Comments on: Money-Market Accounts: Tax Free or Not Tax Free? http://blog.filife.com/money-market-accounts-tax-free-or-not-tax-free/ A production of FiLife, a new personal-finance site that goes live later this year. Thu, 04 Dec 2008 02:49:25 +0000 http://wordpress.org/?v=2.6.2 By: Andy http://blog.filife.com/money-market-accounts-tax-free-or-not-tax-free/#comment-12258 Andy Thu, 02 Oct 2008 15:02:16 +0000 http://www.filife.com/money-market-accounts-tax-free-or-not-tax-free/#comment-12258 I just moved my cash sitting on the sidelines to the Vanguard tax exempt money market fund. The yields on these tax free money market funds are amazing espically if you are in the 25% tax bracket and above. A 7.5% equivalent yield with a low 0.17% management fee. Can’t beat that in today’s market. If you live in a state that has state specific tax free money market funds then you are even better off - the Triple Play! I just moved my cash sitting on the sidelines to the Vanguard tax exempt money market fund. The yields on these tax free money market funds are amazing espically if you are in the 25% tax bracket and above. A 7.5% equivalent yield with a low 0.17% management fee. Can’t beat that in today’s market. If you live in a state that has state specific tax free money market funds then you are even better off - the Triple Play!

]]> By: Ari Weinberg http://blog.filife.com/money-market-accounts-tax-free-or-not-tax-free/#comment-299 Ari Weinberg Tue, 30 Oct 2007 16:01:51 +0000 http://www.filife.com/money-market-accounts-tax-free-or-not-tax-free/#comment-299 The interest earned in taxable savings accounts is taxed along with other taxable income - wages etc. - at whatever rate that may be. If you want to think about a maximum %, then you are considering your marginal tax rate on the last dollar. While it may be handy to consider this the rate you are paying on a savings account, it's not exactly accurate. The interest earned in taxable savings accounts is taxed along with other taxable income - wages etc. - at whatever rate that may be.

If you want to think about a maximum %, then you are considering your marginal tax rate on the last dollar. While it may be handy to consider this the rate you are paying on a savings account, it’s not exactly accurate.

]]> By: marlis toulouse http://blog.filife.com/money-market-accounts-tax-free-or-not-tax-free/#comment-296 marlis toulouse Tue, 30 Oct 2007 00:43:33 +0000 http://www.filife.com/money-market-accounts-tax-free-or-not-tax-free/#comment-296 How much are savings accts taxed (Fed & State?) Is it the maximum % or based on "income" that yr? thanks How much are savings accts taxed (Fed & State?) Is it the maximum % or based on “income” that yr?

thanks

]]> By: The Finance Buff http://blog.filife.com/money-market-accounts-tax-free-or-not-tax-free/#comment-183 The Finance Buff Sun, 30 Sep 2007 05:23:49 +0000 http://www.filife.com/money-market-accounts-tax-free-or-not-tax-free/#comment-183 Thank you for referring to my post and calculator. I'm glad you found them helpful. You are correct in your notes. Although the post used Vanguard money market funds as examples, the calculator is not limited to Vanguard. The fifth kind, AMT Free state-specific tax-exempt fund, was added so one can compare the Vanguard state specific tax exempt fund (with AMT exposure) to the Fidelity ATM free fund. The calculator is not even limited to money market funds. You can use it for regular bond funds as well. As for the question "Do you itemize deductions for your state income tax? (no effect if you pay AMT)" perhaps it can be worded better. What I meant was that the state income tax paid is deductible on the federal tax return only if (a) you itemize deductions as opposed to taking the standard deduction; and (b) you don't pay AMT. Any suggestions? Thank you for referring to my post and calculator. I’m glad you found them helpful. You are correct in your notes. Although the post used Vanguard money market funds as examples, the calculator is not limited to Vanguard. The fifth kind, AMT Free state-specific tax-exempt fund, was added so one can compare the Vanguard state specific tax exempt fund (with AMT exposure) to the Fidelity ATM free fund. The calculator is not even limited to money market funds. You can use it for regular bond funds as well.

As for the question “Do you itemize deductions for your state income tax? (no effect if you pay AMT)” perhaps it can be worded better. What I meant was that the state income tax paid is deductible on the federal tax return only if (a) you itemize deductions as opposed to taking the standard deduction; and (b) you don’t pay AMT. Any suggestions?

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