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Flexibility in monthly outlays if you get laid off or something is a plus
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Jan 28, 2020 17:56
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I don't know how to be more clear. The plan is not recast and make minimum monthly payments. The plan is lump sum, recast, and another lump sum in probably 2-4 years, mortgage paid off. totalnewbie posted:Pretty sure this means that recasting (with the same payment) is tax neutral. If you make the minimum payment then you get to take less of a mortgage interest deduction but this is not going to be more than the savings from paying less interest itself (literally impossible, as your extra savings from paying more mortgage interest is only a percentage of the extra interest payments itself). Isn't the mortgage interest deduction irrelevant to most people these days unless you itemize? I don't see myself being able to go beyond the standard deduction anytime in the near future
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Jan 28, 2020 18:13
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Re: recasting (Rere:casting?) I think I was the one who asked about it earlier. I haven't read every single reply yet here but it did make the most sense to make extra principal payments rather than reduce the principal via recasting and make normal payments over the stated life of a 30 year mortgage. Another option, maybe refi into a 15 year? If you can put extra cash on hand towards a chunk of a principal payment and can afford the higher monthly payments, you could come away with a better situation and still make additional principal payments to shorten the life of the mortgage. Should you pick that option, Sebonic Financial gave me 3.345% or some rate that after all was said and done was lower than the 3.375% they quoted and locked. It was a pretty smooth process; I think we went from application to closing in 45 days which could have been shortened if my homeowner's insurance agency was better at giving them paperwork and the underwriter was better at requesting it. Everything but the closing was done electronically. I'd refi'd before with another agency and Sebonic's was as smooth as it got.
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Jan 28, 2020 18:17
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Astro7x posted:I don't know how to be more clear. The plan is not recast and make minimum monthly payments. The plan is lump sum, recast, and another lump sum in probably 2-4 years, mortgage paid off. Yes, I get it. But you will be making payments between your first lump sum payment and your second lump sum payment. If you do not change your monthly payment amount then recasting does nothing. It's the initial lump sum payment that counts. If you DO change your payment amount THEN recasting starts coming into play. quote:Isn't the mortgage interest deduction irrelevant to most people these days unless you itemize? I don't see myself being able to go beyond the standard deduction anytime in the near future 2020 standard deduction is 12400 for single filers. Between my mortgage interest and state/local taxes, I come out just a bit more than that already (gotta check the numbers) and that doesn't include other deductions I could take (whatever they may be). My dad ended up doing my taxes last year because he moonlights for H&R block (he's retired and bored.. this is his hobby) but it definitely made sense for me to itemize. Some people live in places with low property or income taxes which makes standard deduction a lot more attractive. Similarly, married couples might also find it harder to justify itemizing.
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Jan 28, 2020 18:26
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Astro7x posted:I don't know how to be more clear. The plan is not recast and make minimum monthly payments. The plan is lump sum, recast, and another lump sum in probably 2-4 years, mortgage paid off. Yes, that is clear. But the insistence that recasting in and of itself is saving you interest is wrong. Functionally speaking, if you simply made a lump sum payment of an equal amount, and continued to make the same monthly payment, recasting does nothing extra for you in terms of interest paid. The reason sometimes you don't recast is because it costs money, or your lump sum falls short of whatever the lender says is required. Since those don't apply to you, you should definitely recast. Sure you don't PLAN to make minimum payments, it will be nice to have that option in case poo poo hits the fan. I'm just trying to make sure it's clear what a recast is, and what it is not. Honestly I think you're overthinking the whole "recast" thing. Astro7x posted:Isn't the mortgage interest deduction irrelevant to most people these days unless you itemize? I don't see myself being able to go beyond the standard deduction anytime in the near future Short answer, yes. Because of the SALT cap + higher standard deduction, the mortgage interest deduction is now only useful to people with large principals and/or high interest rates. Not saying that this is a good or bad thing, just saying. edit: lol just looked it up and the $10k SALT cap is for pretty much everyone. Married filing joint, single, etc. The only time I can see that it change is married filing separate, and it drops to $5k. so do never marry DaveSauce fucked around with this message at 18:42 on Jan 28, 2020 |
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Jan 28, 2020 18:28
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This year I started adding to a HSA. I am maxing my Roth IRA, contributing more than match but less than max to 401k... So did I just take a few % away from 401k and put it into a slightly shittier version since apparently i am required to keep 1000$ in cash for the HSA? (I didn't actually lower 401k contribution, just started saving a bit more)
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Jan 28, 2020 20:57
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ChiTownEddie posted:This year I started adding to a HSA. I am maxing my Roth IRA, contributing more than match but less than max to 401k... The distinction here is that it's easier to liquidate a HSA (using money for qualified medical expenses) compared to a Roth or 401k.
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Jan 28, 2020 21:02
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Ah alright. I'll just chalk maxing that as my tick up for the year. E: vv Thanks for that. I'll chat with my HR. ChiTownEddie fucked around with this message at 22:47 on Jan 28, 2020 |
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Jan 28, 2020 21:16
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I think the general "ideal" advice is to only contribute to HSA if you are already saving at least 15% of your income to your retirement. I would argue less than that is OK, especially if your company matches HSA contributions. Routine medical expenses are good too, since the HSA will let you pay for those tax-free. Also note that a HSA is actually better than a 401(k) for retirement in certain ways. The deposits are pre-tax, and the gains/withdrawals are tax-free (when used for qualified medical expenses, which you will encounter when you're older). After a certain age however, you can take withdrawals without penalty for non-qualified expenses (though they are taxed as income). If that $1,000 account minimum bothers you, generally you can have a HSA anywhere you want (not just the custodian that your employer shills). Some employers will refuse to deposit anything to any custodian except the one they prefer, though, so you may encounter resistance. You'd have to talk to HR to figure that out. edit: To be sure, you can make deposits to any HSA in your name as long as you are currently on a qualifying HDHP (and not covered by other insurance). The sum total of all deposits across all accounts is what the IRS looks at (rollovers are an exception). So it doesn't matter if you put it there, or if your employer puts in a match, or you split off between accounts, that all counts towards the same yearly max for you. The downside of making non-payroll deposits though is that a payroll deduction will be taken out before FICA tax, whereas a non-payroll contribution has already been hit by FICA tax. If you make a non-payroll contribution, you can claim a deduction on your taxes, but you won't get the FICA tax back, just the income tax. DaveSauce fucked around with this message at 21:48 on Jan 28, 2020 |
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Jan 28, 2020 21:34
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I absolutely love my HSA. I maxed it out for two years in a row. When I started maxing it I wasn't planning to have a baby, but I just had one two days ago. It funded the hospital bill, private room, all prenatal care, everything, and I still have $6k left over invested in VTI. I will keep maxing out my HSA as a priority over my post-match 401k. Medical care will likely be your biggest expense when you reach retirement age, so it would be stupid not to have a large chunk of money making compounding interest just to pay for it.
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Jan 28, 2020 23:15
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What is the definition of medical expense for an HSA? Can I use it to pay for prescriptions and doctor's visits or is it only for inpatient care and major emetgencies?
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Jan 28, 2020 23:46
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Buddy,,, anything is fair game if you've got the balls. You can buy a peloton with it. E: useful answer is that I don't think anybody actually looks at it but it would help to have some sort of argument
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Jan 28, 2020 23:48
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mmj posted:What is the definition of medical expense for an HSA? Can I use it to pay for prescriptions and doctor's visits or is it only for inpatient care and major emetgencies? Pretty much anything that you can prove you needed to be healthy except for food. No, a PS4 Pro doesn’t count because you need it to be happy. A Peloton would probably be fine.
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Jan 28, 2020 23:54
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This is pretty easy to google tho http://www.hsabank.com/hsabank/learning-center/irs-qualified-medical-expenses there's a list it's basically everything, except dental floss, fake boobs, aromatherapy and bath salts. you can even use it to pay for a babysitter
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Jan 28, 2020 23:56
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I think the real big thing would be end-of-life care or like any retirement home expense
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Jan 28, 2020 23:56
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Leperflesh posted:you can even use it to pay for a babysitter That's for a Dependent Care Flexible Spending Accounts (DC-FSAs). HSA eligible expenses are the first 3 sections in your linked article.
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Jan 29, 2020 00:05
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I definitely need to look into an HSA then, thanks thread
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Jan 29, 2020 00:10
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Yeah, well, I definitely feel better about doing it then haha.
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Jan 29, 2020 00:24
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SlapActionJackson posted:That's for a Dependent Care Flexible Spending Accounts (DC-FSAs). HSA eligible expenses are the first 3 sections in your linked article. ahh, I missed that thanks
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Jan 29, 2020 01:01
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Animal posted:Pretty much anything that you can prove you needed to be healthy except for food. No, a PS4 Pro doesn’t count because you need it to be happy. A Peloton would probably be fine. How about a Nintendo Switch and Ringfit Adventure?
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Jan 29, 2020 04:45
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Astro7x posted:How about a Nintendo Switch and Ringfit Adventure? Fun fact, since a friend of mine just asked both his doctor and his tax guy that exact question: apparently it would qualify if you got a doctor to provide a Letter of Medical Necessity stating that it's needed to treat a legitimate medical condition, ie. obesity. Probably only the game would qualify though, not the Switch. The same would apply to stuff like Fitbits, and honestly probably a Peloton too. That said, it doesn't really seem like there's anybody paying that close of attention to HSA disbursements so 
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Jan 29, 2020 05:26
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MockingQuantum posted:That said, it doesn't really seem like there's anybody paying that close of attention to HSA disbursements so The trick with HSAs is that the only disbursements that get challenged are the obvious, clearly medical ones. My mother got challenged on the purchase of a cane and an inhaler and had to provide documents to prove she had asthma and a recent foot surgery. EDIT: poo poo, nope, that was her FSA. Not HSA. Sorry; I leave the post here as penance and shame.
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Jan 29, 2020 07:20
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Sundae posted:The trick with HSAs is that the only disbursements that get challenged are the obvious, clearly medical ones. My mother got challenged on the purchase of a cane and an inhaler and had to provide documents to prove she had asthma and a recent foot surgery. FSA's are a nightmare. It took me months to get reimbursed on dental expenses to the point where I am convinced that they intentionally interfere in the hopes that you will give up and they get to keep the money. For HSA no one has ever asked me any questions ever. No one seems to give a poo poo what you do with it. I wonder if even an IRS audit would look deeply into it.
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Jan 29, 2020 07:24
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Counterpoint - FSAs are great for dependent child care spending (e.g.: daycare).
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Jan 29, 2020 07:29
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simble posted:Counterpoint - FSAs are great for dependent child care spending (e.g.: daycare). If the FSA bank is not trying to scam you and you are definitely gonna spend that amount of money anyways then it would be stupid not to use that FSA and save on taxes. For those who are not aware, unlike an HSA, the FSA acts like an interest free loan which you pay through the year and your payments come off before taxes from your paycheck. The catch is that if you don’t use all of the loan money by the end of the year, you lose it and your employer keeps it and has to use it to keep funding their FSA program so it ends up back in the hands of the FSA provider. So there is an incentive there for them to be skeptical and interfere as much as possible with your attempts to get your distributions. I may be testing the dependent care FSA next year now that I have a baby. In fact since it’s a life changing event I could enroll now, but I don’t want the money to go unused if the baby is healthy. When she is older then I’ll wanna get the money for childcare but with how scummy my FSA provider was when it came to proving dental care expenses, it scares me to use it again. Animal fucked around with this message at 13:07 on Jan 29, 2020 |
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Jan 29, 2020 12:39
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Had my yearly meeting with my Vanguard guy yesterday and he was unable to answer some of my questions: 1. Regarding tax efficient placement: REIT/Bond funds go preferentially in to 401k/403b accounts, Total US stock and International Stock funds go in Roth/Taxable, correct? 2. I still don't think I understand the 30 day forward/back period for wash sales. Every month, I put money in to my US Total Stock fund in my taxable Vanguard account. This happens on the last day of the month, and I'm using Spec ID cost basis. Say the market takes a dump on February 14th, and I decide to try to TLH in to the Vanguard 500 fund. Does that mean that because I bought my monthly shares of US Total Stock on January 31st, and I'm now trying to sell on February 14th, I'm going to trigger a wash sale? Or would that only apply if I sold the shares I bought on January 31st, and not the ones that I bought on December 31st? 3. Currently, our tax advantaged accounts include: 2x Roth, my 403b, my wife's 403b, my wife's 457 (institutional, non-governmental), and our HSA. We're using all of them and putting the remainder in to a taxable account. I've been working at my job for enough time that I'm going to be eligible for our own institutional 457 in a few months. Am I right in thinking that as long as the disbursement options in the event of changing jobs are reasonable, we should begin to fund my 457 as well to decrease our taxable income?
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Jan 29, 2020 14:15
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Animal posted:If the FSA bank is not trying to scam you and you are definitely gonna spend that amount of money anyways then it would be stupid not to use that FSA and save on taxes. For those who are not aware, unlike an HSA, the FSA acts like an interest free loan which you pay through the year and your payments come off before taxes from your paycheck. The catch is that if you don’t use all of the loan money by the end of the year, you lose it and your employer keeps it and has to use it to keep funding their FSA program so it ends up back in the hands of the FSA provider. So there is an incentive there for them to be skeptical and interfere as much as possible with your attempts to get your distributions. Some FSAs allow for limited rollover fwiw (mine is up to $500). Also if you leave that employer, I believe the FSA is forfeit.
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Jan 29, 2020 14:20
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I maxed out the "limited purpose FSA" (basically the FSA for vision/dental) last year for Lasik and it went without a hitch. I was super paranoid about making sure I opted out this year though.
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Jan 29, 2020 14:48
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Small White Dragon posted:Some FSAs allow for limited rollover fwiw (mine is up to $500). Goes both ways, though. I'm pretty sure if you spend the whole FSA and leave the employer, they can't claw back anything you hadn't contributed yet. So if you elect to contribute $1,000, then you drain the full $1,000 for something in January, and then quit in February, you basically got $1,000 in medical care for the cost of $83.33.
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Jan 29, 2020 14:49
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Residency Evil posted:Had my yearly meeting with my Vanguard guy yesterday and he was unable to answer some of my questions: If your 401k or 403b has REIT options, then yeah you could put them there. Mine doesn't, so all my REIT investments are in my Roth IRA. Point is, they're in a tax advantaged place. Residency Evil posted:2. I still don't think I understand the 30 day forward/back period for wash sales. Every month, I put money in to my US Total Stock fund in my taxable Vanguard account. This happens on the last day of the month, and I'm using Spec ID cost basis. Say the market takes a dump on February 14th, and I decide to try to TLH in to the Vanguard 500 fund. Does that mean that because I bought my monthly shares of US Total Stock on January 31st, and I'm now trying to sell on February 14th, I'm going to trigger a wash sale? Or would that only apply if I sold the shares I bought on January 31st, and not the ones that I bought on December 31st? Doesn't matter which lot you're selling; you have bought something substantially identical within 30 days before or after the sale. Same would hold true if you had sold and your spouse had bought: https://www.bogleheads.org/wiki/Wash_sale
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Jan 29, 2020 14:50
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As long as you sell all your shares, you'll be good from a tax loss harvesting perspective. Just don't buy back in for 30 days, or buy a different security. The way the wash sale rule works like this. You have $10k worth of SPY you want to sell for a loss. You can't sell and immediately buy back in (forward looking). If there were no backwards looking period though, all you would do is buy $10k worth the day before, then sell the original $10k the next day, chalking up the loss and saying "well I haven't purchased anything within 30 days so I'm good. Selling all shares means there's nothing to worry about.
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Jan 29, 2020 15:01
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SpelledBackwards posted:Doesn't matter which lot you're selling; you have bought something substantially identical within 30 days before or after the sale. Same would hold true if you had sold and your spouse had bought: ranbo das posted:As long as you sell all your shares, you'll be good from a tax loss harvesting perspective. Just don't buy back in for 30 days, or buy a different security. See, you guys are saying the opposite thing. Although the bogleheads link makes it seem like if I use Spec ID, I can sell only the old shares? quote:To avoid the 30-day limit,[note 4] do not reinvest dividends or capital gains in your taxable funds. Otherwise, the reinvestment will cause a wash sale (for at least the shares bought with the reinvestment) if you sell the fund at a loss within 30 days of the distribution; this will affect a sale for eight months of the year if the fund pays dividends quarterly, and at all times if the fund pays dividends monthly. (If you use Specific identification of shares, you can avoid the effect of a wash sale on a reinvestment in the last 30 days by selling those shares; even if your brokerage says that you have a wash sale, you retain the loss because you sold the replacement shares at the same time.) Although as they point out, you also can't buy those shares in your other 401k/Roth/etc accounts. gently caress, they don't make this easy.
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Jan 29, 2020 15:15
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Residency Evil posted:Although the bogleheads link makes it seem like if I use Spec ID, I can sell only the old shares? Nope. The link means that if you use SpecID to get rid of all the recently purchased shares at the same time as your old shares with the loss, then there wouldn't be a wash sale. If you keep the recently purchased shares and only sell the old ones, you will have a wash sale.
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Jan 29, 2020 15:36
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Animal posted:I may be testing the dependent care FSA next year now that I have a baby. In fact since it’s a life changing event I could enroll now, but I don’t want the money to go unused if the baby is healthy. When she is older then I’ll wanna get the money for childcare but with how scummy my FSA provider was when it came to proving dental care expenses, it scares me to use it again. DC fsa will pay for things like daycare, not medical expenses. Your child being healthy or not is largely irrelevant.
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Jan 29, 2020 16:42
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Dependent Care FSAs are The poo pooTM if you're sending your kid to day care (and if you make a high enough income to where the tax credit is less than your marginal rate). Keep in mind that you can't double dip with the child care tax credit. That gets you back between 20%-35% (income dependent) of your expenses up to $3k (the expenses, not the credit) per kid (up to 2 kids, so $6k of expenses max). So depending on your income, that's a credit of between $600-$1050 per kid. While you can't double dip, IIRC you can stack this on top of the DC-FSA. So if you max your DC-FSA at $5k, and you have 2+ kids in day care, you can use that remaining $1k to get between an extra $200-$350 in tax credits. edit: also the credit doesn't disappear with higher income. It drops to 20% of your expenses at the lowest, but it never disappears. DaveSauce fucked around with this message at 17:28 on Jan 29, 2020 |
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Jan 29, 2020 17:25
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spf3million posted:I maxed out the "limited purpose FSA" (basically the FSA for vision/dental) last year for Lasik and it went without a hitch. I was super paranoid about making sure I opted out this year though. Got invisalign last year and maxed out both a HSA and limited purpose FSA. Drained the FSA and turned down my 401k contribution (my company doesn't match) so I can max out the HSA. Meaning, instead of putting money into one of the S&P index funds in the 401k, the HSA contributions are going to VFIAX.
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Jan 29, 2020 18:50
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Don’t worry to much about wash sales. It’s perfectly legal to rebuy the same shares in a 30 day window. The only thing it means is if there’s a loss you can’t claim it for tax purposes until you sell the new shares. If there is a gain you’ll owe taxes in the current tax year, but then it’s not called a wash sale.
nelson fucked around with this message at 21:15 on Jan 29, 2020 |
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Jan 29, 2020 20:54
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Animal posted:The catch is that if you dont use all of the loan money by the end of the year, you lose it and your employer keeps it and has to use it to keep funding their FSA program so it ends up back in the hands of the FSA provider. "End of the year" is pretty loose. You have until 3/15 of the next calendar year to process reimbursement for the previous year.
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Jan 29, 2020 22:03
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Residency Evil posted:See, you guys are saying the opposite thing. It's actually very easy, it just sounds complicated. Tl;dr sell all your shares, don't buy more for 30 days and you're fine. I'll dig into the nitty gritty below. Really a wash sale doesn't lose you anything. There's no gotcha (assuming you don't do the IRA thing) that's gonna lose you money, ignoring the fact that, well, if you're loss harvesting you by necessity already lost some. All a wash sale means is that the cost basis of the replacement shares you bought gets adjusted upwards. Let's say you buy 10 shares of GOON for $10. It drops to $8. You want to harvest those losses. Well, you sell your 10 shares for $80 total, book a loss of $20. Now, if you buy 10 more shares, the Gov goes hold on, you didn't really sell. So we're not going to give you a loss for tax purposes, we're going to adjust your cost basis up by $2 per share, for a cost basis of $100. Now you have 10 shares with a cost basis of $10, but are worth $8 per share. You still have the loss, can still realize it later, you just need to play by the rules. But what about dividends? Well, let's say GOON issues a $8 dividend, and you auto bought a share. The gov goes "very sneaky, we see that share" and bumps your cost basis up, but since it's just one share, it's basis goes to $10 and you can still book a $18 loss ($20 loss - $2 disallowed) This is why dividends won't truly gently caress you over, usually dividends mean like maybe 1-2% of your wash sale get disallowed. This is also why if you just sell all your shares you're fine. There is nothing to adjust up, so you have no worries of being disallowed. I also realized that the link the other person gave you also explains all this in great detail so I didn't need to type all these words and could have told you to read the link, but I typed them so damnit im posting them.
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Jan 30, 2020 06:09
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ranbo das posted:I also realized that the link the other person gave you also explains all this in great detail so I didn't need to type all these words and could have told you to read the link, but I typed them so damnit im posting them. BFC in a nutshell.
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Jan 30, 2020 08:46
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