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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

#61

Post by bingidingi »

pmorici wrote: post #57
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.

No, It's $500 + $6,450 so $580 a month plus an unspecified employer contribution. Because it is a HDHP with an HSA though they are incentivized to keep their costs in check and anything they don't spend of the $6k gets rolled over to the next year and once you hit retirement if you have a surplus at retirement age you can use the money like an IRA.

Wow... maybe I should find a different job with better insurance. I pay ~$12,000 a year for premiums, have an $8k deductible, and don't get an HSA.

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

#62

Post by Booktrope »

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.

Small point, but the average household size in the US is 2.5, on half of the 5 people in this household, so you really can't compare their family income to family income statistics for much smaller families.https://www.statista.com/statistics/183648/average-size-of-h...

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

#63

Post by [deleted] »

lostcolony wrote: post #46
rejectedandsad wrote: post #16

Earlier quoted context omitted.

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 cha…

[deleted]

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

#64

Post by stu2b50 »

bingidingi wrote: post #61
pmorici wrote: post #57

Earlier quoted context omitted.

No, It's $500 + $6,450 so $580 a month plus an unspecified employer contribution. Because it is a HDHP with an HSA though they are incentivized to keep their costs in check and anything they don't spend of the $6k gets rolled over to the next year and once you hit retirement if you have a surplus at retirement age you can use the money like an IRA.

Wow... maybe I should find a different job with better insurance. I pay ~$12,000 a year for premiums, have an $8k deductible, and don't get an HSA.

If that's a PPO, yeah that's kinda atrocious.

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

#65

Post by stu2b50 »

rejectedandsad wrote: post #58
lostcolony wrote: post #46

Earlier quoted context omitted.

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 cha…

I’ve never been able to contribute to an IRA. But realistically for me the only change is I’ll owe instead of getting a refund on account of the withholding. Considering I don’t keep much in cash I’ll need to make some changes in a year.

That's not true, you can always backdoor Roth IRA. And if you have a 401k and depending on how it works you might be able to do a mega backdoor Roth IRA.

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

#66

Post by thrill »

bingidingi wrote: post #61
pmorici wrote: post #57

Earlier quoted context omitted.

No, It's $500 + $6,450 so $580 a month plus an unspecified employer contribution. Because it is a HDHP with an HSA though they are incentivized to keep their costs in check and anything they don't spend of the $6k gets rolled over to the next year and once you hit retirement if you have a surplus at retirement age you can use the money like an IRA.

Wow... maybe I should find a different job with better insurance. I pay ~$12,000 a year for premiums, have an $8k deductible, and don't get an HSA.

As long as Congress, in its great wisdom, makes health benefits correlated to employment, then yes, job shopping for better health plans is a thing.

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

#67

Post by hiram112 »

For any of our friends outside the US, this is not normal. As someone with a similar income (single - not married couple) but 0 children, 0 "special" government deductions, etc, here's a breakdown of my 2020 numbers:

- Income from employer: $168K

- Investment income: $41K

- Total income: $209K

Deductions (rounded numbers):

- $19.5K (private retirement 401k)

- $12.5K standard deduction

- $3.5K health care savings

- $3K MEME stonks losses :(

Approximate taxable income after deductions: $170K

Taxes paid:

- Federal Income tax: $32K

- Federal Social security (gov't pension / disability insurance): $8500

- Federal Medicare (gov't old age health care): $2500

- State Taxes: $10K

Total taxes: $53K

So I'm looking at about 25% taxes due. Also, my employer had to match my federal Social Security and Medicare (which is essentially taken out of my pay), so it's closer to about 31%.

That's certainly better than what (it sounds like) you guys pay over in the UK, EU, etc, especially as my salary over there would be taxed in one of the higher brackets, while in the US, I'm in the "middle", though I have very few deductions that larger families will have (especially if they own a very big house in an expensive state).

In high tax states like California, you would add another 4-5% or so - you'd end up at 35%.

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

#68

Post by RobRivera »

rileymat2 wrote: post #55
RobRivera wrote: post #26

Earlier quoted context omitted.

there is no such thing as loopholes and tax hacking, simply 'THE LAW' noone is beholden to pay more taxes than the tax code requires. anyone who uses emotional appeal to say otherwise wont help me when i need their help anyway so they can pound sand.

I think this will become a pedantic argument, but without defining loophole, we can’t say they exist or don’t. Presumably a law is written with some intent. When that intent or spirit is broken because of poor construction or poor foresight in the text of a law, a lot of people call that a loophole. I think it is a fair definition.

along this line of thought, using a library written for one use case for a separate use case could pedantically be considered a 'hack'.

I simply share the opinion that the people writting tbe laws should recieve the heat, not those doing what they are legally allowed to

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

#69

Post by bsorbo »

stu2b50 wrote: post #28
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…

>because he can't touch it until he is 59.5 (w/o penalty). That's not quite true. With 5 years of preplanning, you can get money out of a 401k without any penalty at any age (although, you will of course pay taxes on it) by doing a backdoor Roth IRA ladder.

Adding onto this, this article compares various approaches to getting money “early” out of a 401k/tIRA (Roth conversion ladder as said here, 72t SEPP’s, early withdrawal penalty), and has the surprising conclusion that even the “just pay the 10% penalty” comes out ahead of regular taxable contributions, at least in some situations.

https://www.madfientist.com/how-to-access-retirement-funds-e...

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

#70

Post by pmorici »

bingidingi wrote: post #61
pmorici wrote: post #57

Earlier quoted context omitted.

No, It's $500 + $6,450 so $580 a month plus an unspecified employer contribution. Because it is a HDHP with an HSA though they are incentivized to keep their costs in check and anything they don't spend of the $6k gets rolled over to the next year and once you hit retirement if you have a surplus at retirement age you can use the money like an IRA.

Wow... maybe I should find a different job with better insurance. I pay ~$12,000 a year for premiums, have an $8k deductible, and don't get an HSA.

Not sure where you live but that is a rip off. You can get a better plan than that in the private market in my state.
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