3 ms·

You are right, I should be more precise. If you earn more than $523,600 and are single, then your tax rate is not 50% but 37%, which is still meaningful amount

by vjeux 5y ago

You are right, I should be more precise. If you earn more than $523,600 and are single, then your tax rate is not 50% but 37%, which is still meaningful amount that is often not considered when looking at those big numbers. https://www.manafld.com/blog/2021/2/26/rsus-no-sell-tax https://www.manafld.com/blog/2021/2/26/rsus-no-sell-tax If you are in California, then your employer will not give you all your RSU but sell 40% and give you 60%. So you don’t have a big scary surprise when it’s tax season. https://blog.myrawealth.com/insights/rsu-tax-rate https://blog.myrawealth.com/insights/rsu-tax-rate

lotsofpulp 5y ago
> If you earn more than $523,600 and are single, then your tax rate is not 50% but 37% The federal income tax rate only for income above $523k is 37%. Only for income above $523k. > If you are in California, then your employer will not give you all your RSU but sell 40% and give you 60%. So you don’t have a big scary surprise when it’s tax season. Withholding amounts seem irrelevant when discussing effective tax rates.
- erwincoumans 5y ago
  federal + income tax + social taxes will be closer to 45% in California, at that income level (approx. 30% federal tax, 10% state tax, 4% FICA)
  - lotsofpulp 5y ago
    I am getting 42% according to this website: https://smartasset.com/taxes/income-taxes#gJwOxy2ei7 https://smartasset.com/taxes/income-taxes#gJwOxy2ei7 But that is without 401k/HSA/etc.
    - vecinu 5y ago
      HSA contributions and gains are taxable in California, so that won't help your taxes.
pyrale 5y ago
Is it 37% marginal tax rate or 37% effective? I calculated 42% effective on lifetime income, and I suppose the writer was not taxed at 42% on their 100k income from the first years, so the tax rate for later years must have been higher.
Rebelgecko 5y ago
This doesn't line up with my experience. I have the option of having anywhere from 22-37% of my RSUs withheld to pay taxes. The IRS only forces you into the 37% supplemental withholding rate if you make more than $1,000,000/year which alas is a problem I've never had.
BeetleB 5y ago
> If you are in California, then your employer will not give you all your RSU but sell 40% and give you 60%. That is entirely irrelevant. You will get taxed the same no matter what they sell and give you. If your tax rate should be less than 40% (true for me, and probably most people here), you'll get the money back as a refund. You do miss out on any appreciation, but if you know your marginal tax rate is < 40% (just look at your previous tax returns to figure it out), you can simply spend the delta to buy the stocks you should have gotten and you'll still get the appreciation (and the cash in the tax refund to compensate you for doing this).

by vjeux 5y ago

lotsofpulp 5y ago

> If you earn more than $523,600 and are single, then your tax rate is not 50% but 37% The federal income tax rate only for income above $523k is 37%. Only for income above $523k. > If you are in California, then your employer will not give you all your RSU but sell 40% and give you 60%. So you don’t have a big scary surprise when it’s tax season. Withholding amounts seem irrelevant when discussing effective tax rates.

erwincoumans 5y ago
federal + income tax + social taxes will be closer to 45% in California, at that income level (approx. 30% federal tax, 10% state tax, 4% FICA)
- lotsofpulp 5y ago
  I am getting 42% according to this website: https://smartasset.com/taxes/income-taxes#gJwOxy2ei7 https://smartasset.com/taxes/income-taxes#gJwOxy2ei7 But that is without 401k/HSA/etc.
  - vecinu 5y ago
    HSA contributions and gains are taxable in California, so that won't help your taxes.

pyrale 5y ago

Is it 37% marginal tax rate or 37% effective? I calculated 42% effective on lifetime income, and I suppose the writer was not taxed at 42% on their 100k income from the first years, so the tax rate for later years must have been higher.

Rebelgecko 5y ago

This doesn't line up with my experience. I have the option of having anywhere from 22-37% of my RSUs withheld to pay taxes. The IRS only forces you into the 37% supplemental withholding rate if you make more than $1,000,000/year which alas is a problem I've never had.

BeetleB 5y ago

> If you are in California, then your employer will not give you all your RSU but sell 40% and give you 60%. That is entirely irrelevant. You will get taxed the same no matter what they sell and give you. If your tax rate should be less than 40% (true for me, and probably most people here), you'll get the money back as a refund. You do miss out on any appreciation, but if you know your marginal tax rate is < 40% (just look at your previous tax returns to figure it out), you can simply spend the delta to buy the stocks you should have gotten and you'll still get the appreciation (and the cash in the tax refund to compensate you for doing this).