@BelknapPoint, thanks very much for the great example.
I guess there’s good and bad news. It’s too bad that it counts as income, but I guess that’s actually better than if it counted as an asset the second time.
It does seem unfair that it’s counted as income twice, but compared to the money that’s put in a savings account, it’s actually better, I guess. The money that’s put into a savings account counts as income when you first earn it, and then counts as an asset every year after that. The money that you put into a Roth counts as income the first year, and then as nothing for any subsequent years, until the year that you pull it out, when it counts as income again.
I think I know the answer to this question, but I guess home equity loans count as untaxed income in the year that you take them?