Or people that don't understand the graduated tax scale oye
Tax prep woes ...
- Thread starter ripcord
- Start date
Really depends on your state as to total tax burden, as it should be. I can assure you - some places - it's not THAT low. Sales, property and state income tax.
That said, what people really don't know is we pay business taxes..........
That said, what people really don't know is we pay business taxes..........
NH on business taxes. They finally smartened up and raised tax on profits over $40k->$250k to reduce tax burden and encourage starting business. It was nice to avoid the tax however moreover not pay the extra to file either turbo tax or preparer with state at end of year.
Do you have an opinion on small S-Corps taking all their income via K1 rather than salary? IIRC K1 form S-Corp doesn't apply towards SSI benefit basis. IMO it seems like a Catch-22. They're not getting credit towards SSI which based on their level of income they may be heavily reliant on SSI yet they're trying to take home as much as possible because it's not a lot of income to begin with.
With that big fat Standard Deduction, it's almost like a tax refund in retirement; you Gotta use it or loose it to peel off some of your Trad Ira/401 money and get it into a Roth bucket.Will probably never see a refund again. My adjusted gross income in 2022 was $131.
In 2023 it was $4400. Did not owe anything as I am Poor.
My wife and I are pretty much typical middle class with 40 years in the workforce and just recently retired with very decent monthly social sec benefits - almost enough to live on.
We can convert or withdraw a combined $22,000 - per tax year tax free - if that is the only taxable distribution/event in the mix.
Remember, also, required minimum distribution is on the near horizon (age 72 or 73) which will force you to start aggressively emptying your Trad Ira's, etc., likely forcing a taxable event depending on what you have socked away.
The Roth IRA currently is immune from RMD's and tax on all investment earnings - even upon withdrawal,
Last edited:
Understood/agree, here in VA, we have a state income tax as well as personal property tax on vehicles levied each year and a sales tax. All-in what I pay on a heathy combined (teacher + self-employed geologist but sole/LLC so not an S corp/just pass-through) 6-figure income is about 22% effective (all taxes divided by gross income...gross gross, not the adjusted etc.) last I checked and that's ALL IN as in every tax/fee/etc. including social security/medicare/sales/property/gas/utilites/you name it. 22% to live in the U.S. is pretty reasonable to me and is much lower than any other first world country but again, we trade relatively low taxes for less services which is a different discussion/not the purview of this post. What I always want to hear in these threads is...what do you think is a reasonable as an all-in effective tax rate that you would be willing to pay to live here? I'll stick with my 22% haha
Last edited:
Sure, total tax includes more then the IRS amount. Of course tax cost/value depends on what you get in return.
IMO, it depends on what you end up with, and a lot of that is dependent on what you do with your earnings.
I see so many complainers, blaming everyone and everything but themselves. Well, I have 1 person to blame, and he's a lousy typist.
IMO, it depends on what you end up with, and a lot of that is dependent on what you do with your earnings.
I see so many complainers, blaming everyone and everything but themselves. Well, I have 1 person to blame, and he's a lousy typist.
A Sub-S corp must pay reasonable compensation to its shareholders. Otherwise, IRS can asses extra payroll taxes. It has been this way for about 40 years now by an act of Congress. Now the question is, what is reasonable compensation? Cases have determined it is NOT $12,000 a year for a doctor or lawyer.
I struggled trying to decide to do an S or my LLC...ended up going easy way and just the LLC, I really don't make that much to justify the slight savings in payroll taxes and yes, that's what many do...set your salary at 60K then take the big K1. Just more of a pain IMHO for a simple consulting gig but I have friends in this business that do it that way.
Hermann
Site Donor 2023
Mine is all buried at Ft Knox in silver quarters.
Almost a quarter of all you make and own is still crazy high. For what? That's the problem we can't talk about. But there is a TON of waste and corruption.
I have a couple of thoughts on this.
First of all the gross that you’re paying, in terms of rate, is well below what I’m paying. I know my federal alone is higher than that “all in” number you quote.
When you add in the Virginia income tax, sales tax, and then you start rubbing salt in the wound over property tax, particularly on vehicles, it’s a solid 15% over the number that you are suggesting.
That is too high, in my opinion. Not marginal rate, but an overall rate, of nearly 15% higher than what you’re saying is “reasonable” sounds, to me at least, to be “unreasonable”.
Note, the city of Virginia Beach raised the property tax on my 2016 Toyota tundra from $680 last year, to nearly $800 this year. That’s right, for the rest of you BITOG crowd that is not in VA, I pay $800/year, just to own an 8 year old truck, and the total tax bill, just for cars, is over $2,000/year. That’s not registration, or insurance, those also have a cost, this is just the property tax levy, in municipalities of Virginia.
The overall burden is one of the reasons we are considering leaving the state of Virginia. You may think it’s reasonable, but I do not, and there are states that are much better. Now, for us, the state of Virginia has made a significant step in the right direction, by excepting tax on a small part of my military retirement check. That’s a step in the right direction. But not a big enough one to keep me in VA.
I don't disagree with you. So some of that comes back as social security/medicare so have to factor that back in but of course folks will say no thanks I'd rather just have that money. State/local is a chunk and not sure where else schools, libraries, roads, EMS, etc. will get paid from if not taxes. Federal military costs money. The waste part many complain (folks will say welfare, saving a blue spotted owl, etc. etc.) about is actually a pretty small bit of the federal budget when you do the math but of course waste is waste and reductrion is always the goal. I don't think I pay too much for my lifestyle living in the greatest and richest country in the world.
Wow! Deep in the heart of Taxachusetts my property tax on my 2020 Tundra Plat was $129.82. The first year of ownership is was ~$850.00 but it drops precipitously year after year.
My house valuation is about $770,000 and my property tax was about $10K last year.
I think those are both reasonable.
Last edited:
YMMV at play here and I understand. What's great about the US...you can choose to live in whatever state you want, no papers required and yes, there are cheaper places to live...we will consider that later on when we are done here/kids all moved out etc. For now VA is a nice place and we have a good standard of living.
So for me in Midlothian, VA outide of Richmond:
6 vehicles with market value of about ~$65K total. Personal property tax bill in Chesterfield Co. was about ~$1,000.
House worth~$575,000. Property tax ~$4,000.
Federal income tax (includes my self-employment portion). ~$25K
State income tax. ~$6K
SS/Med for wife. ~$4K
Add in 6% sales tax, gas tax, and all those fees/taxes on your phone/gas/electric/etc bills. I call that ~$8,000.
I am self employed. I pay double what a W2 person does w/r to social and medicare (self employment tax), but I also get a deduction for half of it (with some other math worked in to make it fair against the W2 folks) plus I can write off all my business expenses against my income. I have 3 children but don't get the child tax credit on 2 of them now. I have one in college so can deduct a bit for tuition and I get the AOC credit. Of course retriement and benefits against pre-tax deductions. I also get the pass-thru business tax Trump put in place which is big for me and his increase in the standard deduction also helps. All said and done it's about 20-25% of my gross typically. I didn't make quite as much last year as previous years but even those years with more it ended up about the same as a % range.
Of course the tax discussion is predicated on one million variables when comparing to others b/c our tax system is ridiculously complicated.
Yeah, real estate Mill rates are about the same between your area and mine. The total income tax burden is not that different.
I went to school in Massachusetts, and have many fond memories of that time in my life, but there are some other reasons why I would never move back there, taxes are not high on that list.
This vehicle tax here, though, is high, and I don’t have a ton of value in the automobile fleet, so, I know people paying a lot more in annual taxes on their cars. Enough to be a serious consideration. I think it’s interesting that articles tend to compare just the income tax rate, when there is so much more to the fiscal, and tax, climate, than simply the rate.
Pennsylvania, for example, does not levy an income tax on military pensions. As someone who collects a military pension, is married to someone who collects an military pension, and is looking for future residence, that is a huge tax impact.
Last edited:
Midlothian is one of the areas we are considering. We like Virginia Beach, but they hammer us on both personal property, as well as real estate. My house is about the same value as yours, but I pay 50% more in property tax.
I pay more than double in the vehicle personal property tax.
The rest, I choose not to disclose, but trust me that my arithmetic is accurate.
Our decision to leave Virginia Beach has as much to do with logistics as it does with taxes. We get significantly more value in Midlothian - we could buy a much bigger house than we currently have for the same price as our little house near, not on, but near, the water.
The Richmond area puts us much closer to two of the kids, as well as much closer to a major airport that allows us one flight, a non-stops, to see the rest of the kids, or to travel, instead of having to connect when flying from Norfolk.
But the taxes are certainly in the calculus of where to live.
It's a nice suburb and is growing rapidly. Close enough to city to enjoy what it has to offer. We like it here/been here 19 years but we will likely move on to warmer/beach/something smaller when the time comes. I travel regularly and RIC is a great little regional airport that gets me where I need to go.
I trust your arithmetic - you also likely then earn quite a bit more than me (and have to be 10 years older than me at least based on some of your posts/time you were in the Navy flying) and I always say that I'd be happy to take the higher taxes to have more income in the end. I was still quite shocked with my highest earning year a few years ago when my taxes were still somewhat low on what I thought was quite a bit of income for me at least. As we age the taxes will likely get higher as we don't have the write-offs and credits we do now.
The HR Block software was difficult the last few years, everything looked OK, but at the end, it showed problems that needed review with regard to investment income.
It needed a $0 'entry' in some very difficult to find boxes. Took a phone call to get that issue cleared up.
You'd think I'd find the "drill down" menu, through hours of attempts using the "Edit" button on each investment income. AND you'd think the software would point me to the empty field. But nooooooooooooo, it was not simple, or easy.
It needed a $0 'entry' in some very difficult to find boxes. Took a phone call to get that issue cleared up.
You'd think I'd find the "drill down" menu, through hours of attempts using the "Edit" button on each investment income. AND you'd think the software would point me to the empty field. But nooooooooooooo, it was not simple, or easy.
Last edited:
Hermann
Site Donor 2023
Talk to Joe!
Similar threads
