The Money Mustache Community

Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Gin1984 on August 27, 2014, 06:44:45 PM

Title: Can someone check my tax math?
Post by: Gin1984 on August 27, 2014, 06:44:45 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare
Title: Re: Can someone check my tax math?
Post by: makinbutter on August 27, 2014, 09:06:06 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

I think you might have left something off this post, bud - there's no question here.  Do you want to know what your federal tax will be on that?
Title: Re: Can someone check my tax math?
Post by: arebelspy on September 04, 2014, 03:42:13 PM
Looks good to me!

(http://wpcontent.answcdn.com/wikipedia/commons/thumb/f/f5/TI86_Calculator_DivByZero.jpg/220px-TI86_Calculator_DivByZero.jpg)
Title: Re: Can someone check my tax math?
Post by: johnny847 on September 04, 2014, 04:40:44 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

You say new job. Did he start at this new job mid year and get a pay raise (or a drop in pay)? If so, and if he answered the W4 questions as instructed, his withholding is going to be incorrect, because the withholding assumes you're earning at that rate for the entire year.
Title: Re: Can someone check my tax math?
Post by: ender on September 04, 2014, 04:46:30 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

Income: 42k + 25k - 5k -1.56k = $60.44k

Exemptions: 3,950 * 3 = 11.85k
Standard deduction: 12.4k

Taxable income: 36.19k

Federal taxes: $1815 + (36.19-18.150)*.15 = 1815 + 2706 = 4521 (http://www.forbes.com/sites/kellyphillipserb/2013/10/31/irs-announces-2014-tax-brackets-standard-deduction-amounts-and-more/)

Subtract the child tax credit leaves you with $3,521 in federal taxes.


Title: Re: Can someone check my tax math?
Post by: johnny847 on September 04, 2014, 04:53:48 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

Income: 42k + 25k - 5k -1.56k = $60.44k

Exemptions: 3,950 * 3 = 11.85k
Standard deduction: 12.4k

Taxable income: 36.19k

Federal taxes: $1815 + (36.19-18.150)*.15 = 1815 + 2706 = 4521 (http://www.forbes.com/sites/kellyphillipserb/2013/10/31/irs-announces-2014-tax-brackets-standard-deduction-amounts-and-more/)

Subtract the child tax credit leaves you with $3,521 in federal taxes.

Also, FICA taxes are:
($42000+25000 - 5000)*.0765  = $4743.

But these are withheld automatically with every paycheck.
Title: Re: Can someone check my tax math?
Post by: Gin1984 on September 04, 2014, 04:55:10 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

Income: 42k + 25k - 5k -1.56k = $60.44k

Exemptions: 3,950 * 3 = 11.85k
Standard deduction: 12.4k

Taxable income: 36.19k

Federal taxes: $1815 + (36.19-18.150)*.15 = 1815 + 2706 = 4521 (http://www.forbes.com/sites/kellyphillipserb/2013/10/31/irs-announces-2014-tax-brackets-standard-deduction-amounts-and-more/)

Subtract the child tax credit leaves you with $3,521 in federal taxes.
Thank you!  That jives with mine.  And if I put 18040 into 403b's I can avoid the 15% bracket right?
Title: Re: Can someone check my tax math?
Post by: Gin1984 on September 04, 2014, 04:58:36 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

You say new job. Did he start at this new job mid year and get a pay raise (or a drop in pay)? If so, and if he answered the W4 questions as instructed, his withholding is going to be incorrect, because the withholding assumes you're earning at that rate for the entire year.
Yes, new job with an increase from $26K to $42K.
Title: Re: Can someone check my tax math?
Post by: ender on September 04, 2014, 05:08:00 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

Income: 42k + 25k - 5k -1.56k = $60.44k

Exemptions: 3,950 * 3 = 11.85k
Standard deduction: 12.4k

Taxable income: 36.19k

Federal taxes: $1815 + (36.19-18.150)*.15 = 1815 + 2706 = 4521 (http://www.forbes.com/sites/kellyphillipserb/2013/10/31/irs-announces-2014-tax-brackets-standard-deduction-amounts-and-more/)

Subtract the child tax credit leaves you with $3,521 in federal taxes.
Thank you!  That jives with mine.  And if I put 18040 into 403b's I can avoid the 15% bracket right?

Yes, though keep in mind only the income which is above $18,150 of your taxable income is "in" the 15% bracket.

I'm not 100% on this but I think you likely would become eligible for the Earned Income Tax Credit (http://en.wikipedia.org/wiki/Earned_income_tax_credit) at that level too, since your AGI would become 60.44 - 18.04 = 42.4k, which is lower than the threshold for a family with one child (53k).

But I'm not sure how all this stuff works, seems to me you would get benefit from it.

You might also get some of the savers credit (http://www.irs.gov/uac/Newsroom/Plan-Now-to-Get-Full-Benefit-of-Saver%E2%80%99s-Credit;-Tax-Credit-Helps-Low-and-Moderate-Income-Workers-Save-for-Retirement) if you are at that income level too?
Title: Re: Can someone check my tax math?
Post by: Gin1984 on September 04, 2014, 05:12:03 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

Income: 42k + 25k - 5k -1.56k = $60.44k

Exemptions: 3,950 * 3 = 11.85k
Standard deduction: 12.4k

Taxable income: 36.19k

Federal taxes: $1815 + (36.19-18.150)*.15 = 1815 + 2706 = 4521 (http://www.forbes.com/sites/kellyphillipserb/2013/10/31/irs-announces-2014-tax-brackets-standard-deduction-amounts-and-more/)

Subtract the child tax credit leaves you with $3,521 in federal taxes.
Thank you!  That jives with mine.  And if I put 18040 into 403b's I can avoid the 15% bracket right?

Yes, though keep in mind only the income which is above $18,150 of your taxable income is "in" the 15% bracket.

I'm not 100% on this but I think you likely would become eligible for the Earned Income Tax Credit (http://en.wikipedia.org/wiki/Earned_income_tax_credit) at that level too, since your AGI would become 60.44 - 18.04 = 42.4k, which is lower than the threshold for a family with one child (53k).

But I'm not sure how all this stuff works, seems to me you would get benefit from it.

You might also get some of the savers credit (http://www.irs.gov/uac/Newsroom/Plan-Now-to-Get-Full-Benefit-of-Saver%E2%80%99s-Credit;-Tax-Credit-Helps-Low-and-Moderate-Income-Workers-Save-for-Retirement) if you are at that income level too?
According to the IRS I can't get the saver's credit because I am a full time grad student, but yes I will get about $120 in EITC.
Title: Re: Can someone check my tax math?
Post by: johnny847 on September 04, 2014, 05:14:32 PM
DH's new job -$42,000
My job-25,000
Daycare FSA -5000
Health insurance- $1560
Married, one kid who is in daycare

Income: 42k + 25k - 5k -1.56k = $60.44k

Exemptions: 3,950 * 3 = 11.85k
Standard deduction: 12.4k

Taxable income: 36.19k

Federal taxes: $1815 + (36.19-18.150)*.15 = 1815 + 2706 = 4521 (http://www.forbes.com/sites/kellyphillipserb/2013/10/31/irs-announces-2014-tax-brackets-standard-deduction-amounts-and-more/)

Subtract the child tax credit leaves you with $3,521 in federal taxes.
Thank you!  That jives with mine.  And if I put 18040 into 403b's I can avoid the 15% bracket right?

Yes, though keep in mind only the income which is above $18,150 of your taxable income is "in" the 15% bracket.

I'm not 100% on this but I think you likely would become eligible for the Earned Income Tax Credit (http://en.wikipedia.org/wiki/Earned_income_tax_credit) at that level too, since your AGI would become 60.44 - 18.04 = 42.4k, which is lower than the threshold for a family with one child (53k).

But I'm not sure how all this stuff works, seems to me you would get benefit from it.

You might also get some of the savers credit (http://www.irs.gov/uac/Newsroom/Plan-Now-to-Get-Full-Benefit-of-Saver%E2%80%99s-Credit;-Tax-Credit-Helps-Low-and-Moderate-Income-Workers-Save-for-Retirement) if you are at that income level too?
According to the IRS I can't get the saver's credit because I am a full time grad student, but yes I will get about $120 in EITC.

Ugh that stupid full time student rule for the saver's credit. I get disqualified for it too. I don't understand why its there - I do understand why they exclude dependents, but I don't understand why they exclude all students.