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  • Sullivan County Tax
    Sullivan County officials are holding a series of meetings to discuss imposing an economic development income tax of point-3 percent on wages.Comment
  • Filing Your State Tax Returns
    Most states collect income taxes, too. And most want them on the same date your federal return is due. Check out Bankrate's updated state tax roundup.
  • Google And SEC In Tax Dispute
    Google and the Securities and Exchange Commission have been in dispute since March over "various issues" including the way in which Google accounts for income tax, the search giant revealed on Friday.Comment
  • Akron Mayor Urging Tax Hike To Pay For Services, Growth
    Akron Mayor Don Plusquellic said today he'll be actively promoting his proposed income tax hike between now and the May ballot. He says he's held the line on spending for more than 20-years, but now it's essential to raise city income in order to pay for basic services. But possibly the largest ticket item on the mayor's agenda is money to entice economic development. WKSU's Karen Schaefer reports.
  • Efile Tax Returns Still Offline
    The Canada Revenue Agency says a computer glitch may keep itselectronic filing system for income tax returns out of service for afew more days.
  • Open Tax Solver 4.06 (Default Branch)
    OTS is an easy program for calculating personal income tax form entries and taxes-owed or refund due. It handles forms such as US-Fed-1040, with forms A, B, C, D, AMT worksheets, and state income taxes, as well as Canada and UK income taxes. License: GNU General Public License (GPL) Changes: State Tax updates for VA, OH, and NY for 2006 were added. The OTS package also contains US 1040, with Scheds. A, B, C, D, and updates of State Taxes for MA, NJ, PA, NC and CA for 2006. Some improvements were made to the GUI.


New for 2006, the Roth 401k Plan



One of the new tax strategies available in 2006 is the Roth 401k. A taxpayer may place up to $15,000 ($20,000 if age 50 or older) in a Roth 401k instead of a regular 401k plan in 2006. The 401k plan needs to have the provision that allows contributions to go into a Roth 401k. Just because the tax law allows a Roth 401k plan does not mean that all employers will revise their 401k plans to allow Roth 401k contributions.


The Roth IRA has been one way to invest to generate tax-free income for retirement. A taxpayer does not receive a deduction for placing money into a Roth IRA, but the taxpayer may take the money out at retirement free of federal income tax. The new Roth 401k works in much the same way except that a taxpayer may contribute a larger amount to a Roth 401k


The problems with the Roth IRA has been that the law has not allowed many taxpayers to have Roth IRA because their incomes were too high. The new Roth 401k does not have this problem. A taxpayer may contribute to a Roth 401k no matter how high an income the taxpayer has.


Traditional IRAs, 401k plans, and other pension plans provide for tax-deferred income. The contributions made by the taxpayer are either deductible or excluded from gross income at the time of contribution. However, when the taxpayer withdraws the money, it is fully taxable. A taxpayer receives no deduction for amounts that go into a Roth IRA or a Roth 401k plan, but the taxpayer may withdraw the money at retirement completely free of federal income tax.


The Roth 401k plan is especially good for younger taxpayers. They have a longer time to invest their money wisely and generate a large amount of tax-free earnings on their contributions. Taxpayers should carefully consider the Roth 401k plan in 2006 with the assistance of a competent tax advisor.




Alan D. Campbell is a CPA in Arkansas and Florida and is self-employed primarily as an author of tax publications. He is the co-author of the book Tax Strategies for the Self-Employed. For more tax savings strategies, please see his Tax Savings Strategies blog http://taxsavingsstrategies.blogspot.com




The general information in this publication is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purpose of avoiding tax penalties.

  

 

 

 

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