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401k and healthcare deductions lower your actual taxes and even if they don't because you get nailed by the AMT, they are not even taxes. They are savings and should be counted as part of your savings you do each year.
I never said they weren't savings. I said after all deductions we only get paid about half of our salaries.
$200k/yr = ~$16,600/month
Hitting our bank account: ~$8,400
You can't pay a mortgage or credit card bill with 401k "savings". All that matters is what hits your bank account. And even then we have to pay additional taxes.
Well deductions including 401k is a terrible way at looking at your net pay in your bank account because they are afterall savings. My fed tax rate is in the low teens, FICA is under 7.65% so my tax bill is right around 20%
I paid 1.47% federal income tax my first year out of college. I'd much rather pay my higher rate now, because I make a lot more money.
I never said they weren't savings. I said after all deductions we only get paid about half of our salaries.
$200k/yr = ~$16,600/month
Hitting our bank account: ~$8,400
You can't pay a mortgage or credit card bill with 401k "savings". All that matters is what hits your bank account. And even then we have to pay additional taxes.
But you could with relative ease stop the 401k contributions if you needed higher cashflow to pay your mortgage
Well my income is over 200k and even still my fed/FICA rate is right around 20%
People always say they pay such low taxes but I just don't see it on my end. Unless you have a lot of deductions or kids. When asked they never actually disclose anything they do. Which I fund "funny".
On my income alone, looking at my end of year W2
Total taxes - federal, state, SS, medicare: $37k
Total income (gross) - $126k, ~30% tax rate, but keep going
After 401k (pretax deduction not Roth) - $108k gross - actual 34% tax rate
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And that is just what was deducted, not what we have to pay extra
People always say they pay such low taxes but I just don't see it on my end. Unless you have a lot of deductions or kids. When asked they never actually disclose anything they do. Which I fund "funny".
On my income alone, looking at my end of year W2
Total taxes - federal, state, SS, medicare: $37k
Total income (gross) - $126k, ~30% tax rate, but keep going
After 401k (pretax deduction not Roth) - $108k gross - actual 34% tax rate
----------------------------
And that is just what was deducted, not what we have to pay extra
200k in income max 2 401ks and take the standard deduction married filling jointly
I'm gonna have to get TurboTax spooled up later but using the 1040 worksheet at the end of the tax tables
Wages $216k
Short term gains $20k
- $25k in 401k deductions
$211k x .28% - $13k = $46k in federal taxes (does that include FICA and medicare?)
Ignoring long term cap gains sales that I can't figure out now
$46k/$211k = ~21%, is that correct?
I'm not sure what your numbers are. It's not including FICA though. At 216k gross, 25k in 401k, standard dedudcution you'd be in the teens in effective federal income tax rate ignoring cap gains
I'm gonna have to get TurboTax spooled up later but using the 1040 worksheet at the end of the tax tables
Wages $216k
Short term gains $20k
- $25k in 401k deductions
$211k x .28% - $13k = $46k in federal taxes (does that include FICA and medicare?)
Ignoring long term cap gains sales that I can't figure out now
$46k/$211k = ~21%, is that correct?
Why are you calculating taxes like that? You only pay 28% on the portion of your income in that bracket. P,us your deductions come out before you calculate and you y are forgetting the personal exemptions.
Why are you calculating taxes like that? You only pay 28% on the portion of your income in that bracket. P,us your deductions come out before you calculate and you y are forgetting the personal exemptions.
$236-25-12.6-8..1
That would be a tax of $40.27k assuming no kids.
That's a federal rate of ~ 17%
Yes I know how the marginal rate works. To be fair I'm not quite sure how the deductions/exemptions work, I know they are there but never understood exemptions in addition to standard deduction with no kids. Ridiculously complicated, and getting more so every year (here's to the flat $30k deduction Trump wants!!).
Form 1040 instructions instructs you to figure out your taxes like that.
I was just trying to get an idea. It's unfortunate there isn't a flat rate that covers all federal taxes you pay. Because in addition to paying Federal income tax you also pay SS and Medicare, which is pretty significant. It needs to be all combined. People need to see in one spot how much money is going to the Feds.
Anyway I did download Turbotax and put our info in it. Had we not had any short or long term cap gains or dividends we'd have gotten a refund, which would be the first time in about 8 years. Pretty excited about that. Because we overpaid and I withheld a good chunk from a stock sale for taxes we'll actually end up owing less money than I thought. Awesome news. At least we are finally at the point where we are getting a refund in taxes, I am ecstatic about that.
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