Since the end of July is approaching, I wanted to tally up my year-to-date gross income. I anticipate remaining in the 15% tax bracket ($8,375 to $34,000) this year, and for that reason, I plan on doing a Roth IRA conversion from one of my traditional IRAs. I'll pay a lot less in taxes than if I did a conversion during a year of full employment. Given my normal salary range, I'd likely be in the 25% tax bracket.
So anyway, I can't complete the total gross for 2010 becus I have one more unemployment check coming in this week.
But I was able to tally up the total the Census Bureau reimbursed me for gas mileage from the time I started work in late April through end of July = $751. Because I always track my monthly expenses, I could see that what I actually spent on gas for my Honda during that time was just $231, and that included my usual running around doing errands and grocery shopping when not working, etc.
So I made a net PROFIT of $520 just on mileage reimbursements, on top of my Census wages! Cool!
Looks like my gross YTD income through end of July will be in the vicinity of $16,647 reportable income (with $1,490 of non-reportable income earned through surveys, focus groups and Craig's List sales).
So if my year-end income (mostly unemployment benefits) comes out to about $26,167, and factoring in about $1,900 in investment income (on a par with last year), that means I can do a Roth conversion of just $6,000 if I want to be taxed at 15% on it. I guess if I did a greater amount, that portion that runs over the 15% tax bracket, $34,000, would be taxed at the 25% tax rate. Is that right?
How I made a $520 profit from Census work mileage reimbursements
July 25th, 2010 at 02:54 pm
July 25th, 2010 at 03:07 pm 1280066878
My first job out of college was actually travel intensive. I was still driving the car I paid $1k for at age 16, and eventually replaced it with a car in the $6k range. I made SO MUCH money off mileage reimbursements. You definitely come out ahead if you are getting reimbursed for an older vehicle versus new.
On the taxes, you are correct. Have you looked into the savers credit? You may also be able to put some money in a ROTH, and get a nice credit back. (i.e., put away $2k, and get back $1k?). Just keep it in mind when you do your tax return. I just looked it up and income cutoff was $16k, single. So maybe, you won't qualify, but I am not sure how nailed down 2010 numbers are on this credit. I remember it being a little more generous - we qualified before on much higher income.
July 25th, 2010 at 03:21 pm 1280067684
As far as how well you make out with the mileage reimbursement, doesn't it have more to do with the fuel efficiency of your vehicle than its age? I know wear and tear is an issue, and actually was a little concerned about the wear and tear on my starter since at every house you stop at, you turn off the engine, talk to the people for 5 minutes or so, and then get in and go to the next house.
I don't know anything about the saver's credit! I will have to look that up!
July 25th, 2010 at 03:34 pm 1280068448
Here's a quote from a Merrill Lynch paper on the subject:
"Based on the contributions you make to a 401(k) plan or other eligible retirement plans, the tax credit ranges from 10% to 50% of each $1 you contribute, up to the first $2,000 you put into the plan."
I anticipate being right around that income level of $27,000 or so by year's end.
So between the partial tax credit I MIGHT be eligible for (it would be a $200 tax credit for me) or converting about $6K to a Roth and paying 10% less in taxes to do so (savings of $600), I think the latter would be better, if my math is right.
July 25th, 2010 at 03:43 pm 1280068983
To be clear, I would do the ROTH conversion. Just double check on that when you do your taxes. I am not sure the 2010 figures are set in stone - there was some proposals to increase the credit. (Probably not, but worth a check, come January).
July 25th, 2010 at 03:45 pm 1280069128
July 25th, 2010 at 05:05 pm 1280073917
This means you can probably convert more like $15,350 to your ROTH while staying in the 15% bracket.
July 25th, 2010 at 07:23 pm 1280082185
Well, as long as i have til April 15 2011 to do my Roth IRA conversion i should be ok cus i can figure it all out when i do my taxes.
July 25th, 2010 at 07:53 pm 1280083993