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All I know is that I am reasonably intelligent , and my CPA came in found stuff I missed, and pointed out some things I should be doing. If the OP has zero investments and there is only income through W4s and there are no deductibles, it might not be as much of an issue. If self-employment or rental property or any of a dozen other things are part of the mix, hiring a pro makes sense. If I KNEW what a CPA would find, I wouldn't need one, would I?
All I know is that I am reasonably intelligent , and my CPA came in found stuff I missed, and pointed out some things I should be doing. If the OP has zero investments and there is only income through W4s and there are no deductibles, it might not be as much of an issue. If self-employment or rental property or any of a dozen other things are part of the mix, hiring a pro makes sense. If I KNEW what a CPA would find, I wouldn't need one, would I?
You said your CPA found stuff, what was it? You signed off on the return with the legal liability and you don't know what he found?
$17,000 in deductions on a $100,000 of income isn't very much, sorry. Like others have said, max out your 401K's, max out your HSA if you have one. This is just the way it is for younger married couples with not children. It's also a good time to max out those accounts because on paper you should have more disposable income to do so and the time value of money plays in your favor. Just maxing out your 401K's, $36,000/year between the 2 of you, will eliminate "owing".
Just some numbers--say you put away $36,000 for the next 5 years and then stop. At a very modest 6% growth over the next 35 years (assuming you are 30, retire at 65). That will grow to about 4.1 million dollars. Now, change that to putting away $10,000/year, assuming 5% for each of you, that will grow to $874,000 assuming the same tax rate, interest rate and time frame.
$17,000 in deductions on a $100,000 of income isn't very much, sorry. Like others have said, max out your 401K's, max out your HSA if you have one. This is just the way it is for younger married couples with not children. It's also a good time to max out those accounts because on paper you should have more disposable income to do so and the time value of money plays in your favor. Just maxing out your 401K's, $38,000/year between the 2 of you, will eliminate "owing".
Just some numbers--say you put away $36,000 for the next 5 years and then stop. At a very modest 6% growth over the next 35 years (assuming you are 30, retire at 65). That will grow to about 4.1 million dollars. Now, change that to putting away $10,000/year, assuming 5% for each of you, that will grow to $874,000 assuming the same tax rate, interest rate and time frame.
If someone is being pained by paying 10500 in fed taxes putting 36,000 not 38k into 401ks would be even more painful at least to current cash flow
If someone is being pained by paying 10500 in fed taxes putting 36,000 not 38k into 401ks would be even more painful at least to current cash flow
oops--typo in the one paragraph--36K...had it right in the 2nd.
being pained by paying taxes doesn't always mean they don't have the money--just that they don't like paying taxes . If a couple with no children making 100K can't sent aside 36K, they are not being frugal enough.
Figuring 36K 401K and 5K for health and insurance deductions, take home pay would be roughly $3100/month. Figuring just health insurance deductions, same rates, etc. $5500/month. Obviously that will vary with different state/local taxes, etc. but reducing your taxable income by 36K plus the end result for your retirement savings is well worth cutting back for just 5 years....
Maxing out the 401k shouldn't change anything, since it's all pre-tax.
If you max out your IRA, then yes that would change it because you're essentially getting a credit because you've used post-tax dollars to fund a pre-tax account. Hence when you do your taxes, you'll end up getting money back from that deduction.
oops--typo in the one paragraph--36K...had it right in the 2nd.
being pained by paying taxes doesn't always mean they don't have the money--just that they don't like paying taxes . If a couple with no children making 100K can't sent aside 36K, they are not being frugal enough.
Figuring 36K 401K and 5K for health and insurance deductions, take home pay would be roughly $3100/month. Figuring just health insurance deductions, same rates, etc. $5500/month. Obviously that will vary with different state/local taxes, etc. but reducing your taxable income by 36K plus the end result for your retirement savings is well worth cutting back for just 5 years....
You say 36k on 100k like it's nothing. It's 36% of gross
100k gross
5100 fed tax
7650 fica
35000 401k -2014
52k net +/- or 4354 monthly before any other deductions
They just aren't being frugal enough lol, well by putting 35,000 aside you reduced their current tax liability 5k but reduced their monthly cashflow by 2500
Maxing out the 401k shouldn't change anything, since it's all pre-tax.
If you max out your IRA, then yes that would change it because you're essentially getting a credit because you've used post-tax dollars to fund a pre-tax account. Hence when you do your taxes, you'll end up getting money back from that deduction.
Well we have identified the first problem. You don't understand how things work, maxing your 401k would reduce your taxable income in a given year lowering your federal income tax liability for that year.
How much did you pay in federal income taxes total for the year between you and your wife?
$17,000 in deductions on a $100,000 of income isn't very much, sorry. Like others have said, max out your 401K's, max out your HSA if you have one. This is just the way it is for younger married couples with not children. It's also a good time to max out those accounts because on paper you should have more disposable income to do so and the time value of money plays in your favor. Just maxing out your 401K's, $36,000/year between the 2 of you, will eliminate "owing".
Just some numbers--say you put away $36,000 for the next 5 years and then stop. At a very modest 6% growth over the next 35 years (assuming you are 30, retire at 65). That will grow to about 4.1 million dollars. Now, change that to putting away $10,000/year, assuming 5% for each of you, that will grow to $874,000 assuming the same tax rate, interest rate and time frame.
I just don't see how I increasing 401k deductions will reduce tax owed at the end of the year. It shouldn't. It decreases taxes owed per paycheck because it's like you never earned that money to begin with, and it's not taxed.
Last year I made around $50k and did 4% 401k. But my employer gives me 16%.
This year I'll make around $110k and did up my contribution to 15%, but my employer also gives 16%, so that's an effective 31% contribution. Between our retirement accounts and taxable accounts we have $450k, we are 33. I'm fairly comfortable with our savings so far, and just think 31% in addition is almost too much.
My wife makes around $58k and we don't use her employer 401k because it's not really that great, long vesting etc.
2013 our taxes were (this was with each having one (1) allowance) on our W4, which I thought would provide for the correct taxes taken out with each person doing the standard deduction)
$135k AGI
$104k taxable
------------------
$18.5k in total tax due
Total tax payments were $13k meaning we owed over $4.5k!
2014 taxes were (with my at a 0 and her at a 1 for allowances):
$101k AGI
$75k taxable
------------
$11k total tax due
$10k tax payments owing just under $1k.
I'm afraid to go back to 2013 taxes in 2015 with our income growing, owing $5k!
Why are we owing so much money?!? That year we had an allowance of (1) each. I thought that is what you are supposed to do? How is it possible we are owing so much?
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, and my CPA came in found stuff I missed, and pointed out some things I should be doing. If the OP has zero investments and there is only income through W4s and there are no deductibles, it might not be as much of an issue. If self-employment or rental property or any of a dozen other things are part of the mix, hiring a pro makes sense. If I KNEW what a CPA would find, I wouldn't need one, would I? 
