Tax Season 2012: Work No Longer Pays

[FlagDUDE08]

Re: Tax Season 2012: Work No Longer Pays

I like to keep them separate. My E-fund lives lives in the MM account at the credit union where my parents opened an account for me when I was 6 months old. The money that I am saving for specific goals it direct deposited to an ING savings account with multiple sub-accounts. That's what works for me, but you have to go with what is best for you.

If you're looking for something highly liquid with an emergency fund (or even perfectly liquid), why would you use M2 (money market) and not M1 (straight checking, or cash in a shoebox)? I realize getting interest is a good thing, but would an interest checking account suffice?

 

[Bakunin]

Re: Tax Season 2012: Work No Longer Pays

If you're looking for something highly liquid with an emergency fund (or even perfectly liquid), why would you use M2 (money market) and not M1 (straight checking, or cash in a shoebox)? I realize getting interest is a good thing, but would an interest checking account suffice?

Don't know how his account works, but for things like capital one / ING and the like, what they are calling "money market" these days is still good enough on the liquidity side (if I initiate a transfer to my checking, the money will hit in 3 business days). Of course, thanks to the Fed, the interest rate is pure ****. I believe the highest one you can get nowadays is around 1%.

 

[FlagDUDE08]

Re: Tax Season 2012: Work No Longer Pays

Don't know how his account works, but for things like capital one and the like, what they are calling "money market" these days is still good enough on the liquidity side (if I initiate a transfer to my checking, the money will hit in 3 business days). Of course, thanks to the Fed, the interest rate is pure ****. I believe the highest one you can get nowadays is around 1%.

...if you're lucky. But yea, money hitting in 3 business days vs. money hitting immediately is my point. I would think with an emergency fund, you want the money immediately upon demand.

 

[Bob Gray]

Re: Tax Season 2012: Work No Longer Pays

If you're looking for something highly liquid with an emergency fund (or even perfectly liquid), why would you use M2 (money market) and not M1 (straight checking, or cash in a shoebox)? I realize getting interest is a good thing, but would an interest checking account suffice?

At the credit union we use, we get better interest on a money market account than checking, though admittedly even the interest on the MM is pretty minimal right now.

 

[Bakunin]

Re: Tax Season 2012: Work No Longer Pays

...if you're lucky. But yea, money hitting in 3 business days vs. money hitting immediately is my point. I would think with an emergency fund, you want the money immediately upon demand.

Needing money instantly isn't really a concern.

The types of emergencies that I'm thinking of are: job loss, medical issue, traffic accident/car totaled, house burns to the ground, etc. None of these things would require cash-in-hand immediately. I can secure lodging / rent a car with a credit card. Hospital bills would mostly be covered by insurance and the remainder by my HSA balance. Loss of employment would be horrible, but again, I always have enough in my account to cover my bills, so moving money around wouldn't be an issue with that, either.

 

[FlagDUDE08]

Re: Tax Season 2012: Work No Longer Pays

At the credit union we use, we get better interest on a money market account than checking, though admittedly even the interest on the MM is pretty minimal right now.

I kind of realized that, but I think the reason for that is because of mainly how quickly the money transfers (M1 supply vs. M2 supply). It's your preference. I do keep most of my savings in M2, but have a little bit in M1 in case something goes seriously wrong. Also one thing to remember about the money market and savings (at least the online ones, not sure if the rules apply to credit unions as well) is that you're only allowed 6 withdrawals a month for free before the federal government makes you pay $10 a transaction. I'm surprised there isn't a deduction for that, similar to CD withdraw penalties.

 

[Bob Gray]

Re: Tax Season 2012: Work No Longer Pays

I kind of realized that, but I think the reason for that is because of mainly how quickly the money transfers (M1 supply vs. M2 supply). It's your preference. I do keep most of my savings in M2, but have a little bit in M1 in case something goes seriously wrong. Also one thing to remember about the money market and savings (at least the online ones, not sure if the rules apply to credit unions as well) is that you're only allowed 6 withdrawals a month for free before the federal government makes you pay $10 a transaction. I'm surprised there isn't a deduction for that, similar to CD withdraw penalties.

The credit union has limits on free transactions, but I can't imagine needing to transfer more than half a dozen times in a month. In the end the money in our money market account is as accessible as the money in our checking account. Maybe some banks aren't that way. But for us, there's no reason to keep money in checking, rather than the money market account.

And one of our long term goals regarding paying off bills, including our mortgage, is that if there is ever a serious economic/financial meltdown, I'd much rather be as debt free as possible. Or even if the dollar is gradually devalued as our national debt continues to spiral out of control (recognizing there's lots of influences on the value of a given currency).

 

[Almington]

Re: Tax Season 2012: Work No Longer Pays

...if you're lucky. But yea, money hitting in 3 business days vs. money hitting immediately is my point. I would think with an emergency fund, you want the money immediately upon demand.

That's why it's at my credit union and not at ING like my savings. Very few cases where I'd need the actual cash as opposed to just having the resources to pay off a credit card in short order. With the credit union I would be able to go directly to the physical location if I needed to get cash and (more importantly to me, I don't have to worry about the delays in making a transfer between institutions.

 

[FlagDUDE08]

Re: Tax Season 2012: Work No Longer Pays

Good points. Maybe one of these days I'll stop being so OCD about it all.

Anyways, what is the limit on when to receive W-2's? I still don't have mine as of yet.

 

[FreshFish]

Re: Tax Season 2012: Work No Longer Pays

Needing money instantly isn't really a concern.

Depends upon where you live. Last August we were without power for over a week...not just our house, our whole town. ATMs need power to dispense cash; card readers need power to scan that magnetic strip. Some businesses had generators and were operating cash only.


I was really glad I resisted all those pitches to "bundle." Our old-fashioned land line phone worked just fine; no one's modem-operated phone did. Cell phones stopped working because the relay towers had no power either.


When people talk about asset allocation, the reason is to be prepared for a wide range of contingencies. I think there is a minimal yet non-trivial danger of severe social disruption that may last a few months (if it lasts any longer there's no way to prepare anyway unless you are really wealthy or live in the country or both). "Investing" in backup supplies, a generator, and "junk" silver coins (gold is not as useful, who can make change?) is an emergency fund I wish I did not have to have.

It is so weird, at the outset of GWB presidency, after the dot-com bust recession ended, I had a dream about "seven years of plenty followed by seven years of famine" and it pretty much has worked out as scheduled so far. Really freaky.

When it comes to politics, these days I'm pretty much "a plague on both your houses" type. I have very little good to say about career politicians of either party.

I think BHO will be completely and utterly ruthless and will say or do anything to get re-elected. If his class warfare rhetoric leads to open violence, so much the better for him: then he can suspend the Constitution and implement martial law.

Now don't get me wrong: I am NOT NOT NOT saying that's what I believe he is doing deliberately. I don't think he has the foresight for that. He seems all about expediency and the next five minutes. How often did he contradict himself during the State of the Union and not even care whether anyone noticed or not?

I'm merely saying that he doesn't care about the distress he causes others one way or the other.

 

[Almington]

Re: Tax Season 2012: Work No Longer Pays

I kind of realized that, but I think the reason for that is because of mainly how quickly the money transfers (M1 supply vs. M2 supply). It's your preference. I do keep most of my savings in M2, but have a little bit in M1 in case something goes seriously wrong. Also one thing to remember about the money market and savings (at least the online ones, not sure if the rules apply to credit unions as well) is that you're only allowed 6 withdrawals a month for free before the federal government makes you pay $10 a transaction. I'm surprised there isn't a deduction for that, similar to CD withdraw penalties.

1.) The difference between M1 (a checking account) and M2 (a savings or money market deposit account) in terms of liquidity is tiny. I can transfer between the two and have the money available no later than the next business day. I can go into the location and walk out with cash immediately. Keeping some cash around isn't a terrible idea, but anything more than a few hundred dollars is excessive and unnecessary (at least for me).

2.) If I'm making more than 6 transfers to/from my normal savings in a month something is very wrong, given that I usually only have 1 (in) and sometimes have 2 (one in, one out) and have never had more than 3. If it is an emergency and I do cross the 6 transaction limit, the $10 isn't going to be my biggest or most pressing problem.

 

[aparch]

Re: Tax Season 2012: Work No Longer Pays

I still haven't received my W2 from my Fall employer. Have the W2 from the employer from the Spring/Summer, a 1099G from Illinois for my unemployment, and a 1099-Div from the stocks I have.

Not looking forward to completing my forms. I think I fear that I owe in.

 

[FlagDUDE08]

Re: Tax Season 2012: Work No Longer Pays

I still haven't received my W2 from my Fall employer. Have the W2 from the employer from the Spring/Summer, a 1099G from Illinois for my unemployment, and a 1099-Div from the stocks I have.

Not looking forward to completing my forms. I think I fear that I owe in.

So long as it's under $1000, you should be fine. Just gather up some interest on the money you have to pay, first.

 

[aparch]

Re: Tax Season 2012: Work No Longer Pays

So long as it's under $1000, you should be fine. Just gather up some interest on the money you have to pay, first.

Not too worried about the stocks. It's just 10 of 'em. Literally. My dividend check was a whopping $14.50.

I'm more worried about my two jobs. I have taxes withheld from the unemployment, but I think I may have made too much with the two jobs to qualify for any nice refund.

 

[FlagDUDE08]

Re: Tax Season 2012: Work No Longer Pays

Not too worried about the stocks. It's just 10 of 'em. Literally. My dividend check was a whopping $14.50.

I'm more worried about my two jobs. I have taxes withheld from the unemployment, but I think I may have made too much with the two jobs to qualify for any nice refund.

My point still stands. So long as what you owe isn't over $1000, you should be fine, as that is when you have to pay penalties. Plus, refunds aren't all that nice, as the government is not required to pay you statutory interest on that money, as long as they aren't late to send you a check. I had missed the Making Work Pay credit on my 2009 return, and was paid statutory interest on that money because of the time difference between when I filed and when I received the check.

If it weren't for the efforts of those darn accounting firms, I could pick up chicks with this knowledge...

 

[FlagDUDE08]

Re: Tax Season 2012: Work No Longer Pays

I love how a bunch of my facebook friends boast about already filing their tax returns, and I don't even have a W-2 or my broker's 1099 yet...

 

[aparch]

Re: Tax Season 2012: Work No Longer Pays

My wife filed hers Friday night. I'm still waiting on a W2.

If mailed, they have until Feb. 15th to deliver, right?

 

[FlagDUDE08]

Re: Tax Season 2012: Work No Longer Pays

My wife filed hers Friday night. I'm still waiting on a W2.

If mailed, they have until Feb. 15th to deliver, right?

According to the 1040 instructions on Page 20, the cutoff date is January 31st. My broker likes to wait until the last second (although it may have to do with how dividends are reported, whether ex-dividend or payment date).

 

[joecct]

Re: Tax Season 2012: Work No Longer Pays

There's gotta be something wrong here:
http://mobile.boston.com/art/28/new...inmate_guilty_of_seeking_890m_in_tax_refunds/

 

[Twitch Boy]

Re: Tax Season 2012: Work No Longer Pays

There's gotta be something wrong here:
http://mobile.boston.com/art/28/new...inmate_guilty_of_seeking_890m_in_tax_refunds/

Kinda reminds me of that guy who files those crazy-*** lawsuits against Tiger Woods and Lady Gaga and other people.

Apparently this isn't that uncommon in prison - it passes the time, and legal-minded inmates like to do stuff like that for practice and to learn about the system.