3 ms·

This math is remotely not accurate. 42% tax rate ? Tax rates are progressive. I made a whole lot more last year and my effective Federal + State was 28%. Rememb

by dmode 8y ago

This math is remotely not accurate. 42% tax rate ? Tax rates are progressive. I made a whole lot more last year and my effective Federal + State was 28%. Remember, there are a ton of deductions available. $6k in rent ?? Who pays that ? I have a large house and my mortgage payment is close to 4.5k. And I am building massive equity on my home as well as paying down an expensive asset. Home insurance is $1k for the whole year, while health insurance is roughly $250/month for the whole family. If you play your cards right, you can save upto 200-300k in 3-4 years. Now here's the cherry on top. Add a partner who makes the same amount.

zeroonetwothree 8y ago
Just tried in TurboTax. $300k income in CA has effective tax rate of 35%.
- dmode 8y ago
  I filed my taxes with TurboTax last year. Did you account for state tax deduction, mortgage deduction, property tax deduction, standard deduction, child tax credits, 401k deductions, charity deductions, and a myriad of other options ? There is no way for anyone to say what an accurate effective rate would be. Mine was 28% last year
  - magnetic 8y ago
    There are new rules that are not particularly advantageous for people making good money in CA due to the fact that CA has a fairly high state income tax rate and the new limits for the bucket of deductions it fits in. https://www.fidelity.com/viewpoints/personal-finance/how-has-tax-reform-changed-deductions https://www.fidelity.com/viewpoints/personal-finance/how-has... If you own a home in the Bay Area, chances are you hit the limit on your property taxes alone.
- periya 8y ago
  Guess the OP files taxes as married filing jointly. That could cause a dip in the effective tax rate.
matchagaucho 8y ago
Enter $300K into https://smartasset.com/taxes/income-taxes https://smartasset.com/taxes/income-taxes Take home pay for CA is $185K
- jedberg 8y ago
  Before deductions.
- dmode 8y ago
  I entered "married" in the same calculator and it gives me a 29.75% effective rate and 210k take home. If your math above is for a single person, I haven't met anyone who is paying more than $2500 in rent. $6k for a single person is way out of range.
  - nomel 8y ago
    > I haven't met anyone who is paying more than $2500 in rent. Out of everyone know, I'm the only one paying under $2500. How many bedrooms and what's the square footage of these places? Are they shared?
yalok 8y ago
you get hit by AMT. Or at least it used to be the case, before Trump changes - didn't do my taxes this year yet. 30% Federal + 15% state, and when you try to do deductions, you hit AMT.

by dmode 8y ago

zeroonetwothree 8y ago

Just tried in TurboTax. $300k income in CA has effective tax rate of 35%.

dmode 8y ago
I filed my taxes with TurboTax last year. Did you account for state tax deduction, mortgage deduction, property tax deduction, standard deduction, child tax credits, 401k deductions, charity deductions, and a myriad of other options ? There is no way for anyone to say what an accurate effective rate would be. Mine was 28% last year
- magnetic 8y ago
  There are new rules that are not particularly advantageous for people making good money in CA due to the fact that CA has a fairly high state income tax rate and the new limits for the bucket of deductions it fits in. https://www.fidelity.com/viewpoints/personal-finance/how-has-tax-reform-changed-deductions https://www.fidelity.com/viewpoints/personal-finance/how-has... If you own a home in the Bay Area, chances are you hit the limit on your property taxes alone.
periya 8y ago
Guess the OP files taxes as married filing jointly. That could cause a dip in the effective tax rate.

matchagaucho 8y ago

Enter $300K into https://smartasset.com/taxes/income-taxes https://smartasset.com/taxes/income-taxes Take home pay for CA is $185K

jedberg 8y ago
Before deductions.
dmode 8y ago
I entered "married" in the same calculator and it gives me a 29.75% effective rate and 210k take home. If your math above is for a single person, I haven't met anyone who is paying more than $2500 in rent. $6k for a single person is way out of range.
- nomel 8y ago
  > I haven't met anyone who is paying more than $2500 in rent. Out of everyone know, I'm the only one paying under $2500. How many bedrooms and what's the square footage of these places? Are they shared?

yalok 8y ago

you get hit by AMT. Or at least it used to be the case, before Trump changes - didn't do my taxes this year yet. 30% Federal + 15% state, and when you try to do deductions, you hit AMT.