first time home buyer & IRA

Tax Law (Questions About Taxes): Taxes on IRA withdrwal for first ...

Questions:
I am a first time home buyer who is eligible for the $10,000 withdrawal from my traditional IRA. I was advised by my IRA administrator that as a first time home buyer, I would not have to pay the 10% penalty, and that I can avoid paying taxes on the borrowed amount if I return the full amount I borrowed within 60 days. I have the following questions about this:
1. Can you confirm that I won’t have to pay taxes if I return the borrowed amount within 60 days?
2. If yes to the above question, and I do pay back the amount I borrowed from my IRA within 60 days, what sort of paper work (IRS forms, etc.) do I need to submit in order to avoid paying taxes on the IRA withdrawal?

Answer:
1. Yes that is correct
2. The distribution and return should be reflected on your 1099-R that you receive. The Administrator should net the distribution with the return if within the same year, so pay it back before December 1st to avoid overlapping the year end. No 5432 form needs to be filed as you paid it back within the 60 days.

http://www.bankrate.com/brm/itax/tips/20030410a1.asp

cashback credit cards

http://moneycentral.msn.com/content/banking/creditcardsmarts/p86145.asp
http://moneycentral.msn.com/banking/services/CreditCard.asp?iSearchId=9&Go=Go
http://www.mitbbs.com/article1/Money/5891165_0_1.html
http://www.mitbbs.com/article/Money/20918558_3.html
http://www.creditcards.com/credit-card-finder/index.php

Summary
Amex SimpleCashBiz: 5% on gas, office supplies and wireless
Chase FreedomSM: 3% on top 3 category everyday apply here

tax bracket

http://www.moneychimp.com/features/tax_brackets.htm
single:
77,100:25%
160,850: 28%
349,700:33%

married but filed separately:
64,250: 25%
97,925: 28%
174,850: 33%

Mutual Fund Taxation

MUTUAL FUND TAXATION: How To Cut The Tax Bite

Tax Saving Tips
It is very complicated...

401K tax

http://beginnersinvest.about.com/od/401k/a/aa122104a.htm?p=1

The other tax question on 401K, although you will get taxed when you get the money out, but you will not get them out all together, you will only get a small amount once at a time, when you don’t have a job, you will be at a lower tax bracket. So for tax benefits, it is reducing your high income tax bracket now to low tax bracket in the future.

IRA

http://www.bankrate.com/brm/green/retirement/traditional_IRA_Roth_IRA.asp

http://finance.yahoo.com/expert/article/moneymatters/5160

In essence:

• This is a retirement plan besides 401K (work sponsored), you save this amount of money (maximum $4000 each year) by yourself in your own bank, and you don’t pay tax (Roth) or tax deferred (Traditional).
• 401K is pretax, IRA is after tax, you don’t get tax break for contribution but on growth
• If your income exceeds $114000, you will not be eligible for Roth IRA.
• But!!! on 2010, you can convert all your Traditional IRA to Roth IRA no matter your income, except you have to pay tax during this conversion.
• Some other benefit of Roth IRA including early withdraws can be found in the links above.

PITI

Principal + Interest + Tax + Insurance = Housing Expense

typically around 35% of gross income (before tax) or net income for self-employed and 1040.

maybe another 5% for other expense (student loan, car loan and credit card bills)