The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: frugalfoothills on November 06, 2018, 10:30:42 AM
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Hi all,
As we roll into the end of the year, I'm trying to prepare myself to change my 401k and HSA elections, but I am embarrassingly bad at understanding taxes and such. Can I get some help?
2018 wages:
Gross base salary: $69,901
Gross bonus: $10,001
Total Gross Wages: $79,902
Until now I have only contributed up to my company match with 401k (6%) and a small amount to HSA ($20 per paycheck, or $520 per year... company contributes additional $800 a year.) I want to up that in 2019 now that I have my feet under me thanks to this website... you guys are great!
Question 1:
Salary for 2019 should be slightly higher with COL raise, but TBD, so basing this off 2018 numbers. Also, my bonus is a lump sum payment in January, and I budget per paycheck, so I'm thinking I'll just use my base salary for this... does that make sense?
$69,901 (gross base salary)
-$18,500 (max 401k)
-$2,400 (max HSA, minus employer contributions)
-$1,364 (medical pretax)
= $47,634 gross
Here's where I'm trying to figure out the implications to my take-home... I'm looking at my current tax situation and it seems like I'm paying a ton. It looks like for 2018 it was:
OASDI: $4,278
Medicare: $1,000
State: $3,770
Federal: $7,566
Total: $16,614 (again -- does not include my bonus which was taxed almost 4k)
Based on my current 6% 401k contribution and measly $520 HSA contribution (and medical pre-tax) my gross pay for 2018 was $63,831 (without bonus.) Looking at my tax situation above, that looks like 26%. That seems super high, right? My withholding is set to Single (Federal & State), Federal Allowances: 2 and State: 1. I have no clue why it's set like that... I don't really understand what it should be set to. Should I change this? What to?
So I guess my main question is--if I drop my gross (base) pay from $63,831 to $47,634 by upping 401k, HSA (and medical pretax stays the same), what can I expect for my post-tax income to look like? What rate should I apply?
My annual expenses are $36,000 (including mortgage), so I KNOW the math SHOULD work. I am just scared to max everything and find myself struggling paycheck to paycheck.