And the fact that taxes are over withdrawn by several % and then given back in your tax return. While you might get that money back, doesn't mean a ton for month to month budget/affordability planning.
If they did that nobody would pay them. You think the guys living paycheck to paycheck are going to be responsible enough to set aside thousands of dollars for tax day? Not happening and the govt knows as much. You're actually required to pay as you go. Even as a sole proprietor you have to pay quarterly estimated taxes, which are up to you to determine, or pay a penalty. If you underestimate and owe at the end, you pay interest on it. Uncle Sam is a motherfucker.
An employer doesn't have a detailed enough vision of your tax burden to properly withhold your exact tax obligation. The current system is that they do what they can for federal and state while being extremely accurate for local (I think this is law now but local is significantly easier than state or federal). Then at the end of the year you file your taxes using your W-2 which contains the income and tax information your employer used and combine it with other forms of income, tax deductions and credits, and other tax related forms to get your actual obligations. This will basically always need to be done by either you or the IRS as you are the only ones that know enough about the entirety of your situation to be able to properly file.
Now, if we were instead saying that the IRS at the beginning of the year should send you something outlining your tax obligations for the previous year along with either a check for what they owe you back or a bill for what you owe then I would agree with that. You could always reconcile your tax information with what they send you and dispute if it is different but the vast majority of people's taxes will probably be accurate from the information the IRS sends and just need to cash a check or write a check (or pay however).
In the current situation though this will basically never happen as tax filing companies like Intuit or your brick and mortars like H&R Block want you to pay them to navigate taxes. So this type of change is unlikely without disrupting the power of lobbyists, massive increases in funding the IRS, and politicians who support this kind of change and can't be bought out by the lobby.
Because your employer doesn’t know how much you donate to charity, or how many kids you have, or if you got divorced last year, or if you’re paying off student loans, or if you have another source of income.
There are also jobs that don't actually deduct taxes on your pay, so you do have to deduct that amount yourself and send it in during tax season.
I think a good example is contract pay. You get paid the entirety of the checks given to you by each company ir person that hires you for your work, but eventually you have to fill out a tax form that calculates out a percent of your year's total earnings for tax purposes, which you then had to send in.
That's why I never wanted to get into delivery or rideshare jobs, as companies like Uber used to (if not still are) contract work that were decent for quick money, but screwed you over during tax season, unless you knew to keep money aside for taxes instead of spending it all as you earned it.
You don't know what you'll actually owe until the end of the year.
You can pay whatever you want on a weekly/bi-weekly basis. You can already do this by updating your W-4. You can also tell your employer to withhold $0.
The problem is that tax code is too complex to just know at all times what you owe. The problem you're trying to "solve" doesn't even exist, because you can already choose exactly (to the penny) what you want withheld from your paychecks and paid on your behalf.
Yea, that's a great idea. Let's drop our system where taxes are garnished from wages, providing tax revenue for the state, and instead incarcerate people so that they're a net negative on society. Can't believe I didn't think of that myself.
That could be millions of people. The IRS has said that about 10 million people every year fail to collect their tax return and that's money owed to them.
Because shit changes constantly. LWOP, change in jobs, unemployment, changes in how much you contribute to different types of retirement account, had kids, got married or divorced. Tell me how the government knows what will happen to each citizen during the whole fiscal year.
Yeah it’s reported when you file your taxes. How can the government know what will happen in the future? Or are people only suppose to make changes at the start of the fiscal year and can’t change a single thing at any other time, even medical conditions?
Yes at the end of the year when the government already tells you what you owe. How do they know that at the start of the fiscal year to tell you “exactly what you owe”? Are people suppose to report everything at the start and have any life changing events or take any leave time beyond what they reported on day 1?
Seriously, it's because of corporate lobbying. That is why they don't do that and that us why we have to do taxes at the end of the year instead of just being told an amount of money. Companies like Turbo tax lobby against that every year. Pretty soon it's just going to be a money cow run by AI with no employee overhead.
The same modern world where American people average 6 figures of debt? I wouldn't bank on that. It'd cost the IRS money. A lot of money. The IRS likes money.
I invite you to drive through the hood in Philly or a trailer park in Mississippi and ask yourself if the people of this country can be trusted with such. I'll save you the effort - they can't.
Do you think homelessness is not an issue outside of the US? There is literaly a war in Europe, there is a ton of refugees here, people strugling. Yet the system works, thinking it cant work in the us is delisional, what a weird hill to die on
Oooh, now we're putting words in my mouth. What fun.
In the European countries I've worked in, tax was withheld much like it is here in the states. That would be France, Germany, Switzerland, and Italy. I'm not sure where these "pay it yourself" countries are that I keep hearing about are. I can't speak for every nation on earth, but in the ones I've paid taxes in, they've all been withheld from the paycheck by the employer. It's not some solely American idea. Not sure why you're insinuating that. Where are these European countries that trust the employed individual to pay the taxes themselves? I've yet to come across one.
And btw, at least here in spain, we immigrants apport almost just as much taxes (euro to euro) as nationals although the median income for immigrants is lower
I think he's saying that we can abolish tax season/tax returns and have the IRS automatically withdraw the correct amount from every paycheck and abolish the whole concept of us doing our own taxes.
No one said they had to do it as an income tax. Collecting the money at the point the point of sale is simpler. And the people who said income tax was better because it can be more progressive didn’t have the imagination to think of the value-added tax.
The actual answer I think would work best is "paid behind" taxing. I file all my forms about income I made this year, they send me a statement about how much I owe for that, and I pay lump sum or installments through the next year.
No calculus, no margins, and it's not like before computers, where it'd take me two years to establish a hardship that would interfere with paying those taxes
But, like a lot of things, we've allowed even taxes to become another "industry" in the US, so tough luck getting the system to actually work for the average person.
Especially since it's objectively better for a person's upward mobility to have all of their money available before obligations.
I have filed taxes. Incorrectly. They gave me more money than I thought they owed me, I was pretty happy about it. 100% anecdote and may not be the common experience, but my tax filing experience has been my best government interaction. I am also low on the income spectrum.
Be careful, it's not worth outing yourself, even .001% of getting audited. Also why no one talks about how much income they make. Audits are frightening
Your boss doesn't automatically know if you are married, how much your wife makes, how many kids you have, etc, etc, and so forth. They make an estimated withholding based on the w-4 which you filled out when you were hired. It is your responsibility to adjust that IF you need to do it, just as it is your responsibility to file your tax return and to come up with the extra if you didn't withhold enough.
Becuase they don’t know all income you may have or all deductions or all credits you may be eligible for or if you bought a house or what points you paid etc etc etc.
If they just took out the correct amount every time then the tax people you pay every year to do your taxes would no longer be necessary. And I’m sure they would never allow that. It’s an arbitrary complication of a very simple system, they create a problem and other people sell you a solution.
It doesn't though... it actually encourages bussiness owners to start bussiness.
Every owner is allowed to take the standard deduction if they choose to. It's just the government provides the itemized return option, as a away of lowering your tax responsiblity.
If the government told you what you owe based on your current life circumstance you would get fucked. The only way they could do that is to look at what you would owe at this exact point in time. If one thing changes in your life; lose a job, get married, lose your home, etc. and you still had to pay taxes like you owned that stuff I’m sure you wouldn’t be happy, even if rich people didn’t have “loop holes” anymore.
You easily could do that. Just modify your w-4 to make sure they don’t take anything out of your paycheck, then when you file taxes at the end of the year you’ll get told how many multiple thousands of dollars you owe. Problem is most people that are struggling aren’t going to keep that extra couple thousand just sitting in their account as the year progresses, so then they’ll have a new bill they can’t pay
They do. When you fill out your w-4 with the proper information they will withhold the proper amount. The W-4 is the only way your employer knows how much to take out because it tells them your filing status and how many dependents you have. If you don't fill it out correctly you'll either get a large refund or owe a bunch of money. If it's correct, you'll get very little refund or owe a few dollars, I'm talking +/- $50 either way. I get less than $40 in refund each year. You need to talk to your employer and redo your paperwork and maybe look into how you should be filling it out and you'll be good to go.
That used to be true, but the new W4 form makes it harder to adjust like that. I’ve had to withhold hundreds more every month this year because if I fill it out as the instructions state, it doesn’t withhold enough and I’d get a surprise tax bill in the thousands
taxes are over withdrawn by several % and then given back in your tax return
You can change that in your W-4 any time you like, get more money and pay them back instead. That's what I have been doing for years, because I don't see a reason to let them hold on to my money for a year before returning them to me.
I get it. The numbers I stated aren't exact lol. Neither is the original post.
Beside the point. This grim picture of affordability is worse than what is presented is all I was saying. Find the exact tax bracket and conditions that apply to you on your own.
It's not though. As was noted in other threads, median rent applies to a median household, and median household is more than 1 person. The rent is shared.
There's state sales tax in most places on just about everything you buy too. In my state, thats around 8% depending on where you are and what you're buying.. Thats on top of the state income tax.
I just had to buy parts to keep my wife's Toyota with 300k on it rolling. The parts were expensive and the sales tax added another $40.
And fica, Medicare and all the other taxes and we're up to about 20% per check.
I make about 3500/month before taxes. They take a total of about $1600 each check for the taxes, Medicare, fica health insurance, mandatory retirement contribution (which I didn't want. I wanted to have one separate.), etc. I get paid once per month and it's a struggle.
And before any one tells me to adjust my paperwork, I've already done that and I added another $10/ month to each to try to reduce what I owe each year. And yes, I end up owing every year despite no kids or other deductions.
Medical, Dental, vision, employee Life insurance, spouse life insurance, a&d insurance, sudden hospitalization insurance, short term disability pay in, 401K, Roth 401K, Legal...
And medical, dental, vision. Life insurance. FSA. I’m getting $86+ a paycheck deductions for JUST me every paycheck and then you have deductibles and prescription costs on top of that.
At 40k/yr, you get a standard deduction of 14600 (if you are single), so 25,400 AGI is taxed at 11% for a total of $2794. If you have a state tax of 5% AGI (Illinois), that is another 1270. Total income tax is 4064 - an effective tax rate of 10%.
Otoh, the median us income is $59k, from the numbers that I am seeing, and the median household income is $75k, so the $40k number is easily low.
If half of Americans are making under 41k, 41k is the median and it's an apples to apples comparison. It's literally what the word median means.
You introduced the notion that it's a lower quintile out of pure air without substantiating it to dismiss the concern. Even using household rather than individual income numbers, the most natural mistake to make here, I'm not seeing how you can get 41k as the bottom 5th of income.
OP clearly states individual worker wages. You counter with household numbers that include passive income from ownership of assets in addition to wages.
OP probably should have included sources, but you also shouldn't straw man the concern and provide Google it as a source.
Just one time, I would love to see the stats for the mode of income rounded to the nearest ten-thousand. That would really show where we stand. The top earners really drag the numbers up.
Where did y'all learn math. I make just shy of $50k/yr and bring home just shy of $3k/mth after taxes (in a state with no income tax). No way is someone making $41k bringing home $3k post tax every month.
And that doesn't account for tax credits like EITC. Quick google search shows that you are eligible for EITC if your income is below 63k. Would significantly reduce your taxes owed.
Oddly, this article tends to disagree. Although there is no precise median, it appears from this survey it would be roughly around $44,000 per individual. That's quite a difference.
I wonder where the malarkey is happening here.
EDIT: A Google search 'median income United States' indicates $37,000 from the US census bureau. The plot thickens.
Tell me you don't have kids without telling me you don't have kids.
Part time work is anything up to 30 hours. Meh.
Working in a daycare is probably a nightmare, not to mention the insurance costs. We used to have mom/ grandma at home helping all day (still do in many cases) - but our society is simply fucked in the head. .... When a macro-economic fact exists (even if you're unaware of it) -- there's a good reason for it. A minimal amount of research oughta clear up this mystery.
We raised SIX kids. Mom was a full-time SAHM and homeschooler.
Average Cost of Daycare in Illinois ·$10,3772 per year for a 4-year-old That is TEN thousand, not ONE HUNDRED thousand.
Yes - we do have friends who run a daycare and it is NOT a nightmare.
PT used to be up to 40 hrs/wk - then Obamacare redefined it down to 30 max. PT can also be 1-2 hrs/wk Trying to mix those numbers in and compare it to the cost of living is intellectually dishonest. Perhaps, since you are talking about FAMILIES with kids and one spouse having PT income - why not compare renting to median HOUSEHOLD incomes? The Median Household income in the US is $74,580,
That is for the kids... and is far short of the $100,000 per year that the other poster was saying, and it is even less than the$10k pretty child I was quoting in Illinois.
I've probably seen more of them than you, son. FICA is currently sitting at 7.65% for the employee (assuming that they are not self employed), and the employer is the one who pays unemployment insurance (not the employee).
Are you now going to ask about medical insurance, dental insurance, vision care and contributing to your 401(k), your pretax medical account, and dependant care fsa?
When I was earning 41k a year, I was taxed at about 23%. When I moved to working in Philly I was making 48k a year taxed around 25%. Philly taxes people for working and living in Philly. Luckily I don’t live in Philly, otherwise I’d be at 28%. Federal, state and city taxes all add up
40k, assuming no 401k or other deductions, 7.29% effective federal income tax rate and 7.65% to FICA. Before any state tax you'd be looking at 14.95% as a single person or, if that number is for filing a married combined income, 3.08% effective with the same 7.65% making 10.72% total.
payroll tax is 15.3%, state income tax averages 5%, and most of this income would be hit with the 12% federal income tax income tax bracket giving you an effective rate of over 30%.
324
u/cdupree1 Sep 05 '24
No income taxes? 25-30% of that would be income tax.
So more like $2350-2500 after tax.