3 ms·

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

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%.

stu2b50 5y ago
Tbf your income is also very not normal. The article is a much more typically family income - their combined income is still less than your individual income by 50k! Because they are two people, they’re doubling up on things like the 401k deduction. You make far, far more than them. The “average” American would be able to get pretty close to what the article is doing. But probably shouldn’t and won’t because you can also see they’re leaving a pitiful amount for themselves to live on in the moment.
- walshemj 5y ago
  My thought too 41k in income would need more than than $1,500,000 asuming your takin a sensible yield. I get about £4k on the 180k in my ISA her in the UK
andrejguran 5y ago
on $209k salary or £148k, here in UK the total tax is £46,632 and £6,838 for National Insurance. So about 36% which is almost the same as California. Source: https://www.thesalarycalculator.co.uk/salary.php https://www.thesalarycalculator.co.uk/salary.php
- walshemj 5y ago
  Might be lower when you factor in Pension and ISA - and that's not counting and approved share schemes, VCT EIS and SIS.
jokethrowaway 5y ago
In the UK, I calculated I paid roughly 22% on a similar employee salary by putting enough money in pension contributions (+ employer match and government match). I also have a limited company where I do occasional work (without having to increase my income taxed at 40%) and that I use to draw dividends from (up to free allowance) yearly and get some other advantages, which was a decent way to get extra untaxed income. These days the allowance is 2k so there is not much to get. The disadvantage of using a pension is that I won't get that money until I'm 60 (and they keep increasing the age where you can withdraw money). I'm kinda forced to do that and maximise I'd rather invest the money in buy-to-lets than the weird ETF a pension is, but then I would lose 40% of my money to the government. Being employed in the UK is not very convenient over 50-70k (and it becomes especially painful at 100-120). You are always better as a contractor outside of IR35 with your own limited company, unless some of the benefits make it worth it (eg. long paid m/paternity leave, stock options you really care about). Unfortunately being outside IR35 is getting more complicated, corporate tax rate is increasing and buy-to-lets lost some of the tax advantages they had. Overall if I had to pick a country with bad weather to make money in, I'd go with Switzerland instead of the UK.

stu2b50 5y ago

Tbf your income is also very not normal. The article is a much more typically family income - their combined income is still less than your individual income by 50k! Because they are two people, they’re doubling up on things like the 401k deduction. You make far, far more than them. The “average” American would be able to get pretty close to what the article is doing. But probably shouldn’t and won’t because you can also see they’re leaving a pitiful amount for themselves to live on in the moment.

walshemj 5y ago
My thought too 41k in income would need more than than $1,500,000 asuming your takin a sensible yield. I get about £4k on the 180k in my ISA her in the UK

andrejguran 5y ago

on $209k salary or £148k, here in UK the total tax is £46,632 and £6,838 for National Insurance. So about 36% which is almost the same as California. Source: https://www.thesalarycalculator.co.uk/salary.php https://www.thesalarycalculator.co.uk/salary.php

walshemj 5y ago
Might be lower when you factor in Pension and ISA - and that's not counting and approved share schemes, VCT EIS and SIS.

jokethrowaway 5y ago

In the UK, I calculated I paid roughly 22% on a similar employee salary by putting enough money in pension contributions (+ employer match and government match). I also have a limited company where I do occasional work (without having to increase my income taxed at 40%) and that I use to draw dividends from (up to free allowance) yearly and get some other advantages, which was a decent way to get extra untaxed income. These days the allowance is 2k so there is not much to get. The disadvantage of using a pension is that I won't get that money until I'm 60 (and they keep increasing the age where you can withdraw money). I'm kinda forced to do that and maximise I'd rather invest the money in buy-to-lets than the weird ETF a pension is, but then I would lose 40% of my money to the government. Being employed in the UK is not very convenient over 50-70k (and it becomes especially painful at 100-120). You are always better as a contractor outside of IR35 with your own limited company, unless some of the benefits make it worth it (eg. long paid m/paternity leave, stock options you really care about). Unfortunately being outside IR35 is getting more complicated, corporate tax rate is increasing and buy-to-lets lost some of the tax advantages they had. Overall if I had to pick a country with bad weather to make money in, I'd go with Switzerland instead of the UK.