Latest baseball scores, trades, talk, ideas, opinions, and standings

Archive for the ‘IRA’ Category

>More From The Feds To Confuse You


Help for Home Buyers?

Are you kidding? When the Feds tell you they are out to help you watch out. The “give-away” is muddied with so much gobbledygook that most people of average intelligence have a hard time understanding.

Even with a good head on your shoulders it’s just some more of our government’s doubletalk.

At first when I saw a story in the Wall Street Journal I said, Oh, boy! This sounds really good. Then came the qualifiers. Try these on for size and see if you can benefit.

First, they say they’re giving you something when you buy a home–some tax breaks, what else have they got to promise but somebody else’s tax money called a tax break?

The government is hocked up to their necks so tightly to China that we the people don’t even own Washington anymore. The Chinese are becoming so rich that pretty soon they’ll be buying all of Michael Phelps’ gold. Oh, they would but they snuck a fast one by him–gave him lead trinkets covered with gold paint. They’re not dummies. Pretty soon all of us will be sloshing around in muddy rice fields wearing those detestable conical sun bonnets working for the Chinese.

Soon, you learn our government’s handout is only for first-time home buyers. Fun…and if your wife has had a house and you didn’t, you don’t qualify.

All of this came from the American Housing Rescue and Foreclosure Prevention Act of 2008, passed by Congress at the end of July with hopes of shoring up the ailing housing market.

If you and the Mrs. fit–never had a house before–you win the prize. It’s an all-paid trip to Disneyland in California. No, really it’s not quite that much fun, but it is a small tax break. The Feds call it “an important tax break.” But what could be better than fun and sun at Disney?

You have to have purchased your home after April 8, 2008, and before July 1, 2009. then you are eligible for a $7,500 tax credit (or, if the home costs less than $75,000, a credit equal to 10% of the purchase price).

This credit, however, comes with a catch. Now you tell me? After I was just starting to envision all the fun I could have with that $7,500?

You’ll have to pay it back. What!!!

What do you want first, the good part or the bad part? The credit reduces your tax liability on a dollar-for-dollar basis and can even boost your refund. If you owe $10,000 in taxes–many of us didn’t even make that much, Pal–you can take the credit and pay just $2,500. Or if you owe $5,000 in taxes and have paid it over the year, you can take the credit and receive all your money back with an additional $2,500.

Don’t get too comfortable~But unlike other federal tax credits, the new credit must be paid back to the government over a period of 15 years. Don’t worry if you can’t pay it back, there’s a comfortable cot reserved in your name rent free at your local penitentiary. And maybe that’s the biggest freebie in this whole giveaway.

Here’s the best part–It’s like taking out an interest-free loan.

“It’s the equivalent of an interest-free loan from the government,” says Bob Trinz, senior tax analyst at the tax and accounting business of Thomson Reuters.

To qualify for the credit, you (and if married, your spouse) must not have owned a principal residence during the three-year period before you buy the home. In general, the credit is available in full only if your adjusted gross income doesn’t exceed $75,000 ($150,000 if you file a joint return).

The credit phases out over the $150,000 to $170,000 adjusted gross income range for joint filers ($75,000 to $95,000 for individual filers).

If you claim a $7,500 credit, you’ll have to start paying it back as an extra tax amount on your federal returns at the rate of $500 per year, beginning with the tax return for the second year after you buy the new home. That is, if you buy a home this year and claim the credit, you’ll have to start paying back the money when you file your 2010 return in 2011.

Oh well, all good things must come to an end…

For more details and examples of how the new law works, visit the Web site of Congress’s Joint Committee on Taxation at and look for publication JCX-63-08 on the home page. For additional information on tax breaks from the Internal Revenue Service, see Publication 530 at

IRA Withdrawals

The Wall Street Journal says another option for first-time home buyers is to take out money from your traditional individual retirement account (IRA) or from your Roth IRA.

Typically, if you take money out of a traditional IRA before age 59½, you pay a 10% early withdrawal penalty. But you can avoid that penalty if neither you nor your spouse has owned a home in the previous two years. You can receive distributions from your traditional IRA to pay up to $10,000 of first-time home buyer expenses, but “because you still have to pay taxes on the withdrawal…it’s not a particularly attractive way to fund a down payment on a home,” says Kaye Thomas, a tax lawyer and tax-guide publisher in Lisle, Ill.

With a Roth IRA, a withdrawal from contributions is always tax and penalty free. If you have held your Roth IRA for five years, and plan to use the money to finance your first home, you can withdraw from both earnings and contributions with no financial repercussions.

Write to Don White at

<!– document.write('’); //–> <!– if((typeof sponsorshipRendered)=='undefined' && !turnOffMSNAds){ document.write('’+”); } //–> <!– if((typeof sponsorshipRendered)=='undefined' && !turnOffMSNAds){ if((typeof pID)=='undefined'||pID==null){pID=''} if((typeof adKeyword)=='undefined'||adKeyword==null){adKeyword=''} pageID = pID?pID:''; parDomain = window.location.toString(); var adInfoObj = getAdInfo(pageID,parDomain); var msn_adunit_style = adInfoObj.adst?adInfoObj.adst:"text-align:center"; if(msn_adunit_style.indexOf('left') == -1) document.write('

‘); } //–> <!– function GetArg(N){;var i=0,u="".concat(window.location),u=(u.indexOf("?")>-1)?u.split("?")[1]:"",u=(u.indexOf("#")>-1)?u.split("#")[0]:u,u=(u.charAt(u.length-1)=="&")?u.substring(0,u.length-1):u;N+="=";while(i‘); }else{ if((typeof pID)==’undefined’||pID==null){pID=”} if((typeof adKeyword)==’undefined’||adKeyword==null){adKeyword=”} pageID = pID?pID:”; parDomain = window.location.toString(); if(parDomain.indexOf(‘setup’)!=-1){ document.write(‘

‘); } microsoft_adunitid= adInfoObj.adid; microsoft_adunit_width=adInfoObj.adwd; microsoft_adunit_height=adInfoObj.adht; microsoft_adunit_keywordhints=adKeyword?adKeyword:””; if(msn_adunit_style.indexOf(‘left’) != -1) document.write(‘

‘); document.write(”); if(msn_adunit_style.indexOf(‘left’) != -1) document.write(‘

‘); if(parDomain.indexOf(‘setup’)!=-1){ document.write(‘

‘); } } var sponsorshipRendered=true; } //–>