State Income Tax - Is it Worth it?

I rolled it over when they came out in 96, and just made my last tax payment this past year. There is no question in my mind that they are the best deal around. I have no confidence that taxes will go DOWN in my lifetime, so taxfree is good.


To the extent that my effective tax rate Federal and State was 23% last year, each 10,000 in income would keep 2300 in my Trading Account/ Roth so it is starting to seem pretty compelling.

The Roth still requires you to keep the money in until 59 1/2 except for the purchase of a home ($10,000 max), disability or death of the original owner. In addition to the 5 year test. If you pull it out early the only portion that is tax free are your contributions which have to be pull out last. IRS rules state that your earnings come out first. These are taxable and subject to a 10% penalty except in the above cases.
 
Met a guy at a dinner party last night who said he moved from Jupiter Island Fla. because they jacked his r.e. taxes up to $250,000 a year, was distracted and never got back to him on the value of the house. Anybody know if that bears any semblance to reality?
 
The problem is her logic is wrong. The distribution is not qualified if you are not 59 1/2, disabled, a beneficiary or purchasing your first home.

Her is a link to the IRS website.

http://www.irs.gov/file/display/0,,i1=52&genericId=16220,00.html


Quote from topic 428 Ira distributions.

A qualified distribution is generally, any payment or distribution made after the 5–taxable–year period beginning with the first year for which a contribution was made to a Roth IRA set up for you, and that is made on or after you reach age 59 1/2, made because you are disabled, made to a beneficiary or to your estate after your death, or that is made to buy, build, or rebuild a first home
 
I have read some similar numbers from time to time. Figuring the guy could have a 20M dollar house a 1% property tax in a state with no income tax is very possible. Juniper Island is not exactly downtown Beirut from what I understand.

My first condo was 50K and I paid a little over 1k in property taxes including school tax which was the biggest hit about 750 in my memory.
 
I tried to post a link, but the IRS site shut me out. But Publication 590 on pages 58 and 59 gives some good examples for Roth withdrawals. I was wrong about the contributions, they come out first. They have 3 examples of someone under 59 1/2 taking withdrawals they may be good if this is part of your strategy.

Off to read Cramers new book, have a good weekend.
 
Cashonly,

Thanks for starting this thread. It's funny I have spent the last couple of weeks pondering this exact situation. I currently live in Michigan where the state income tax is about 4.25% (not terrible I guess). In some parts of the state property taxes are pretty stiff.

My thinking has led me to believe that the best place to live in the US from a tax standpoint is probably Las Vegas. There housing looks pretty reasonable too. I guess if one can stand the heat, etc why not???

Anyone here who lives in Vegas care to give us an overview of how long you have lived there, likes and dislikes, etc? Also curious about the current state of their school systems....

Thanks,

Leland

P.S. This Lake Las Vegas development looks interesting...
 
I'd like to hear some recommendation on which city to live in Florida, the pros and cons of each place, especially southern Florida. Thanks in advance.
 
Originally posted by CoolTrader
I'd like to hear some recommendation on which city to live in Florida, the pros and cons of each place, especially southern Florida. Thanks in advance.
More...

My parents live in Lauderdale. I love South Florida. Besides the zero income tax, both your home and retirement funds are exempt from creditors. Problems though are numerous. Broadband is rarely available. frequent electrical storms cause monthly power outages (only minutes at a time, but?) and the threat of obliteration from the long awaited category 5 Hurricane is as great a reality as L.A. falling into the ocean. Good housing costs less then suburban NYC, about the same as Chicago, though prices are rising as fast as any market in the country. Crime is bad but falling and if you're a white, Catholic, non New Yorker or Jerseyite, You'll be about 2.9% of the population. All in all though if Chicago doesn't
warm up soon, I'm down in Fla. in a heartbeat.
 
I live on the beach at the northern tip of Ft. Lauderdale. I have dsl which is very reliable. For the past 2 years I have lived here I can't recall one storm that knocked out my DSL service.

Having come from living in Manhattan, the tax situation and the cost of living is a pleasure. All in all this is a very nice place to live and trade.
 
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