Questions for you tax folks.

[Larry]

1) Because I'm taking care of Mom, I have zero earned income. However, I do have money in the bank.

Can I still put money in my Roth and have it act like a normal contribution?

I remember from long ago that the rule for traditional IRAs was that contributions had to come from earned income. But since Roth money gets taxed, anyway (and isn't deductible), I don't know if the same rule applies.

2) Can I donate "on behalf of" the ears I skipped? I think I can still make a contribution and count it as happening in '09. But can I make one and count it as '08?

3) And a question that I suspect isn't as trivial as the previous two:

I own a lot of Disney stock, which has gone up in value. (Sucks, I know. First time I've ever actually made money on a stock.)

Can I transfer the stock into my Roth, without selling it? (Or can I, say, sell it to myself, at the price I originally paid for it?)

Freely admitting that I'm asking for advice on how to avoid paying CG tax on stock I own.

[Corcaigh]

Not a tax person but my 2c :)


1) Because I'm taking care of Mom, I have zero earned income. However, I do have money in the bank.

Can I still put money in my Roth and have it act like a normal contribution?

I remember from long ago that the rule for traditional IRAs was that contributions had to come from earned income. But since Roth money gets taxed, anyway (and isn't deductible), I don't know if the same rule applies.


Yes, you can contribute to a Roth.



2) Can I donate "on behalf of" the ears I skipped? I think I can still make a contribution and count it as happening in '09. But can I make one and count it as '08?


I don't think so - for over 50s you can make a larger catch up contribution (for just this year) but I think it's $6k rather than $5k.




3) And a question that I suspect isn't as trivial as the previous two:

I own a lot of Disney stock, which has gone up in value. (Sucks, I know. First time I've ever actually made money on a stock.)

Can I transfer the stock into my Roth, without selling it? (Or can I, say, sell it to myself, at the price I originally paid for it?)

Freely admitting that I'm asking for advice on how to avoid paying CG tax on stock I own.

I don't think you can transfer stock to an IRA unless they are in an existing retirement account. You can't put an appreciated asset into the Roth without paying tax on the appreciation.

[twa]

Maybe you need to incorporate?;)
Almost a certain no on the selling of stock to yourself at a reduced value.
Not sure on the others.

[The Evil Genius]

I thought you don't have to pay long term CG tax on stocks you own, if you are in the lowest tax bracket?



edit..

acording to wiki - it breaks down like this.

http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States


Looks like it would be 0% for you Larry if you are in the lowest tax bracket. But I would definitely consult someone.

[Corcaigh]

I thought you don't have to pay CG tax on stocks you own for more than x amount of time?

Good point. It depends on his tax bracket and if he has little or no taxable income then he may well pay nothing.

[Larry]

I thought you don't have to pay long term CG tax on stocks you own, if you are in the lowest tax bracket?

I've only owned them a few months. That's one reason why I'm not selling them. (If I sell now, it's a short term CG.)

In addition, the stock is pretty much at a 5-year high. Now, since I bought them at a considerably lower price, I'm willing to "let it ride". But if I have to sell, I'm going to be really reluctant to buy at today's price.

Edit:

I just looked up the short term CG rates. I'd been hearing "35%" for so long, I thought that's what the tax was. It isn't. It's "whatever tax bracket you're in, up to 35%".

(Guess I've been spending too much time discussing tax policy with people who are in the habit of pretending that the top tax rate is the only tax rate.) :)

I just sold.

My only question, now, are the ones about "what can I put in the Roth?"