4 ms·

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

lostcolony 5y ago
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.
- rejectedandsad 5y ago
  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.
  - stu2b50 5y ago
    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.
  - lostcolony 5y ago
    Why will you owe instead of getting a refund? What has changed this year? Are you a 1099 and you didn't contribute enough? Because if you're a W2, and you haven't changed any of your amount withheld, you're just making more, and you got a refund last year, and it's the same employer...I'd be shocked if you ended up owing. Even if you changed employers, it's unlikely you'll end up owing (at least, not much); while the new employer won't know what bracket to start withholding from, the extra amount you'll be paying into social security is an extra 6% that will likely cover much of it.
- deleted 5y ago
  [deleted]

lostcolony 5y ago

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.

rejectedandsad 5y ago
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.
- stu2b50 5y ago
  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.
- lostcolony 5y ago
  Why will you owe instead of getting a refund? What has changed this year? Are you a 1099 and you didn't contribute enough? Because if you're a W2, and you haven't changed any of your amount withheld, you're just making more, and you got a refund last year, and it's the same employer...I'd be shocked if you ended up owing. Even if you changed employers, it's unlikely you'll end up owing (at least, not much); while the new employer won't know what bracket to start withholding from, the extra amount you'll be paying into social security is an extra 6% that will likely cover much of it.
deleted 5y ago
[deleted]