All my axes live in taxes

[prog]

Finally filed, last night. After talking with several 1099-filing friends, I concluded that I was mistaken in my notion that they all dodged the self-employment tax somehow (this notion was installed, I think, by other friends and family who had never filed a 1099 before and agreed that the idea seemed ridiculous), and decided to be 100 percent honest about it. I will take the hit, and try to keep deductions in mind for this current year. Good-bye, pretty money. It was nice of you to visit. Thanks for your interest, yuk yuk.

I know... aww, poor baby, you can keep only most of the thousands you grossed from sitting on your butt and watching your books sell themselves last year. Still, it’s awful hard to part with it, once you have it, eh?

I also opened a Roth IRA, and socked the legal-annual-maximum of $3,000 into it. So I have two IRAs now, doy... I think the Roth is better for me, and don’t know why I opened a traditional one last year, instead of a Roth. Shrug.

Comments

both are good

[cthulhia]

if you wait until retirement, you get your roth back tax free.
(I need to get a roth, but, I need that much extra cash first)

[dougo.livejournal.com]

My (naive) understanding of IRAs is that if you think you'll be in a lower tax bracket when you retire than you are now, you should use a regular IRA, otherwise use a Roth IRA. I guess that used to always be the case (since retirement = no job = no income) but nowadays lots of seniors still make money through investments and whatever else, so they pay high taxes when taking money out of the IRA, which sort of defeats the purpose.

I didn't think you could have both, though. Sounds like a fine way to hedge your bet.

And I still think it's weird to pay tax twice on the same income. Royalty income seems like it should be the same as investment income, but maybe I'm missing something. (Possibly just misunderstanding your explanation last night.)