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Tax Question

Discussion in 'Off topic' started by Shwafta, Jan 10, 2019.

  1. Shwafta

    Shwafta Active Member

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    Hi everyone. I recently received a job offer in NYC for $80,000 (+healthcare, 401k, dentalcare) and I'm trying to figure out how taxes on it would work, because I just honestly don't understand. After federal, state, and city taxes, as well as social security, medicare etc, how much will I be left with? (and i didn't ask but generally does healthcare/401k come out of the 80,000 or is it complimentary? No idea how this stuff works.)
    Thanks to anyone in advance.
    Basically I'm trying to debate whether the 80k salary job in the city (train commute + parking) is more worth it than 65k with 50 minute drive, but less commute money.

    I appreciate any help at all.
    Thanks y'all
     
  2. Kyle Koerner

    Kyle Koerner Newbie

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  3. gbservis

    gbservis Senior Member Elite Donor Donor Seasoned Supporter

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    There are some free online tools that can help to estimate that for you. Most seem to do it by state though so I don't think they include the 3% city tax so you'd probably want to take that off after it gives you a result just to be safe.

    This one from ADP looks pretty comprehensive:

    https://www.adp.com/resources/tools/calculators/salary-paycheck-calculator.aspx
     
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  4. mgarbowski

    mgarbowski Senior Member Elite Donor Donor Seasoned Supporter

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    You won't be living in NYC? If so, NYC income tax will not apply.
     
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  5. Shwafta

    Shwafta Active Member

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    My main issue with all these is just... I have no idea what half of those fields mean, and i don't even know where to begin looking the info up. There are so many little complications that it just confuses the hell out of me. (Keep in mind i'm only 21 and have never really had to deal with this in full before.) Like when it comes to allowances and all that. Could I just leave most of them at 0 for simplicity's sake?
     
  6. Shwafta

    Shwafta Active Member

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    Oh? I thought you get taxed for income based on where you work, not based on where you live?
     
  7. ZYanksRule

    ZYanksRule Active Member

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    It can be both. My office is in CT but I live in NY, I get taxed by both.

    One thing to remember: Your 401K contributions and your medical plan deductions are both pretax. So if you're contributing, say, 10% of your salary to your 401K, and if your medical plan is $50/pay period, you'd be discounting a total of $9,300 from your salary -- so your taxable income would be $70,700 instead of $80,000.
     
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  8. mgarbowski

    mgarbowski Senior Member Elite Donor Donor Seasoned Supporter

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    That's generally correct but the NYC non-resident income tax was repealed years ago. NYS still has it.
     
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  9. gbservis

    gbservis Senior Member Elite Donor Donor Seasoned Supporter

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    NYC tax is only for residents of NYC so if you are outside of the 5 boroughs you don't have to pay it. This is super rough and I'm sure there are actual accountants on here that know far more than me but a lot of the boxes on the ADP form probably don't apply to you. For the ADP thing I linked below is rough guidance on which boxes you need to fill out to get a reasonable estimate, if I don't list a box just leave it blank or whatever its defaulted to:

    1. Gross Pay: 80,ooo
    2. State: New York (assuming you live in new york state, if you don't this gets harder)
    3. Federal Filing Status: Single (unless you are married)
    4. # of Federal Allowances: 0 (I'd do this just to be safe unless you have kids worst case you overestimate you taxes and get a more conservative number)
    5. Additional Withholding - NYC - leave blank unless you live in NYC
    6. Voluntary Deductions -
    a. click 401K if you will have one and add the amount you will put towards it
    b. click "Other" and put you health insurance cost in if you will have one and you know it

    I just ran it with everything above for an example, for 401K I did 4% (you're young do as much as you can now), and for health insurance I did 1.5% (wild guess as this is very employer dependant) $80K salary, 0 federal allowances:

    Calculated at 01/10/2019 21:04:19

    Gross Pay: $3076.92 <- your paycheck before they take all the stuff below out of it

    Federal: 458.40
    Fica: 190.77
    Medicare: 44.62
    State: 154.72
    FLI: 4.71 . <- All these things in the middle are money taken out of the check
    SDI: 1.20
    Health insurance: 46.15
    401K: 123.08

    Net Pay: $2053.27 (your actual paycheck that goes in the bank for 2 weeks of work)
     
  10. roxfontaine

    roxfontaine Level Up Elite Donor Donor Seasoned Supporter

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    I'd say take the max deductions you can. The game, for me, is to take the max deductions so that I get my money up front. It's just a free loan for the government.

    At 80k, you will be taxed heavily filing single zero.
     
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  11. Shwafta

    Shwafta Active Member

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    Wow, thanks. I think I understand now. Do allowances just mean that you are taxed less based on certain criteria like children, marriage, etc?
    That's more in two weeks than I've had in my bank account ever. lol.
    based on experience, and especially at my age (i'm estimating 400/month for commuting fees) what percentage of my salary should go towards security funds and 401k? (my parents say some companies cap 401k at a certain percentage, if the company matches what you put?)
     
  12. sundance

    sundance Regular Member Elite Donor

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    If the company matches, at minimum you should put in as much as required to get the maximum match. Otherwise, up to you. But I’d recommend putting as much as possible, as soon as possible, toward the 401(k). If you have student loans there are more considerations involved.
     
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  13. gbservis

    gbservis Senior Member Elite Donor Donor Seasoned Supporter

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    Allowances determine how much taxes are taken out of your paycheck. You will have to set this up in your first week or so at work. Each allowance you take reduces the amount of taxes that are taken out. The higher the number the less money they take out. The tricky thing is that none of this is actually determining how much you pay in taxes, you are just approximating how much you should be taxed based on how many deductions you can take (such as kids, etc).

    At the end of the year you do your taxes and that is when it's determined how much you actually owe in taxes. At this point you compare the amount that you paid over the year in each paycheck based on your allowances to what you actually owe. If they took out more money than your taxes end up being you get a refund. If you selected an allowances number that was too high, they will not have taken out enough and you will have to pay the difference.

    You don't want to make your allowances too low because then the gov't is just holding your extra money for a year with no interest. On the other hand getting an unexpected bill at the end of the year because you set your allowances too high can be a crappy surprise. Everyone does it their own way but I prefer to get some money back than all of a sudden owe money so I choose to set my allowances low when your single with minimal deductions that means 0 or 1.
     
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  14. ZYanksRule

    ZYanksRule Active Member

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    It's not that the company caps what you can put in, the company will only match up to a certain percentage. So for example, my company matches up to the first 6% -- but if you only put in 4%, they only match 4%. So you're leaving free money on the table unless you hit their max match. I'd ask your HR person what that number is. If they'll match everything up to 6%, you should put 6% away on your 401K.

    You can put away more than that if you feel able to -- you can put away 10%, but your company match will still be 6%.

    Your situation depends on a number of factors. Do you have student loans? Do you live with your parents or are you renting your own place, etc. If you're living with your parents, you have far fewer bills and can afford to save more money a month.
     
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  15. Shwafta

    Shwafta Active Member

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    I see. That's sorta what I thought about it, but I guess the actual amount of allowances doesn't matter much to me up until this point due to the fact that I'm still young and haven't had anything that could raise the number of allowances yet. Thanks for the help!

    Oh, I understand. So let's say they cap at 6% as in your example, if I put 10% away then they will match 6% and that extra 4% will be put away unmatched- essentially I'm getting 16% total (my 6%, their match, and my 4%)?

    Also, I have student loans but very very minimal- I managed to get by with i think 5,000 or so. So I'm thinking of just paying it off in a single swoop as soon as I can rather than monthly or weekly, so I'm not factoring that in, and I will currently live with my parents so that I can save up first before I go out.
    ----

    Thanks all for the help, it's quite scary knowing you're 5 months away from jumping out of the airplane, but the sky diving instructor helping you always makes the fall easier.
     
  16. hatt91

    hatt91 Junior Member Elite Donor Seasoned Supporter

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    Something else to consider, I guess this is for everybody. If you make very close to the same amount each year and your deductions and credits are roughly the same, you can set up your paycheck to have the same amount taken out each week. For example if you know you will end up owing $2000 in federal income tax, you can set up your paycheck to have $39 taken out each week. The way you do this is by filling out a W4 and setting the allowances to 99 and then under that you put $39 in the line that says any additional amount you want taken out.
     
    Last edited: Jan 10, 2019
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  17. hatt91

    hatt91 Junior Member Elite Donor Seasoned Supporter

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    Also try to be diligent about the 401(k). You are young and that is the best time to start saving. Nothing grows an investment like time. Stick with it.
     
  18. Shwafta

    Shwafta Active Member

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    Well currently I'm going to be entry level, with a an assessment every half year for at least the first two years where there will be salary raise discussions based on my progress so it's not going to be the most stable currently.
     
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  19. 21Architect

    21Architect Junior Member

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    +1 on putting as much money as you can in your 401. Consider a Roth IRA (especially at your age) too. Even if you put just $25 or $50 a pay period in.

    You’re 21 so it’s quite natural to give zero fucks about retirement, but you’ll be SO happy you did when you’re in your late 40’s and beyond.
     
  20. 21Architect

    21Architect Junior Member

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    Another thing about the Roth IRA.......

    If you will be making bigger money down the road (let’s say over $200K), you won’t be eligible to contribute to a RothIRA. So get some contributions in there now. You can leave money to your children tax free via a RothIRA.

    https://www.rothira.com/what-is-a-roth-ira
     
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