Generally good info and helpful advice, as usual, Ken. Just want to make a point about this: The marriage penalty does still exist, although probably to a lesser degreee than before because of changes in the tax structure. If you compare tax returns side by side, a married couple both earning about the same amount will pay more tax than 2 single taxpayers with the same income; if that married couple files separately (MFS) they would pay even more than they would on a joint return. Looking at the same amount of income, but divided unequally between the two - say one makes 80% of the total, and the other is a stay-at-home with a part time job - in that case, the married couple pays substantially less tax on a joint return than the 2 singles would. So the "marriage penalty" exists, as it always has, only for 2-earner families where both partners make close to the same income. Our income tax system, like our Social Security system and a lot of other things in our society, seems to be based on a "traditional family" model that has not been in the majority in this country in probably 50 years. Personally, I think the best way to address the marriage penalty would be with a tax credit based on the income of the lower earning spouse. That would be the best way, mathematically, to correct the problem. (I don't think that's a liberal or conservative position, I think it's simple arithmetic, and I have held that opinion since I first learned how the tax system works, many, many years ago.)
Publication 501 has all the answers! The age is under 24, not 25 (sorry :-( ) and I believe any accredited institution of higher learning will qualify.
Sorry, i was just going by what i had been told, no worries though, if plans go as planned, he will graduate at 22 so i haven't checked into it to thoroughly:-D
The phrase "marriage penalty" refers to the facts I pointed out in my previous post. Two successful, single, career people who marry will suddenly find themselves paying more tax on the same income, and that has always been the case. Well, not always as in since the creation, but always as in 50-60 years or more without changing. The marriage penalty is not something that can be fixed by fiddling with exemption amounts, standard deduction amounts, or tax tables.
Here's an interesting article from a reliable source, discussing all the ins and outs of the marriage penalty, and its obverse, the marriage bonus that we don't hear much about. That is, a single earner married couple pays less tax than if they had to file as single individuals. Funny, how nobody ever complains about paying less tax (including me when I was a stay at home Mom). The article linked above discusses the possible disadvantages of the stay at home spouse going back to work.
Right! Anybody that contributes less money to their 401-K than what the employer will match, is giving away free money.
All I know is that, as a single parent, I have basically the same expenses as two working parents have, minus a little food, perhaps. And I have to make ends meet on half the income. My children and I miss out on some of the fun stuff other families get to do because we can't afford very much other than the basics. And any time health care expenses get involved, it blows the monthly budget right out of the water. Excuse the _______ out of me if I pay a few dollars less in income taxes each year!:evil:
Ken (and all)~ Anyone considering a FHSA should read the information about it and weigh whether it will be worth it in their particular situation. For us, no way! We're much better off the way we're doing things now. Someone else, however, may benefit from it. Just remember to do the research before committing. Frogger
Ken~ Tax benefits are better the way I do it now. That account just doesn't work for me. My tax preparer agrees. Frogger
Actually, right now? Probably. Not divulging any financials or reasonings for the next 11 months...just in case I have another ghost on the 'net... Frogger
I use TurboTax and just got my refund 9 days after I e-file it. Pleased and happy with it, will do it again every year.
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