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Old 05-29-2020, 11:26 AM
 
Location: Log "cabin" west of Bangor
5,993 posts, read 7,197,666 times
Reputation: 11443

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Quote:
Originally Posted by lieqiang View Post
I suspect you'd find a significant overlap with the people who worry that a raise will make cause them to take home less money since they'll fall into a higher tax bracket.

One of the keys, is to use every possible advantage available to legally avoid paying taxes and thereby lower your tax burden.


We use strategies to direct money on a pre-tax basis, to apply funds in such a way as to reduce our adjusted gross income. One example is a vehicle to fund medical expenses- money that we would spend anyway- but these funds are deducted in a way that reduces our AGI. Other funds are directed to tax-advantaged retirement vehicles.


The net effect is to reduce the amount of taxes owed, while still being able to retain the use of those funds for our own benefit.

 
Old 05-29-2020, 04:20 PM
 
Location: Guadalajara, MX
7,491 posts, read 3,644,311 times
Reputation: 14295
We pay (approximately) $0 in federal income taxes, despite doing Roth conversions every year.

God Bless America.
 
Old 05-29-2020, 05:16 PM
 
952 posts, read 1,071,016 times
Reputation: 1407
Quote:
Originally Posted by Rocko20 View Post
They don’t teach you how to file taxes in school, so yes, Uncle Sam is hoping you get screwed.
I've never understood this rationale and the repeated notion that personal finance should be taught it school. I've been out of HS for 12 years but I think I'm still young enough (and manage enough young guys) to know that kids for the most part dont give two ****s about what they learn in school. They definitely dont want to learn about delayed gratification through investing and compound interest. Everything is about consumption and right NOW.

I feel I'm a rare breed I'm a minimalist to my core and I stress out about money more than most even though I save 40%+ of gross.

A coworker of mine my age has been picking my brain for about a year. Im teaching him how to invest, how to fix his credit score, how to keep a budget, how to set himself up for success in the future. But first he needs to pay off his debt. I've suggested many books he read.

One of his questions that almost floored me was "how did you learn so much about personal finance, did your parents teach you" (my parents did not I was 100% self educated). My immediate response was "who taught you how to have sex? Who taught you how to talk to women? I explained that personal finance isn't this complicated thing you need to be taught. Like anything in life if you make it a priority you will find time to educate yourself. If someone dosent want to take the time to learn some of the most impactful things in life on their own, teaching it to them when they're young and dont care wont help them.

People who waste all their time and resources knowing everything about some subject but are complete idiots to PF get no sympathy from me. But I'm happy to help anyone I can just as many on this board have been so helpful to me.

One of my favorite quotes in music applies to my life.

Ask for money, and get advice. Ask for advice, get money twice.
 
Old 05-29-2020, 10:23 PM
 
Location: Honolulu
1,415 posts, read 1,721,481 times
Reputation: 3538
I can tell you're clueless when you use your refund or amount owed as a barometer of whether you "got screwed" or not.
 
Old 05-29-2020, 10:26 PM
 
5,106 posts, read 3,401,898 times
Reputation: 10366
Quote:
Originally Posted by Rocko20 View Post
They don’t teach you how to file taxes in school, so yes, Uncle Sam is hoping you get screwed.
I taught my kids how to do their own taxes as soon as they got out of school. I thought it was important that they understood how their money was taxed. It's just entering numbers from other forms.
 
Old 05-30-2020, 01:11 PM
Status: "Sliding to retirement by the seat of my khakis...." (set 22 days ago)
 
Location: USA
1,493 posts, read 651,032 times
Reputation: 4173
Quote:
Originally Posted by 1ondoner View Post
A better comparison would have been your effective tax rate. This is how to tell if your taxes went up.
Exactly. We went from a small refund to a large payment due. I was slightly miffed until I realized that our income went up and, best of all, our effective tax rate went down a bit. Sleep lost, fxxxs given: nada.
 
Old 05-30-2020, 04:08 PM
 
12,242 posts, read 9,688,746 times
Reputation: 31579
Quote:
Originally Posted by NJDevil View Post
That seems to be the only answer relevant to my direct question. Thanks all for your input. I will see if hubby wants to do the comparisons people suggested.
Can't you do the comparison?
 
Old 05-30-2020, 04:13 PM
 
291 posts, read 121,868 times
Reputation: 530
What a thread.


I think the power of compounding interest should be taught starting in 6th grade, and carried through til graduation. Let them see what would have happened if they had saved $10 a month starting in 6th grade.


I still have not done my 2019 taxes yet, have to save up a bit more for the IRA's to reduce my tax liability. Uggh.
 
Old 06-03-2020, 02:43 PM
 
8,284 posts, read 2,373,980 times
Reputation: 7146
Quote:
Originally Posted by luv4horses View Post
Go back and look at the amount total that you owed. Ignore what you paid in withholding and what you owed still or got back at the end of the year. It’s the total you owed that counts

However when there is a new formula for withholding it screws everyone up. I use an accountant so did not calculate myself, but it appears there is a new and difficult process this year.
Close, but it's actually the effective rate. People don't understand that their income changes so their rate will change.
 
Old 06-03-2020, 02:47 PM
 
8,284 posts, read 2,373,980 times
Reputation: 7146
Looks like the OP is not coming back.
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