Financial literacy is an ongoing process for me.
I use to consider myself a saver and a spender, I’ve gotten to the point where I am now more of a saver. I’ve always hated giving the government my money; however, I do understand that there are resources in that those funds could, well should, be used for. But to be hit with $200 less in my check, I am not happy. This really burns me. I’m not trying to make this post political by any means; however, those new tax laws are not beneficial to me, and I’m ticked off about it. Home interest deductions for some is no longer, and I’m one of them. Yes, I know pay the house off but I’m still ticked off. I can go through the list but won’t.
I’m still learning, so even though there isn’t a match with my employer, I’ll adjust my deductions to include 401(k) contributions, this should help, I think with my taxable income(reduction) vs transferring the money to the IRA.
I’m just annoyed, I feel like I work so hard and yet I’m still not educated enough. I want to scream, wages are at an all time low, though there’s jobs, and you’re taking my money.
Getting off my soapbox
Annoyed
February 11th, 2020 at 11:24 am
February 11th, 2020 at 01:27 pm 1581427661
The standard deduction was increased, and it may be more than your itemized deductions. You should do your taxes both ways to see whether taking the standard deduction is correct for your situation.
Finally, are you accounting for taxes on the income from your second job? That should increase your withholding if you are only withholding from your primary job.
February 11th, 2020 at 02:35 pm 1581431728
We currently have 9 for allowances because we know that number leads to an amount similar to what we pay taking into account income that is pretax, credits for our girls with college expenses. My husband will get a raise this year and we will likely have to adjust back down so we don't have a large tax bill next year.
Go to the IRS website to learn more AND use their withholding calculator. You can also go to a website called Paycheck City to plug in numbers to see how those withholding amounts change your paycheck.
February 11th, 2020 at 04:58 pm 1581440294
February 11th, 2020 at 05:30 pm 1581442244
There are mixed messages on which is ‘better’. This is my belief.
Some people have a low income and/or a lot of deductions. For them, saving money post tax makes sense because they estimate that their income and taxes in retirement will be higher. So it is better to pay any tax due now, at the lower rate.
If you have a higher income, and not a lot of retirement saved, it is smarter to pay pre tax. If you have income above the 22% level (@$39,500 for single after your deductions) each dollar you save for retirement saves you .22 in taxes.
You take your total income, subtract $12,200 (standard deductions for single) and that is taxable income. You can also subtract HSA or FSA contributions if you have them. Without kids, it’s hard to get other deductions now.
You pay 10 percent of the first $9700, and 12 percent of the money from 9701 to $39476. Everything over that is 22 percent to $84,200. If you are over that, 24 percent. (There are even higher brackets, but I think if you were there, you’d not have these worries!)
So first 9700 = 970
Next 22975 = 3573
Total. = 4543
Then subtract 39476 from your total adjusted income and multiply the result by 22 percent. That’s your tax liability on that money. Add it to the 4543. That’s your tax liability if you save for retirement post tax.
Then figure out how much you want to put in pre tax retirement, subtract that from the amount you multiplied by 22 percent in the last step.
Take the new, lower total and multiply that by 22 percent. The differences between the numbers is your pre tax savings. It will be $220 for every $1000 you save.
Once you know your total tax due - which you will at this point, divide that by the number of paychecks you get. That is the amount you want deducted each check.
Less and you will owe.
More and you get a refund.
Many People like refunds, but here’s why I don’t.
- the government pays no interest on your money
- money you owe costs you interest every month - use the ‘extra’ to pay down debt
- if someone fraudulently files and gets your money, it is a mess that takes time to clean up
- if there is ever any kind of garnishment, right or wrong, they can take your refund,
There are reasons why, for some people, a mix of pre and post tax money is good in retirement. But I think for you, having more money to put in so it can grow is where you should be right now.
Best wishes
February 11th, 2020 at 07:11 pm 1581448270
February 11th, 2020 at 10:56 pm 1581461806
February 11th, 2020 at 11:04 pm 1581462250
In the past, you could deduct interest on a mortgage of up to $1 million ($500,000 for married taxpayers filing separately). This still applies for any loan originated on or before Dec. 16, 2017. But if you originated a new mortgage after that date, the new limit of $750,000 applies ($375,000 if married and filing separately). The Joint Committee on Taxation estimated 14.3 million tax payers would continue to claim the mortgage interest deduction in 2019, down from 16.5 million in 2018.
So unless your house cost more than $750,000 you can still deduct. It didn't cost that much. Do you have state laws interfering or something.
February 12th, 2020 at 06:53 am 1581490392
February 12th, 2020 at 11:23 pm 1581549830
February 13th, 2020 at 02:35 am 1581561358