2006 Tax Return Results February 4
I apparently cannot tax plan worth a damn. I did my taxes last weekend and low and behold I am getting more than six thousand dollar refund. I know it is nice to get a refund especially one that is that large, but if you think about it, you are getting your money returned to you. You gave a loan to the US government which is interest free. I have adjusted my withholdings so next year this will not happen again.
Now the question is what am I going to do with my refund? I am unfortunately ineligible for a Roth IRA. I did some research and discovered that starting in 2010 the income limit on Roth conversions is going away. This is kind of funny if you think about it. You can convert to a Roth IRA, but not contribute one directly. This creates a loophole that you can contribute to a non-deductible IRA and turn around and convert it to a Roth. It is kind of cool. I am going to open a 2006 non-deductible IRA and wait till 2010 to convert it. I will only have to pay taxes on the gains.
The four thousand IRA contribution this leaves over two thousand dollars left. I am going to buy a macbook pro. I know I should save the rest, but I save my entire vacation payoff last month when I got transferred between op co’s. It is going to be my bonus to myself. The IRA contribution should make the savings goal I set in this post about my 2006 year-end financial update.