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CNN Live Sunday
Interview With Janet Novak
Aired November 30, 2003 - 10:17 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SEAN CALLEBS, CNN ANCHOR: Well, if the shopping season is here, tax time can't be far away. As always, a little preparation now can make things easier later on. Preparations such as -- well, Janet Novak of "Forbes" magazine knows, and she's in Washington. She joins us now to help us unfold all of this.
Good morning to you, Janet. Thanks very much for coming on.
JANET NOVAK, WASHINGTON BUREAU CHIEF, "FORBES" MAGAZINE: Good morning.
CALLEBS: End of the year, but really a time when people really should focus on their taxes.
NOVAK: Oh, yes. Now is a very good time, for example, to make some moves for both 2003 and 2004. Now is a good time to look at your retirement savings and to see, for example, whether you're putting enough aside in your 401k and to also see if you might qualify for either a regular or a Roth IRA for 2003.
CALLEBS: I want to talk about the IRAs in just a moment. But are there ways, really, this time of year, that people can do things that will actually save them some money on their 2003 taxes?
NOVAK: There definitely are, but you need to be very careful. For example, some of the things you have traditionally heard that you need to do, such as, oh, pre-pay your real estate taxes, will backfire if you are in the alternative minimum tax. So one of the things you need to do, particularly if you earn over about $125,000 a year, is determine if you're in the AMT.
If you are not, it makes sense to pre-pay some of your real estate taxes, perhaps make an extra mortgage interest payment. And there are other things that everyone can do, such as making their charitable deductions, their charitable contributions before December 31.
CALLEBS: Right. Now you talked just a moment ago about the individual retirement accounts. To some people, I guess, they're kind of passe, old news. But are these still the bargain that they were portrayed to be 10, 15, even 20 years ago?
NOVAK: Yes, they are. And it depends what your income is. If you're a couple earning under about $60,000 a year, you can do a deductible IRA and you can save on this year's taxes. However, if you earn up to about $150,000 a year per couple, you have what I consider an even more desirable option, which is a Roth IRA.
Now, the money you put into a Roth won't save you on this year's taxes. It is not deductible. But everything you earn on that Roth is tax-free. And what's important about that is I think that tax rates right now are about as low as they're going to be. So the Roth is very attractive for people at those income levels.
CALLEBS: OK. Janet, let's look ahead to next year. What should people do right now to prepare themselves to perhaps save the most amount of money they can on their taxes?
NOVAK: Well, they should be aware that the 401k contribution limit is rising again from $12,000 this year to $13,000 in 2004 if you're under 50. And it's going from $14,000 to $15,000 if you're over 50. So you need to check with your employer to make sure you're deferring the maximum if you're capable of doing that.
Also, flexible spending accounts for medical expenses. You need to look at what you're putting away. Next year, you'll be able to use these accounts for over-the-counter medications, too. So that's important.
But don't put too much into an FSA, because anything you can't use by the end of the year, you forfeit. So those are two important things to do now. And your employer is going to want you to make those decisions within the next week or two at the latest about your savings for 2004.
CALLEBS: OK. Janet Novak, the D.C. bureau chief for "Forbes" magazine, thanks very much. I hope people are taking notes at home. There's some very good information.
NOVAK: Thank you.
CALLEBS: Thanks again.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired November 30, 2003 - 10:17 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SEAN CALLEBS, CNN ANCHOR: Well, if the shopping season is here, tax time can't be far away. As always, a little preparation now can make things easier later on. Preparations such as -- well, Janet Novak of "Forbes" magazine knows, and she's in Washington. She joins us now to help us unfold all of this.
Good morning to you, Janet. Thanks very much for coming on.
JANET NOVAK, WASHINGTON BUREAU CHIEF, "FORBES" MAGAZINE: Good morning.
CALLEBS: End of the year, but really a time when people really should focus on their taxes.
NOVAK: Oh, yes. Now is a very good time, for example, to make some moves for both 2003 and 2004. Now is a good time to look at your retirement savings and to see, for example, whether you're putting enough aside in your 401k and to also see if you might qualify for either a regular or a Roth IRA for 2003.
CALLEBS: I want to talk about the IRAs in just a moment. But are there ways, really, this time of year, that people can do things that will actually save them some money on their 2003 taxes?
NOVAK: There definitely are, but you need to be very careful. For example, some of the things you have traditionally heard that you need to do, such as, oh, pre-pay your real estate taxes, will backfire if you are in the alternative minimum tax. So one of the things you need to do, particularly if you earn over about $125,000 a year, is determine if you're in the AMT.
If you are not, it makes sense to pre-pay some of your real estate taxes, perhaps make an extra mortgage interest payment. And there are other things that everyone can do, such as making their charitable deductions, their charitable contributions before December 31.
CALLEBS: Right. Now you talked just a moment ago about the individual retirement accounts. To some people, I guess, they're kind of passe, old news. But are these still the bargain that they were portrayed to be 10, 15, even 20 years ago?
NOVAK: Yes, they are. And it depends what your income is. If you're a couple earning under about $60,000 a year, you can do a deductible IRA and you can save on this year's taxes. However, if you earn up to about $150,000 a year per couple, you have what I consider an even more desirable option, which is a Roth IRA.
Now, the money you put into a Roth won't save you on this year's taxes. It is not deductible. But everything you earn on that Roth is tax-free. And what's important about that is I think that tax rates right now are about as low as they're going to be. So the Roth is very attractive for people at those income levels.
CALLEBS: OK. Janet, let's look ahead to next year. What should people do right now to prepare themselves to perhaps save the most amount of money they can on their taxes?
NOVAK: Well, they should be aware that the 401k contribution limit is rising again from $12,000 this year to $13,000 in 2004 if you're under 50. And it's going from $14,000 to $15,000 if you're over 50. So you need to check with your employer to make sure you're deferring the maximum if you're capable of doing that.
Also, flexible spending accounts for medical expenses. You need to look at what you're putting away. Next year, you'll be able to use these accounts for over-the-counter medications, too. So that's important.
But don't put too much into an FSA, because anything you can't use by the end of the year, you forfeit. So those are two important things to do now. And your employer is going to want you to make those decisions within the next week or two at the latest about your savings for 2004.
CALLEBS: OK. Janet Novak, the D.C. bureau chief for "Forbes" magazine, thanks very much. I hope people are taking notes at home. There's some very good information.
NOVAK: Thank you.
CALLEBS: Thanks again.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
