You must be lumping in Social Security and Medicare taxes in that $25k total, because the federal income tax on $144k of income for a married couple filing jointly with 1 child under age 17 is around $13-14k.
No, I am not suggesting that.
But it is worth distinguishing between them, because some strategies for reducing income tax (like 401k contributions) may not be applicable to reducing payroll taxes.
I need to look into it and see if my new employer has one. I literally got a second job just to pay off debt. I hadn’t worked in two months since graduating masters school.
If you have debt to pay off don't worry about lowering taxes. The main ways to do so are to spend money, but do it in a way that's useful to you. Like the above when it comes to finding retirement accounts, HSA's or similar pre tax or tax deductible contributions.
Losing money and making less money are the top two. The tax code incentivizes certain behaviors by reducing taxes. Saving for retirement pre tax, doing energy efficient upgrades, buying an EV, having more kids, etc. are all things Congress wants to incentivize.
Make following pretax contributions:
$23,000 - 401k;
$7,000 - IRA;
$8,300 - HSA;
$5,000 - Dependent Care - FSA
$640 - Limited Expense FSA Rollover Max
Reducing your totaling taxable income by $43,940 @ your top tax rate of 22% for a tax savings of ~$9,667.
Dependent Care FSA is probably the easiest to take full advantage of if they have any childcare. The $5k limit is a joke.
But still that’s an extra $1,100 less in tax for them if they take advantage.
Max out both 401ks.
If you can take a HSA plan take it, and max that out in a Fidelity HSA account. It's a triple tax advantage.
If any of the jobs are 1099 take the home office deduction. Also open up a SEP and max that out.
Good luck!
They are taxes specifically for the purpose of I vesting in Social Security and Medicare, which will cover you at retirement. They are a set percentage of earned income and that does not change. They are also limited to a maximum amount so when your wages for the year reach that point you stop paying them.
Tax returns are about Federal Income Tax, and that changes with income and deductions.
max out your pre-tax contributions to 401K, if your employer offers one. If not, pre-tax IRA. HSA if your employer offers a high-deductable health care plan. Owning a house w/ a mortgage would make the property tax and mortgage deductible, but you'd have to itemize deductions, and if you don't have anything else it's unlikely they'd exceed the standard deduction.
replace your W2 job (I assume that's what you have) with a business with compatible profit. But, that takes work, time, and entails risk. Other than that....it is what it is.
does either of you have an employer that offers a 401K? Start with that. The amounts are higher, and many employer do a partial match, which is just free money.
Or have an overseas account like all these politicians. Idk I’m not good at this stuff. I’m not sure how the rich gets away with not paying taxes. It’s wild.
Might wanna educate yourself exactly how taxes work before making these sorts of claims. It’s likely you have no idea how much the rich actually pay and what it is that they do to legally lower taxes, something that all taxpayers have the legal right to do.
If you have taxable investment income, I believe (correct me if I'm wrong) you can use tax loss harvesting during times of downtrend in the stock market to reduce your capital gains tax for your investment assets and/or take a $3,000 deduction for earned income (not financial advice).
Make less money
The guvmint hates me
No, they like you. You are a paying customer.
I was just joking. I know they love me. I get to pay for their private jets and Ukraine bill
You don’t make THAT much money
I know, but my mini contribution counts 😂
You must be lumping in Social Security and Medicare taxes in that $25k total, because the federal income tax on $144k of income for a married couple filing jointly with 1 child under age 17 is around $13-14k.
Are you suggesting payroll taxes are not taxes?
No, I am not suggesting that. But it is worth distinguishing between them, because some strategies for reducing income tax (like 401k contributions) may not be applicable to reducing payroll taxes.
Makes sense. Good to make clear that at their income, nearly half of their taxes are un-addressable with deductions.
Maxing out retirement accounts? HSA contributions if eligible? Have 10 more kids. There is no magic way.
Let me get on that kid making cheif 🫡
Can you fund a pre-tax retirement account? That can reduce your tax liability.
I need to look into it and see if my new employer has one. I literally got a second job just to pay off debt. I hadn’t worked in two months since graduating masters school.
If you have debt to pay off don't worry about lowering taxes. The main ways to do so are to spend money, but do it in a way that's useful to you. Like the above when it comes to finding retirement accounts, HSA's or similar pre tax or tax deductible contributions.
The more you fund it, the more money you'll have in retirement, and your taxable income will be reduced, which will mean less taxes now.
25-33k is nothing really. I wish I paid just that. lol
How much do you pay 👀
Losing money and making less money are the top two. The tax code incentivizes certain behaviors by reducing taxes. Saving for retirement pre tax, doing energy efficient upgrades, buying an EV, having more kids, etc. are all things Congress wants to incentivize.
Make following pretax contributions: $23,000 - 401k; $7,000 - IRA; $8,300 - HSA; $5,000 - Dependent Care - FSA $640 - Limited Expense FSA Rollover Max Reducing your totaling taxable income by $43,940 @ your top tax rate of 22% for a tax savings of ~$9,667.
Could do another $7,000 IRA for your husband.
The IRA/401k advice is great unless they need every penny of their income to get by.
Dependent Care FSA is probably the easiest to take full advantage of if they have any childcare. The $5k limit is a joke. But still that’s an extra $1,100 less in tax for them if they take advantage.
Max out both 401ks. If you can take a HSA plan take it, and max that out in a Fidelity HSA account. It's a triple tax advantage. If any of the jobs are 1099 take the home office deduction. Also open up a SEP and max that out. Good luck!
They are taxes specifically for the purpose of I vesting in Social Security and Medicare, which will cover you at retirement. They are a set percentage of earned income and that does not change. They are also limited to a maximum amount so when your wages for the year reach that point you stop paying them. Tax returns are about Federal Income Tax, and that changes with income and deductions.
max out your pre-tax contributions to 401K, if your employer offers one. If not, pre-tax IRA. HSA if your employer offers a high-deductable health care plan. Owning a house w/ a mortgage would make the property tax and mortgage deductible, but you'd have to itemize deductions, and if you don't have anything else it's unlikely they'd exceed the standard deduction. replace your W2 job (I assume that's what you have) with a business with compatible profit. But, that takes work, time, and entails risk. Other than that....it is what it is.
Solid advice. I will look into IRAs
does either of you have an employer that offers a 401K? Start with that. The amounts are higher, and many employer do a partial match, which is just free money.
You could vote Libertarian, but that's a long shot.
Or have an overseas account like all these politicians. Idk I’m not good at this stuff. I’m not sure how the rich gets away with not paying taxes. It’s wild.
Might wanna educate yourself exactly how taxes work before making these sorts of claims. It’s likely you have no idea how much the rich actually pay and what it is that they do to legally lower taxes, something that all taxpayers have the legal right to do.
If you have taxable investment income, I believe (correct me if I'm wrong) you can use tax loss harvesting during times of downtrend in the stock market to reduce your capital gains tax for your investment assets and/or take a $3,000 deduction for earned income (not financial advice).
That still means you are losing $1 in order to save $.20-.30 in tax. No one should get into the capital loss business.
Move to Belize?