but because of him. We did get back $330 that was applied to our debt and then a note in the mail that says my balance is now $4,200.00. He was find and good til we got that note then once again said just pay it. If I do the money is gone and then what?

If I am understanding correctly I can just contribute to my IRA and give the money to myself instead of Uncle Sam and this is what should have happened in the first place. If I am correct I have sent in money I should not have. Is there any recourse for this if I was not notified of my options?

[Nutria]

He stashed it all over the place and offered me nothing which is why I'm so secret now with him about what I have and what I do with it. I need to explain that within 3-6 months he would spend all of it. It would be gone.

So the year I was awarded my disability he hassled me that entire year about what it would do to our taxes so I volunteered to pay anything we owed. We filed jointly and when she came up with the amount I burst into tears because it was $7,000.00. A huge chunk for me. I thought quick and decided to just make payments. My husband viewed this as "my tax" all me getting benefits did in his eyes was take away his tax refund. For me and the kids however it's been food and clothing that would have not been afforded to us in the same generous way. Even with that as I described before I bargain hunt by second hand etc etc. raising four kids is just expensive.

So I decided not to pay the $7,000.00 up front. How did I know he wouldn't also start making it my job to pay our joint taxes.

You've got some serious marital issues there...

[mommycakes66]

Thank you for pointing that out. All the more reason why I need to do everything I can to educate myself and make the most of what I have for my situation.

[Petunia 100]

Reading over that info it looks like I can either open or contribute to my own IRA $5,500.00 and also one that would be in his name?
And that this can then be used as a tax deduction?
Is this correct?

Taxes have been a major stress for us. We actually got a tax break when I was not working and he would get back about $6,000- $7,000 and he looked at this as his money. He stashed it all over the place and offered me nothing which is why I'm so secret now with him about what I have and what I do with it. I need to explain that within 3-6 months he would spend all of it. It would be gone.

So the year I was awarded my disability he hassled me that entire year about what it would do to our taxes so I volunteered to pay anything we owed. We filed jointly and when she came up with the amount I burst into tears because it was $7,000.00. A huge chunk for me. I thought quick and decided to just make payments. My husband viewed this as "my tax" all me getting benefits did in his eyes was take away his tax refund. For me and the kids however it's been food and clothing that would have not been afforded to us in the same generous way. Even with that as I described before I bargain hunt by second hand etc etc. raising four kids is just expensive.

So I decided not to pay the $7,000.00 up front. How did I know he wouldn't also start making it my job to pay our joint taxes. I paid about $1300 right then and there and started making $150 payments per month out of my monthly benefits. We were never told if we made an IRA contribution it would help eliminate that amount we owed. Would this be the case? I did understand though that future refunds would go towards that tax debt and he did not share so it was the only way to get him to help contribute.
Fast forward to this year. 2014 tax same thing he started nagging me to pay that debt because he wanted HIS tax refund. I told him I was doing what I needed to do making my monthly payments. He wanted me to go in and give them say $5,000 so he could get back $3,000.00. Totally stupid if it is truly our money. Why would anybody do that. But guess what happened? No tax refund not because of me this time but because of him. We did get back $330 that was applied to our debt and then a note in the mail that says my balance is now $4,200.00. He was find and good til we got that note then once again said just pay it. If I do the money is gone and then what?

If I am understanding correctly I can just contribute to my IRA and give the money to myself instead of Uncle Sam and this is what should have happened in the first place. If I am correct I have sent in money I should not have. Is there any recourse for this if I was not notified of my options?

If you had made a traditional IRA contribution and deducted it, that would have reduced your taxable income and thus your income tax owed. It would not have been a dollar per dollar reduction.

You have until April 15th each year to make IRA contributions for the previous year. So at this point, it is too late to make IRA contributions for any year except 2015.

[Petunia 100]

Thank you for pointing that out. All the more reason why I need to do everything I can to educate myself and make the most of what I have for my situation.

Are you positive you want to make an IRA contribution for him? The account will be completely under his control. If you put 5.5k in for him, then he decides to withdraw it, there is a penalty on top of the tax. That will only put your further behind with your joint IRS debt.

[kv968]

If I am understanding correctly I can just contribute to my IRA and give the money to myself instead of Uncle Sam and this is what should have happened in the first place. If I am correct I have sent in money I should not have. Is there any recourse for this if I was not notified of my options?

Unfortunately there is no way around the $4200 you owe the IRS even by currently contributing to an IRA.

As Petunia pointed out a contribution to an IRA isn't a dollar for dollar deduction but you just wouldn't have to claim that contributed money as income. For example, if you were to put $5000 into a traditional IRA and you're in the 25% tax bracket, your tax savings/refund for that would be $1250 ($5000 * 0.25). However since that money would be added into any refund you would normally be getting I assume that that money would go directly to paying off the IRS as your other refunds have.

The only way you would have avoided the original $7000 you owed the IRS would have been to contribute $28,000 ($7000/.025) of the disability money to a traditional IRA the year your received it (again assuming you're in the 25% tax bracket). That wouldn't have worked anyway since the combined maximum contribution would have been only around $10k. You could have possibly contributed that much if you maxed out 2 traditional IRA's (~$10,000) at the time and added the rest into a 401k if one was available. However that opportunity is gone but you can save, in a sense, some of what you currently owe by contributing now to a traditional IRA. In other words, you'd be contributing $5000 to an IRA and paying off $1250 to the IRS at the same time.

[mommycakes66]

Thank you for explaining that it isn't a dollar/dollar amount that would be deducted from taxes we owe to contribute to IRA. I probably would not have wanted to do this because in my situation with my health questionable I don't know if I would want to access this money before I am 70 years old.

And no I do not want to put any money in my husband's name,

Best case scenario he benefits also from my savings but in order to do that he cannot have free access to the money or it will be gone. He will spend it.

[Petunia 100]

Thank you for explaining that it isn't a dollar/dollar amount that would be deducted from taxes we owe to contribute to IRA. I probably would not have wanted to do this because in my situation with my health questionable I don't know if I would want to access this money before I am 70 years old.

And no I do not want to put any money in my husband's name,

Best case scenario he benefits also from my savings but in order to do that he cannot have free access to the money or it will be gone. He will spend it.

You can access before age 70.

With a Roth, your contributions are always available, no tax or penalty. Once you have turned 59.5 AND your Roth account is at least 5 years old, you may withdraw earnings with no tax or penalty.

With a traditional IRA, you can withdraw with no penalty once you reach age 59.5. If you need to withdraw sooner than age 59.5, you can still do it with no penalty if you elect to withdraw following 72t rules. All withdrawals will be taxable (unless you have made some non-deductible contributions, which you most likely will not be doing).

But, even with a traditional IRA, withdrawals can be tax-free depending on your overall tax situation. If you have no pension or other source of taxable income, then you can still withdraw about 10k each year (about 12k if age 65 or older) without paying any income tax. This is because of the standard deduction (6.2k single under age 65 in 2014) and personal exemption (3.95k in 2014). If you're married filing joint, you can double that amount.

[mommycakes66]

Thank you so much for all the info.
I may have more questions but right now I may have just stumbled onto a way of making money.
This has been a big concern for me.
I started a facebook group about eight months ago and it is very successful.
I'm up to over 1,000 members just in that time.
An author just joined and offered to sponsor me and it got me thinking about the possibilities or starting my own forum all together.
I obviously need to do a little research on what that would cost to get started but I have no doubt in my mind it would be desirable.
I guess I need a solid business plan as well as a solid investment plan. Neither one of which I have skills to come up with.
I'll just have to use my desire for both of these things to help me work through what it will take to come up with solid plans.

[mommycakes66]

From what it looks like you added Petunia the Roth might be a safe place to choose to contribute if I choose to go that route. I set that up after reading one of Suzie Ormann's books. Specifically for my future. I had an impulse I was going to need it and saw it had a five year "no touch" policy and wanted to get my five years in.

[snafu]

I hope it's ok to encourage you to decide on a program and begin the steps to make changes to get the wheels turning.

Totally off topic...http://www.youneedabudget.com/downloads/10DayCourse.pdf

CreditCardFree kindly posted a link to SA's participants very popular program called You Need A Budget [ynab]. It's a long read but you may see some ideas or alternate views that might be helpful in your specific circumstances. Sometimes even a teeny change results in better than anticipated benefits.