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It’s possible to pay $150 in taxes on an income of $150K

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Re: It’s possible to pay $150 in taxes on an income of $150K

#41

Post by jamesmeador »

SavantIdiot wrote: post #13

The two biggest reducers he cites are 401k contributions and tax-loss harvesting. #1. 401k. While this is a great idea, if he's trying to retire at 33, putting 17.5k away from his 70k paycheck is not going to help because he can't touch it until he is 59.5 (w/o penalty). #2. Capital losses Tax-loss harvesting means selling securities that are underwater to get a capital-loss deduction. I don't know where to start exp…

Most tax-loss harvesting strategies incorporate a re-buy of a similarly-performing but substantially different asset. Of course, selling an asset just to maximize tax losses is unwise, but in the context of diversifying your portfolio, tax loss harvesting has its place.

Re: It’s possible to pay $150 in taxes on an income of $150K

#42

Post by poundofshrimp »

bingidingi wrote: post #23

Holy shit, $500 a year for health insurance? I pay twice that a month and don't even get an HSA option. Seems weird to put so much into retirement funds if your plan is to retire in your 30s, the penalties of touching that before 60 are pretty substantial. I suspect there's some sort of inheritance of property or something they're not disclosing.

HSA has nothing to do with the quality of the insurance plan btw. HSAs are only available in conjunction with HDHP (High Deductible Health Plan). Typically, HDHPs are Bronze level plans that don’t provide a good coverage (which is why HSAs are allowed to supplement such plans).

Re: It’s possible to pay $150 in taxes on an income of $150K

#43

Post by tudorw »

chooseaname wrote: post #9
imajoredinecon wrote: post #4

The author has 3 children, and that's a _household_ income of $150000. 150 grand is not a huge family income to support 2 adults and 3 kids; as a country, we give people tax breaks to encourage having children and to help support people who make that choice. Calling this "Houdini-like" (author's words) tax hacking seems like a bit of a misunderstanding of deliberate social policy!

>>150 grand is not a huge family income to support 2 adults and 3 kids An awful lot of families are doing this on 1/3 of that amount.

About 46% of US families apparently, https://www.statista.com/statistics/183807/number-of-househo...

Re: It’s possible to pay $150 in taxes on an income of $150K

#44

Post by bushbaba »

andrewmcwatters wrote: post #25
Swizec wrote: post #17

The best tax optimization trick you can do is to open an LLC. Costs $800/year to maintain in California, enables you to claim business expenses for a looot of things. Sometimes surprisingly. You don’t even need a whole lot of revenue. Just sell something, anything, and go for it. The penalty for going overboard is to pay back taxes with a bit of interest. As long as you don’t do anything crazy, you should be fine. Re…

Yeah, for anyone reading who needs to read this: don’t do this. Unless you’re running a legitimate business, this is blatant tax fraud. Also $800/yr in California? You people are being ripped off. LLCs aren’t laid any fees to maintain annually in Arizona, and they’re perpetual entities.

If you live in Cali and your Llc is incorporated elsewhere. You still need to report to Cali gov. Cali is not small business friendly

Re: It’s possible to pay $150 in taxes on an income of $150K

#45

Post by knz_ »

imajoredinecon wrote: post #4

The author has 3 children, and that's a _household_ income of $150000. 150 grand is not a huge family income to support 2 adults and 3 kids; as a country, we give people tax breaks to encourage having children and to help support people who make that choice. Calling this "Houdini-like" (author's words) tax hacking seems like a bit of a misunderstanding of deliberate social policy!

It's more than $8000/mo take home. Anyone who can't afford to feed and house 5 people on that budget is probably a degenerate gambler or drug addict.

Re: It’s possible to pay $150 in taxes on an income of $150K

#46

Post by lostcolony »

rejectedandsad wrote: post #16
denimnerd42 wrote: post #2

Yup.. you don't really start to get hit by federal taxes bad until after that 150k mark. You'd still be getting wrecked by property taxes or rent and sales tax in my state though.

This will be the first year I’ll be making more than $150k, not looking forward to next April considering im still basically broke.

Why? Tax brackets are progressive, so even if you had moved up a bracket it wouldn't change the fact you're still making more money (i.e., you don't suddenly go from paying 24% to 32%; you just pay 32% of the money made above the 24% bracket). And given the 2021 brackets, if you're single, you haven't even moved up a bracket ($86,376-$164,925 is the 24% bracket), but even if it had, your effective tax rate barely changes.

About the only thing you lose moving up in income is the ability to contribute to an IRA, and, of course, being able to claim various benefits that you aren't eligible for if you've been in 6 figures anyway.

Re: It’s possible to pay $150 in taxes on an income of $150K

#47

Post by andrewmcwatters »

markdown wrote: post #30
andrewmcwatters wrote: post #25

Earlier quoted context omitted.

Yeah, for anyone reading who needs to read this: don’t do this. Unless you’re running a legitimate business, this is blatant tax fraud. Also $800/yr in California? You people are being ripped off. LLCs aren’t laid any fees to maintain annually in Arizona, and they’re perpetual entities.

Not necessarily. There's a difference between tax avoidance and tax evasion.

Nope, it’s really neither. It’s just straight up breaking the law. You’re not evading taxes because LLCs still pay them, and you’re not avoiding them because LLCs have limited taxation benefits.

Re: It’s possible to pay $150 in taxes on an income of $150K

#48

Post by sbeller »

imajoredinecon wrote: post #4

The author has 3 children, and that's a _household_ income of $150000. 150 grand is not a huge family income to support 2 adults and 3 kids; as a country, we give people tax breaks to encourage having children and to help support people who make that choice. Calling this "Houdini-like" (author's words) tax hacking seems like a bit of a misunderstanding of deliberate social policy!

> October 16, 2013

In 2013 150k seemed a lot IIRC as the economy was in shambles and all those paid with these sweet RSUs and ISOs weren't having it.

Re: It’s possible to pay $150 in taxes on an income of $150K

#49

Post by occz »

SavantIdiot wrote: post #13

The two biggest reducers he cites are 401k contributions and tax-loss harvesting. #1. 401k. While this is a great idea, if he's trying to retire at 33, putting 17.5k away from his 70k paycheck is not going to help because he can't touch it until he is 59.5 (w/o penalty). #2. Capital losses Tax-loss harvesting means selling securities that are underwater to get a capital-loss deduction. I don't know where to start exp…

The suggestion in the link was to sell investments that are underwater and replace them with similar assets, in order to remain invested. Not similar enough to be considered a wash sale, though.

It's not strictly speaking incompatible with buy-and-hold, from my perspective. I'm not an expert though, I don't even live in the U.S.

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