IRA can i deduct this somehow

Discussion in 'Business Operations' started by grass disaster, Dec 6, 2007.

  1. grass disaster

    grass disaster LawnSite Silver Member
    Messages: 2,776

    i'm 27 and i'm not really up on all this ira(roth) stuff. i'm getting to the point where i need to start putting $ away for long term investing. i'm currently maxing out my full time job 401k to the company match point. i could put up to 15% in there if i really wanted to.

    can i deduct up to $4000 a year through my business? how does this all work.
  2. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    talk to your CPA or an adviser

    dont take advice from this site on legal issues like this
  3. beano

    beano LawnSite Senior Member
    Messages: 425

    You should talk to an advisor but im in school for finance and the way my accountant was explaining it to me is one IRA (cant remember if its regular or a Roth) you pay taxes on when you put the money in. But its already been taxed so you can withdrawl it without any penalties. The other one is tax defered so it can grow tax free but you pay tax when you withdrawl it. There is a way to use it as a business write off but im not sure how its applied. The best thing you can do is talk with your accountant or personal banker.
  4. Roger

    Roger LawnSite Fanatic
    Messages: 5,951

    Ditto on the financial adviser suggestion.

    I'm not singling you out, but these kinds of questions with regard to taxation, retirement planning, etc. are posed here frequently. As lawn service providers, I hear how important it is for customers to get advice from an LCO to maintain their lawn. But, when it comes to something far more important than a lawn, many folks don't want to spend the time and money to get advice from somebody who knows the topic far better. I don't understand.
  5. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    Now there's a smart Man....

    Agree 100%, It always struck me as Werid when someone would be good at something so they start a Co....

    They like what they do, then the next thing u know, they find out they have to do EVERYTHING, So In doing this there Now being taken away from what They enjoy and there now in a place where they know nothing.....

    And It's useually money...... I never did understand it.
  6. Brianslawn

    Brianslawn LawnSite Silver Member
    Messages: 2,002

    regular IRA you can deduct, but get taxed when you take it out down the road. roth you get taxed now (cant deduct) but dont get taxed when you take it out. at least thats how it is in this state. make sure you diversify.

    and yes most lawnboys are better off working for someone else.
  7. landscaper22

    landscaper22 LawnSite Senior Member
    Messages: 865

    That is correct. Most experts have told me that the roth is better. Your after tax dollars go into the roth and when you retire, you don't have to worry about paying any tax on the money when you draw it out. Take the advise of others, talk to a CPA or finaincial advisor.
    One word of advice though. When you decide to open an IRA or investment account do your homework. I thought I had done my homework, but later realized that many investment companies charge way more in fees than others. There are some really great companies that offer ultra low cost plans of less than 1%. I don't know if I am allowed to mention the names of who is good and who is not, but I know Clark Howard has some good advice about this on his website.
  8. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Messages: 7,673

    As said, talk to a CPA or financial planner. There is much more information you will need to provide for anyone to be much help. There are a number of plans for self employed other than the traditional and the Roth IRA. I'm not particular crazy about either. I am a CPA and would not begin to give you advice over this site. You need a one on one conference.
  9. colawn

    colawn LawnSite Member
    from co
    Messages: 141

    It depends on what your future expectations are... if you expect to make more money later in life you want a roth (you pay taxes in a lower bracket right now b/c you make less money and then take the money out when you are making more money which puts you in a higher taxable bracket.) This year you can contribute up to 5k as long as you earn less than 101k if single or 159k if married. After you earn that then you can no longer take advantage of the roth. So basically if you are making less now than you plan on making in the future you want a roth. And remember 80 percent of mutual fund managers under perform the indexes so the best bet is to just use an index fund unless you know how to find the good money managers. Also if you work for someone else put all you money in the 401k up to the cap your employer will match. Then put the rest in an ira. There is no benefit to 401k after your employer quits matching and there are actually many down sides to it. Good luck...
  10. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220


    my friend a Roth is one of the hottest things going right now......

    your taxed on the money put into it.... IE "income"

    and NOT taxed when taken out..... PROVIDED you dont touch it untill retirement....

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