Taxes are to high!
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@larsen161 said:
@travisdh1 said:
@johnhooks had to bring this up in "that other thread that got out of hand". So I decided to start a thread dedicated to taxes, and what is or is not reasonable.
For the record, I make less than $40k/year currently, have 20.5% taken in deductions, and a 7.5% local sales tax. Also, yes, I'm getting the resume and precis ready for a job hunt.
Does anyone think 28% when making less than 40k is reasonable? (Actually get to spend ~28,800.) That doesn't include the healthcare crazy.
you're paying 20.5% on what you earn and 7.5% on what you spend so you're not at 28% tax with $28.8k to spend. it's $31.8k spendable
Yeah I would only Count Income tax.
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@johnhooks said:
@PSX_Defector said:
@johnhooks said:
@PSX_Defector said:
@johnhooks said:
No one would think that's reasonable. Around here, you can figure around 80% is take home, until the next tax bracket.
Unless you plan on making triple what you make now, the "next" nominal bracket is the 28% one. And that rate is only for the money made after that threshold. I'm deep into that bracket.
Let's break down what someone should be seeing in a paycheck. To make this simple, let's assume state income tax out of the equation, because they vary from flat 3.75% in Illinois, a progressive scheme of up to 5.25% in Oklahoma to 0% in Texas. We will also assume you work for a company, so standard W2 wages and we will assume they are cheap ass bastards who went "hurr durr obamacare" and refuse to offer health insurance. Medicare is 1.45% flat, no matter how much you make. FICA is 6.2% up to $118K, then it's nothing. Federal taxes are a progressive tax system, from 10% up to 39.6%. Consult your local tax professional for more info.
If you are making $40K flat, single, taking the standard deduction, your AGI would be ~34K. $2480 would go to SS, $580 would go to Medicare. The 34K would put you in the 15% tax bracket, 10% up to $9K then 15% on the rest, $3716, for $4638 total. If you set up your W4 correctly, you should have ~$620 a week net on $769 gross, or 19%.
These calculations change with your situation. I make a lot more than $40K, my tax deduction is 24% per paycheck with an effective rate of around 19% after all my deductions and such.
If you ever hear people quoting some crazy numbers on taxes, always break it down on them to find out exactly what they are getting. You will find that most people are talking out their ass.
Ah sorry I should have clarified my position more. I'm married filing jointly so the next for me would be $74,901. Plus PA state tax is 3.07% plus the local township/borough junk here which changes drastically depending on the area and is charged both where you live and where you work (in our side of the state this can end up being 2-3%). I also wasn't counting any deductions in that so that does make a difference in your favor.
With married joint, your AGI would be 13K versus the 6k. So you would be making ~90k raw before you hit my tax bracket.
People always forget it's AGI, not what you make. I made decent 6 figures last year, woo gambling wins, but my AGI is well under that.
Ah true good point, I have a daughter too so it would be more, what is it like 17k?
Ya I just looked it up. It's 4k for each child.
There is also a $3K child tax credit. So, using my $40K example, you would be at ~$700 a week per paycheck if you set it up right. Paying close to nothing in federal income tax. Then there is EITC, which would bring you down to 0 if not make money off the whole thing.
Deductions are good. Credits are better.
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@MattSpeller said:
@scottalanmiller said:
Yeah, you take home WAY more than we do.
If you have kids, RRSP, those can hugely alter your taxes (give you back $$$$$$$)
Also remember that our sales taxes are eye watering, 13% on average for most provinces.
My income taxes suck because, I'm single and make decent you cane penalized for that here. If I was married or had kids I'd get a lot of breaks.
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@Jason said:
@MattSpeller said:
@scottalanmiller said:
Yeah, you take home WAY more than we do.
If you have kids, RRSP, those can hugely alter your taxes (give you back $$$$$$$)
Also remember that our sales taxes are eye watering, 13% on average for most provinces.
My income taxes suck because, I'm single and make decent you cane penalized for that here. If I was married or had kids I'd get a lot of breaks.
Kids I understand - but married? I suppose PSX's example above said a single person got $6K in deductions, and married/head of house hold filing jointly gets $13K, so there's a tiny advantage.
Would you get more than that?
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@Dashrender said:
@Jason said:
@MattSpeller said:
@scottalanmiller said:
Yeah, you take home WAY more than we do.
If you have kids, RRSP, those can hugely alter your taxes (give you back $$$$$$$)
Also remember that our sales taxes are eye watering, 13% on average for most provinces.
My income taxes suck because, I'm single and make decent you cane penalized for that here. If I was married or had kids I'd get a lot of breaks.
Kids I understand - but married? I suppose PSX's example above said a single person got $6K in deductions, and married/head of house hold filing jointly gets $13K, so there's a tiny advantage.
Would you get more than that?
Not sure the exact amounts for State level but you get more if you are married and filed jointly.
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@larsen161 said:
Looking at the UK at a similar £40k salary just 24% tax on that and healthcare is included. sure vat is higher at 20% but it's already calculated into the costs for goods and food is 0 rated along with a bunch of other stuff.
the value I get here for the tax I pay is like I've won the lottery compared to when I was in the us. and saying that, the lottery winnings here are 0 rated too - no taxes to pay if you win it big.
Yeah, but once your salary hits £43k your income tax rate shoots up to 40%.
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@Carnival-Boy said:
@larsen161 said:
Looking at the UK at a similar £40k salary just 24% tax on that and healthcare is included. sure vat is higher at 20% but it's already calculated into the costs for goods and food is 0 rated along with a bunch of other stuff.
the value I get here for the tax I pay is like I've won the lottery compared to when I was in the us. and saying that, the lottery winnings here are 0 rated too - no taxes to pay if you win it big.
Yeah, but once your salary hits £43k your income tax rate shoots up to 40%.
That's just painful.
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@Jason said:
I don't think you can count all deducations since some of those you opt into. Mine would be really high with all the Retirmenet, Company stocks etc I do.
I Pay 18% in State Income Taxes and 28% in Federal so 46% of my pay goes to taxes.
That's about me too.
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@travisdh1 said:
@Dashrender said:
@JaredBusch said:
My tax rate (counting healthcare) is something like 35% when I looked at my last paystub for 2015. Refund this will be about $3k because I forgot to change the amounts last fall like I generally do once I have paid in enough to cover my taxes.
That's weird - why would you pay in early? In fact, why not do the opposite, short them as much as possible, bank the cash and send them a check?
It's the world's worst savings plan! I've known people who used taxes like a savings account before, not such a great way to go about things. Personally I've got it to the point where it's as close to zero at tax time as possible (normally $40 or so either way.)
Because I forgot to adjust my W4 amounts last year. I normally do that about September once I have a solid grip on my expected tax for the year. I have long aimed for a ~$100 owe/refund amount.
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@JaredBusch said:
My tax rate (counting healthcare) is something like 35% when I looked at my last paystub for 2015. Refund this will be about $3k because I forgot to change the amounts last fall like I generally do once I have paid in enough to cover my taxes.
@JaredBusch another perk of the uk - no filing of taxes is generally necessary - the PAYE system keeps track of how much you earn and pay as the year goes on.
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@larsen161 said:
@JaredBusch said:
My tax rate (counting healthcare) is something like 35% when I looked at my last paystub for 2015. Refund this will be about $3k because I forgot to change the amounts last fall like I generally do once I have paid in enough to cover my taxes.
@JaredBusch another perk of the uk - no filing of taxes is generally necessary - the PAYE system keeps track of how much you earn and pay as the year goes on.
Yeah, that is very nice. Taxes are a huge burden of effort in the US and very easy to get wrong and the onus is totally on the individual to be a tax expert. It's a terrible system.
And for those of us abroad, it's a huge pain. I was dealing with tax paperwork today, in fact, and had to drive my family all over just dealing with pointless logistics of tax filing.
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@JaredBusch said:
@travisdh1 said:
@Dashrender said:
@JaredBusch said:
My tax rate (counting healthcare) is something like 35% when I looked at my last paystub for 2015. Refund this will be about $3k because I forgot to change the amounts last fall like I generally do once I have paid in enough to cover my taxes.
That's weird - why would you pay in early? In fact, why not do the opposite, short them as much as possible, bank the cash and send them a check?
It's the world's worst savings plan! I've known people who used taxes like a savings account before, not such a great way to go about things. Personally I've got it to the point where it's as close to zero at tax time as possible (normally $40 or so either way.)
Because I forgot to adjust my W4 amounts last year. I normally do that about September once I have a solid grip on my expected tax for the year. I have long aimed for a ~$100 owe/refund amount.
If it wasn't for possible penalties, I'd pay zero all year and just write a check every year on April 15, get the interest myself.
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@Dashrender When I was self-employed that is what I did... the penalty for not filing my quarterly's was small enough I felt is wasn't worth my time dealing with.
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@Dashrender said:
@JaredBusch said:
@travisdh1 said:
@Dashrender said:
@JaredBusch said:
My tax rate (counting healthcare) is something like 35% when I looked at my last paystub for 2015. Refund this will be about $3k because I forgot to change the amounts last fall like I generally do once I have paid in enough to cover my taxes.
That's weird - why would you pay in early? In fact, why not do the opposite, short them as much as possible, bank the cash and send them a check?
It's the world's worst savings plan! I've known people who used taxes like a savings account before, not such a great way to go about things. Personally I've got it to the point where it's as close to zero at tax time as possible (normally $40 or so either way.)
Because I forgot to adjust my W4 amounts last year. I normally do that about September once I have a solid grip on my expected tax for the year. I have long aimed for a ~$100 owe/refund amount.
If it wasn't for possible penalties, I'd pay zero all year and just write a check every year on April 15, get the interest myself.
Since April 15 is my birthday, feel free to write me a check too.
