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Federal Income Tax
Posted on 10/28/21 at 3:34 pm
Posted on 10/28/21 at 3:34 pm
My cousin just got a pretty significant promotion. He was a bit perplexed by just how much his federal income tax changed. The other taxes stayed at about the same percentage. The numbers he shared with me are as follows:
Last month: 8,300 wages, 750 (about 9%) in federal taxes
This month: 12,825 wages, 1,675 (about 13%) in federal taxes
Only thing that changed was salary. Even with our 'progressive' tax structure, that seemed a little too disproportionate...
Seem right to you payroll accountants?
Last month: 8,300 wages, 750 (about 9%) in federal taxes
This month: 12,825 wages, 1,675 (about 13%) in federal taxes
Only thing that changed was salary. Even with our 'progressive' tax structure, that seemed a little too disproportionate...
Seem right to you payroll accountants?
10
Posted on 10/28/21 at 3:55 pm to meAnon
Posted on 10/28/21 at 4:00 pm to meAnon
Assuming he is single....
53000 x .24 = ~1000+ in taxes.
Calcs seem pretty spot on. Remember taxes are progressive, so any additional money is taxed at the highest bracket (ie 24%).
His overall tax rate will be less than 24%, but the additional raise and tax withholdings aren't linear versus his current withholding.
53000 x .24 = ~1000+ in taxes.
Calcs seem pretty spot on. Remember taxes are progressive, so any additional money is taxed at the highest bracket (ie 24%).
His overall tax rate will be less than 24%, but the additional raise and tax withholdings aren't linear versus his current withholding.
Posted on 10/28/21 at 6:04 pm to meAnon
Yeah that does seem right. I work my job about 8 months per year, and have a base salary / retainer the other 8 months, I'm typically off January and work Feb - Oct. My wages jump to around what your cousin makes in February and it's a similar amount.
Posted on 10/28/21 at 6:19 pm to meAnon
Payroll withholding is the dumbest calculation known to man. Every payroll provider uses the standard IrS withholding tables, and nothing about your previous or future checks goes into the calculation.
They simply take how often you get paid and multiply it by your gross pay that check. If your pay fluctuates the system doesn’t take it into account.
In other words, you can’t take your paycheck withholding and assume it’s all that accurate for lots of folks.
They simply take how often you get paid and multiply it by your gross pay that check. If your pay fluctuates the system doesn’t take it into account.
In other words, you can’t take your paycheck withholding and assume it’s all that accurate for lots of folks.
Posted on 10/28/21 at 8:22 pm to meAnon
Imagine the impact on wealth accumulation if the government allowed us to save more tax free rather than capping it?
I mean, the lifestyle of someone making 500,000 and 600,000 isn’t that much different but the government won’t allow someone to put 100,000 in a 401k.
It’s worth it to have wages lowered snd put more into
I mean, the lifestyle of someone making 500,000 and 600,000 isn’t that much different but the government won’t allow someone to put 100,000 in a 401k.
It’s worth it to have wages lowered snd put more into
Posted on 10/29/21 at 7:35 am to meAnon
quote:
Even with our 'progressive' tax structure
The USA has the MOST progressive tax structure in the OECD.
Tax Foundation
Posted on 10/29/21 at 1:44 pm to meAnon
Flat tax sure would be nice....
Posted on 10/29/21 at 4:21 pm to meAnon
Tell your cousin to take the additional income and max out his retirement contributions, then (if he and dependents are fairly healthy) get a high deductible health plan and max out the HSA contributions.
This will knock his tax bill down and his retirement accounts will take off.
This will knock his tax bill down and his retirement accounts will take off.
Posted on 10/31/21 at 10:28 am to meAnon
We need to get rid of payroll withholding.
Tax policy would change overnight if everyone had to cut a check every year.
Tax policy would change overnight if everyone had to cut a check every year.
Posted on 11/1/21 at 9:41 am to meAnon
The more money you make, the higher the rate of tax.
Look, withholding is just an estimate, that is why you a file an annual tax return - to reconcile everything.
Payroll withholding tables are set up so that if you have one job, one person, no other income, and take the standard deduction, you should get a small refund on your tax return. Therefore, you can say that the payroll withholding tables, by design, slightly over-withhold.
Look, withholding is just an estimate, that is why you a file an annual tax return - to reconcile everything.
Payroll withholding tables are set up so that if you have one job, one person, no other income, and take the standard deduction, you should get a small refund on your tax return. Therefore, you can say that the payroll withholding tables, by design, slightly over-withhold.
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