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It is no secret; if you are single or even married couple with few to nil deductions or credits you are going to pay dearly in taxes. That has been true for ages and this new tax "reform" does little to change things.
Biggest source of those deductions or credits for many low or middle income households are kids. That and if you can pile on earned income tax credit things get even better.
Majority of households in NYC are renters; so that takes off table the other big (or least large) deduction; mortgage and other costs associated with homeownership.
Many low/middle income households either legitimately or not run game by racking up dependents by claiming their grandkids, parents, or anyone else they can who is living with them, and or at least they are paying enough support to qualify.
United States tax code like many other countries favors marriage and children. Singles get screwed royally.
If you aren't planning on having any kids best you can do is either not earn (good luck with that and live in NYC), or try to find ways to lower your AGI. Things like retirement savings and so forth. Other than that you've just got to fine tune your withholdings to ensure your not over or under paying.
The good news though is many renters get to fly the empty seats tax wise ..... unlike a homeowner who actually paid mortgage interest which is still deductible and real estate taxes , renters have none of that coming out of piggy .. so renters like ourselves have very little in deductible items that we actually pay ..
So a renter couple can see a a good portion of that 24k standard deduction come back to them as a gift ....we got back so much of that standard deduction without spending much from piggy since we had no deductible items for the most part ..we throw that gift in with the rent money
Those at lower income end of things get hammered mostly by FICA (aka payroll taxes). Heck even self-employed persons who don't make much get creamed by Medicare, Social Security taxes.
Only way to lower those taxes is by showing less income; this means just that (earning less, though the threshold for FICA taxes is pretty low), and or finding credits/deductions that will achieve same effect.
But remember lower income earners get a whole lot more back per dollar compared to what they put in .. the lowest income earners have as much as 6x the benefit bought per dollar as a high earner ... those fica taxes on the lower incomes act as a pretty good forced savings..
What most people don’t know is that our employment tax dollars don’t all buy the same amount of future benefit. Some of our employment tax dollars buy six times as much in benefits as others.
According to the most recent Trustees Report, for instance, the first $767 of “average indexed monthly earnings” (a complex formula that adjusts earnings over time) is credited at a 90 percent rate, assuring the lowest wage workers of a retirement benefit nearly equal to their earned wage.
Wages of more than $767 a month but less than $4,624 a month are credited at a 32 percent rate. This means retirement benefits increase at a much lower rate. The benefit pinching, however, does not end there.
More means less
For wages of more than $4,624 a month up to the wage base maximum ($113,700 for 2013), the crediting rate is only 15 percent. Thus, all the wages earned — and employment taxes paid — over that $55,488-a-year “bend point” gain benefits at only one-sixth the rate of the lowest wage earners.
In effect, the Social Security benefits formula functions as a sharply graduated benefits “tax,” reducing the benefits that accrue to higher wages by 85 percent. The higher your means, the lower your benefit.
Does anyone here find that they owe more taxes or have little to no refund? Personally, it's very rare that I get a refund, but I sure owed thousands in taxes this year.
I think that the recent tax adjustment hit blue states - and especially cities like New York - very hard, while red states are having a great ol' time collecting more in refunds.
I also know some housekeepers and other hourly employees getting thousands back. I can't figure it out: Besides having a child, or adjusting a holding of zero - what else can anyone do to get "thousands of dollars in refunds" instead of owing?
Two people in the same exact job earning the same exact pay and yet one get a refund and the other not. It depends on withholding and their personal situation. You have no idea who is withholding how much. So best focus on yourself and not on what others are doing/getting/paying.
Short answer.... earn less... maybe get a job as a housekeeper that you seem to look up to.
I always owe... that's on purpose. The government isn't going to have a free loan on me.
Am not debating how SS works, jus stating things are what they are; FICA is a regressive tax that hits low income earners harder than others.
Yes, they get far more back when (if) they file SS or whatever. But that is often cold comfort to those trying to pay their bills now and find a good portion of their meager earnings are eaten up in FICA taxes.
I agree it is regressive but in the same light it is a forced savings .. likely the only savings and income generation they may be able to have as a low earner..
The problem is an income issue not a tax issue .... they simply need more income and need to do whatever it takes to improve things or they risk committing their own financial suicide.
Know people (accountants, CPAs) who moonlight this time of year doing taxes either on their own or for places like H&R Block. Even they cannot see how some people live in this city on sometimes much less than $25k.
Guy said he was trying to get some chick that rent tax credit; but system kept rejecting submissions. Her monthly rent is vastly higher than AGI, and as such system wouldn't accept. In the end they had to simply enter a much lower rent (by about half) which worked.
When asked "how to you manage to pay your bills/live? She showed him her credit card statements! Basically when times are flush she pays down her debts. When times are tight everything that can goes on CC, and or she uses those zero percent balance transfer offers/checks to move money around.
Many of these people like girl I mentioned up-thread are basically paying just FICA/self-employment taxes. They don't make enough to pay federal or often even state/local taxes.
In a way it does seem stupid to pay several hundred to nearly two grand in FICA taxes that people don't have. But besides the dangers of not filing a tax return it really is better for those planning or whatever to get Social Security to file tax returns and make those payments.
No small number of people understand what happens say if you worked for ten or twenty years, then drop off the radar until reach 65 or whatever filing age. Many think just because they get those letters or whatever from SS stating their predicted benefits that every thing is good. Wrong!
When time comes to file for SS and you've got a work record full of gaps, and or you've not worked on the books say for ten or more years out of the thirty-five or so needed to file all those gaps are filled with zeros. Since SS benefits are calculated as an average I presume you all know what zeros do when factored into an average.
Something, anything even if it is only several hundred a year is better than a zero.
I agree it is regressive but in the same light it is a forced savings .. likely the only savings and income generation they may be able to have as a low earner..
The problem is an income issue not a tax issue .... they simply need more income and need to do whatever it takes to improve things or they risk committing their own financial suicide.
For many there will be no answer ...
Wouldn't exactly call it "savings" since none of SS in certain. Yes, as things stand those who qualify will get "something", but who knows what future holds.
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