Jewish World Review March 9, 2000 / 2 Adar II, 5760
Subcontractors must pay S.S.
DEAR BRUCE: My wife is a court reporter who works for a private firm as a subcontractor. We each started Roth IRAs last year. Since my wife is self-employed and pays no Social Security, can she contribute more than $2,000? -- T.S., Knoxville, Tenn.
DEAR T.S.: I don't know how your wife is getting away with not paying Social Security. She is obligated as a self-employed person to pay the self-employed rate, which is slightly over 15 percent.
I urge you to have an appropriate tax preparer take a look at your taxes and very possibly submit an amended return. It's unequivocal that if your wife is working as a subcontractor she is as responsible for the Social Security deductions as any other self-employed person is. There is no allowance for contributing more than $2,000 to a Roth IRA account, other then rolling over an existing retirement account.
DEAR BRUCE: My question deals with selling a home and calculating the capital gain or loss. Are homeowners allowed to deduct the real-estate commission they pay the broker when they sell? In other words, do you take the difference between what you are paying for the home and what you sold the home for, less expenses? -- J.G., Nashua, N.H.
DEAR J.G.: Under the new tax laws, unless you as a couple exceed a $500,000 profit, you don't have to have any records -- you just keep the money. The only proviso is that it must have been your principle home for two of the last five years.
The beauty of this one is that it can be repeated time and time again. Unlike some past legislation where you had a one-shot deal, now you can make $250,000 as an individual every two years and when you sell the home you keep the entire profit. Not bad!
DEAR BRUCE: Do you have a rule of thumb for projecting income from the interest in a nest egg without invading principal? I want to have a reasonable estimate of what my income will be apart from Social Security and my defined benefit pension plan. -- D.W., Cincinnati
DEAR D.W.: Unfortunately, without other information, you are asking an impossible question. We would have to know the amount of principal that we are working with and what your requirements are to maintain whatever schedule you have determined is appropriate. You must also determine your tolerance for risk. If you forward those details to us, I would be glad to take another
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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03/01/00: Is time-sharing a scam?
02/29/00: Paying for nursing-home care
02/28/00: Rely on a real-estate lawyer
02/23/00: Keeping child's money safe from divorce
02/16/00: Just how important is a 401(k)?
02/14/00: Shaky partnership buying house
02/11/00: Protection by residential zoning
02/09/00: Benefiting from a reverse mortgage
02/07/00: Ensure your insurability
02/04/00: Absurd community zoning laws
02/02/00: Money or securities?
02/01/00: Can we KO a custodian?
01/31/00: Why sell a home you love?
01/26/00: Everyone needs a will
01/25/00: Will splitting stocks affect rollover?
01/24/00: Should early retirees contribute to SEP?
01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
01/13/00: Who gets the house?
01/11/00: It all depends on size of estate
01/06/00: Check references before hiring an advisor
01/04/00: Savings bonds a bad investment
12/31/99: Out of state ain't that great
12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
12/23/99: Options good only when company's strong
12/20/99: Capital gains tax sometimes best
12/17/99: Don't give up your nest egg
12/15/99: Small-claims court no panacea
12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...