Let me have it; don’t hold back

[someguy10]

Originally Posted by Electrician4you

Looks like you’ll be at 33% tax rate for Fed and 10% for state on that income. So at 200k you’ll give up about 80k in taxes. That leaves you with 120,000.
Assuming you have some tax accounts you contribute to let’s call it 5k a year you’re a little less tax but let’s do a qhpuick and dirty. Assume your net is 120k.

The 33% and 10% are the marginal rates, not the effective rates. This article sums up the difference well, but suffice it to say that if your marginal fed rate is 33% and your income is $200K, you are paying substantially less than $66K in fed tax, even before getting to deductions.

https://www.investopedia.com/terms/e...ivetaxrate.asp

[txman210]

Originally Posted by someguy10

The 33% and 10% are the marginal rates, not the effective rates. This article sums up the difference well, but suffice it to say that if your marginal fed rate is 33% and your income is $200K, you are paying substantially less than $66K in fed tax, even before getting to deductions.

https://www.investopedia.com/terms/e...ivetaxrate.asp

Correct marginal isn't total tax paid. I'd expect after 401k, standard deduction or mortgage interest, child credit, and other deductions that the OP would pay probably about 10-15% of gross in taxes for federal. CA is less generous and I'd expect a combined rate of about 7% after deductions. One thing not clear is how much of the income is from each partner, as there is no SS tax after $132K-ish.

FICA is 6.2% up to the limit. Medicare + ACA surcharge on incomes over 250K married at 1.45% + 0.9% for over 250K. SS max for 2019 is $8240. If the OP maxes out his 401k or spouse has access to OP has access to 457, they can deduct 38K. I'll assume that since he said both work.

That would lower total tax burden from 200K to 162K. FICA will depend if they earn above the max or if it's evenly split amongst the two earners. CA tax will likely be around 7% of taxed amount. 2019 brackets are down to 22% marginal now, but with less deductions. I'd expect it to be similar honestly. For the following year, you will be able deduct 10K in CA taxes. Child credit is now 2K. I'm guessing tax burden will be on closer to 130-140K. However, as outlined previously, your net income will likely be closer to 100K then you'd expect.

If we recalculate federal tax on 130K, as the standard is now 24.4K for MFJ, it comes out to around 23-24K federal taxes. Of course you kept the money in your 401Ks but it's not readably accessible. CA tax I'll estimate at 9K. Deductions are "free income." My calculation comes to about 120K after taxes. That's 10K/month. Can that work in SD? Sure. As others have pointed out, if you don't have 20% down, it will be difficult. FHA is 3.5%, but only up to the limit stated previously.

If you have 150K for a down payment, you're good. Otherwise, save.

Something I hadn't seen pointed out is that in general, traffic in SD goes towards to UTC in the morning. I'm sure there's some traffic coming downtown too, but I don't see I-5 and I-805 S nearly as bad as NORTH.

If you want to rent a home (or nice apartment), I don't see many north of I-8 for less than 2K-2.5K/month. That doesn't give you a huge cushion to save for a down payment, as gas is about $3-4/gallon. Food is about the same as I paid in TX. Utilities are very high, but I use far less, so it's been similar. I'm guessing your total COL will be around 5-6K ish/month. While very people can save $50-60K/year, it doesn't go so far when most houses you would want are 800K+.

FYI I'm not a CPA, so don't take my advice as sacrosanct.