5 ms·

50% tax? Where do you file taxes?

by eruci 5y ago

borski 5y ago
The top US bracket of 37% + 13.3% in CA (for example) will get you roughly there. NYC has an even higher tax rate. Of course, this doesn't take into account that it's a progressive tax, etc., but I regularly take home only about 50-60% of what I make, after benefits.
- the_only_law 5y ago
  Yeah but is someone making $6k a month in the top bracket in these places?
  - delphinius81 5y ago
    No, but as a contractor you have to pay the full payroll tax (15%) + all the other SS / medicare costs (usually comes to about 2-3%), plus income tax (progressive and varies, but for this bracket is probably federal 15-20%, and up to 10% state). So, add it all up, and it's ~40-45%. Then they have to cover their own health insurance, which again, depends on state, but could be 400-700/mo. So yeah, it's easy to end up with half your money gone with each pay check.
    - meragrin_ 5y ago
      There are cities which take their own cut and then you can also have school income taxes. I wonder if any counties have an income tax.
- msbarnett 5y ago
  ok but he's only making $72,000 a year pre-tax. He's not even close to being in the top tax bracket in the US.
- deleted 5y ago
  [deleted]
- JshWright 5y ago
  $6k/mo ($72k/yr) is a marginal tax rate of ~13% in the US. Combined w/ FICA (self-employed), you'd be looking at ~25%. Also, no benefits being deducted in this case.
qeternity 5y ago
50% effective at $72k/yr. I genuinely cannot figure out the geography for this.
- pc86 5y ago
  Candyland, maybe. There's no jurisdiction in the world that I am aware of where you can both 1) be a remote developer, 2) pay a 50% effective rate on $6k/mo. Even marginal rate is pushing it for that low of an income.
  - trulyme 5y ago
    Let me introduce you to Eastern Europe then. Lots of smart and well educated people, western-like culture, big taxes and fees (50% sounds right), and the rate sounds right for a capable developer, especially if he is a quasi-employee, as this sounds. Remote work is an option, but the US companies that do that often skip EU altogether and hire in "cheaper" places (India comes to mind).
  - t0mbstone 5y ago
    You are forgetting about self employment taxes, which is around 15.3%. Then you have to pay federal AND state taxes on top of that, which is probably another 25-30%. If you are a self-employed contractor and you don't have a lot of deductible expenses, you can easily end up paying 40-45% of your paycheck towards taxes. You also have to account for all of the other expenses that you have to cover without any company help, such as life insurance, disability insurance, health insurance, etc. Plus, you don't really get "paid time off", "sick time", or anything like 401k matching. Essentially, if you are a contractor who wants to make $100, you need to be actually charging your clients $200.
seattle_spring 5y ago
They're self employed, so 12% FICA, 25% fed 10% state would be my very rough guess.
- pc86 5y ago
  Federal + FICA for self-employed is barely 30% for that income and state is going to be well under 10%. Flat tax states will be 3-5% (or 0%) and even California is barely 5% effective rate.
- JshWright 5y ago
  At 72k it would be ~13% fed (and also much lower in any state I can think of).
  - imustbeevil 5y ago
    Says 22% here: https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets https://www.nerdwallet.com/article/taxes/federal-income-tax-... Certainly with the way brackets work they're only paying 22% on anything between ~40K and 72K.
    - JshWright 5y ago
      13% is the "marginal" rate (i.e. the percentage that you would actually pay on 72k, after applying the various brackets)
    - lostmsu 5y ago
      You don't seem to understand how the progressive taxation works. In U.S. you pay 0 tax on first ~20k income, 15% on the next 35k, 22% on next 40k and so on (random numbers). The 22% is what you pay on anything above 55k in this example. But for the first 55k you pay only 20k * 0% + 35k * 15%=5250, e.g. 9.5%
      - deleted 5y ago
        [deleted]
      - deleted 5y ago
sidlls 5y ago
10%-20% federal, 0-10% state, 15% FICA, 3-5% other (varies, includes things like medicare). It adds up.
steve_adams_86 5y ago
Here in BC, Canada, by the time everything is settled I take home around 60%.

50% tax? Where do you file taxes?

by eruci 5y ago

50% tax? Where do you file taxes?

The top US bracket of 37% + 13.3% in CA (for example) will get you roughly there. NYC has an even higher tax rate. Of course, this doesn't take into account that it's a progressive tax, etc., but I regularly take home only about 50-60% of what I make, after benefits.

the_only_law 5y ago
Yeah but is someone making $6k a month in the top bracket in these places?
- delphinius81 5y ago
  No, but as a contractor you have to pay the full payroll tax (15%) + all the other SS / medicare costs (usually comes to about 2-3%), plus income tax (progressive and varies, but for this bracket is probably federal 15-20%, and up to 10% state). So, add it all up, and it's ~40-45%. Then they have to cover their own health insurance, which again, depends on state, but could be 400-700/mo. So yeah, it's easy to end up with half your money gone with each pay check.
  - meragrin_ 5y ago
    There are cities which take their own cut and then you can also have school income taxes. I wonder if any counties have an income tax.
msbarnett 5y ago
ok but he's only making $72,000 a year pre-tax. He's not even close to being in the top tax bracket in the US.
deleted 5y ago
[deleted]
JshWright 5y ago
$6k/mo ($72k/yr) is a marginal tax rate of ~13% in the US. Combined w/ FICA (self-employed), you'd be looking at ~25%. Also, no benefits being deducted in this case.

qeternity 5y ago

50% effective at $72k/yr. I genuinely cannot figure out the geography for this.

pc86 5y ago
Candyland, maybe. There's no jurisdiction in the world that I am aware of where you can both 1) be a remote developer, 2) pay a 50% effective rate on $6k/mo. Even marginal rate is pushing it for that low of an income.
- trulyme 5y ago
  Let me introduce you to Eastern Europe then. Lots of smart and well educated people, western-like culture, big taxes and fees (50% sounds right), and the rate sounds right for a capable developer, especially if he is a quasi-employee, as this sounds. Remote work is an option, but the US companies that do that often skip EU altogether and hire in "cheaper" places (India comes to mind).
- t0mbstone 5y ago
  You are forgetting about self employment taxes, which is around 15.3%. Then you have to pay federal AND state taxes on top of that, which is probably another 25-30%. If you are a self-employed contractor and you don't have a lot of deductible expenses, you can easily end up paying 40-45% of your paycheck towards taxes. You also have to account for all of the other expenses that you have to cover without any company help, such as life insurance, disability insurance, health insurance, etc. Plus, you don't really get "paid time off", "sick time", or anything like 401k matching. Essentially, if you are a contractor who wants to make $100, you need to be actually charging your clients $200.

seattle_spring 5y ago

They're self employed, so 12% FICA, 25% fed 10% state would be my very rough guess.

pc86 5y ago
Federal + FICA for self-employed is barely 30% for that income and state is going to be well under 10%. Flat tax states will be 3-5% (or 0%) and even California is barely 5% effective rate.
JshWright 5y ago
At 72k it would be ~13% fed (and also much lower in any state I can think of).
- imustbeevil 5y ago
  Says 22% here: https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets https://www.nerdwallet.com/article/taxes/federal-income-tax-... Certainly with the way brackets work they're only paying 22% on anything between ~40K and 72K.
  - JshWright 5y ago
    13% is the "marginal" rate (i.e. the percentage that you would actually pay on 72k, after applying the various brackets)
  - lostmsu 5y ago
    You don't seem to understand how the progressive taxation works. In U.S. you pay 0 tax on first ~20k income, 15% on the next 35k, 22% on next 40k and so on (random numbers). The 22% is what you pay on anything above 55k in this example. But for the first 55k you pay only 20k * 0% + 35k * 15%=5250, e.g. 9.5%
    - deleted 5y ago
      [deleted]
    - deleted 5y ago

sidlls 5y ago

10%-20% federal, 0-10% state, 15% FICA, 3-5% other (varies, includes things like medicare). It adds up.

steve_adams_86 5y ago

Here in BC, Canada, by the time everything is settled I take home around 60%.