Definition of HHI

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When you folks are posting HHI on this board, what are you including? Is it your AGI? Or do you add back in items like 401k, health insurance, HSA, FSA, DCP? Do you include rental income and if so, is it net of expenses? Other investment income?

We only include our net, earned income – basically whatever gets deposited into our bank accounts twice per month from W-2 sources. I know a ton of people on DCUM like to inflate their HHI by referring to gross income or by including things like dividends, interest, and capital gains…but that’s not a game that DH and I need to play.

Interesting. Doesn’t work if the majority of your HHI is via RSUs.

RSUs get included in your W-2 income as they vest.

For tax purposes, yes. They aren’t added to your paycheck at vest. PP was saying they only count what’s in their W2 paycheck.

[Anonymous]

I’m including pretax income including expected bonuses.

[Anonymous]

Anonymous wrote:Pretax W2 income.

This!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Pretax W2 income.

This. We make nearly as much from investments, but we don't count that as HHI income (it's definitely on our tax returns) as it's all reinvested.

I'm in the same boat but our investment income is over triple our W2 income but we only count investment income that is in our taxable brokerage accounts toward HHI despite it all being reinvested (most of the time unless we make a large purchase where we need these funds). I don't count Roth IRA or 401K income since we can't access that for another 19 years.

[Anonymous]

Anonymous wrote:Odd that folks are excluding investment income and all their W2 adjustments

+1

Agree. Almost all of our income is investment income. Tax treatment of investment income (LT capital gains tax rates) is so much better than W2 income except for the 3.8% Obamacare tax (Net Investment Income Tax). Salaries are for suckers.

[Anonymous]

We include everything except our 401Ks since we are retired but not RMD age yet. We also don't include 529 gains or unrealized gains on investments. Our Roth IRA income is over $300K a year which fortunately doesn't show up on our 1040. Just one pension, taxable dividends and interest, and any realized gains are reported to Uncle Sam.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Pretax W2 income.

This!

Same — it’s just the easiest to calculate/remember. We have a bit of rental income which I don’t include, think of it more as an offset to the cost of homeownership.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Odd that folks are excluding investment income and all their W2 adjustments

+1

Agree. Almost all of our income is investment income. Tax treatment of investment income (LT capital gains tax rates) is so much better than W2 income except for the 3.8% Obamacare tax (Net Investment Income Tax). Salaries are for suckers.

This seems crazy to me if you also make good W2 money still but I guess we make a ton more than I thought hah.

[Anonymous]

Our salaries. Pre tax, deductions, etc. I don't usually include bonuses and RSUs without identifying them as such.

[Anonymous]

Adjusted gross income from my tax return.

[Anonymous]

Anonymous wrote:Our salaries. Pre tax, deductions, etc. I don't usually include bonuses and RSUs without identifying them as such.

Hmm - I get paid ~$1M via RSUs annually before any appreciation and my base salary is “only” $300K.

You wouldn’t count those RSUs as HHI if the account is set up to sell at vest?

[Anonymous]

Anonymous wrote:Odd that folks are excluding investment income and all their W2 adjustments

.

They are likely reinvesting dividends.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Our salaries. Pre tax, deductions, etc. I don't usually include bonuses and RSUs without identifying them as such.

Hmm - I get paid ~$1M via RSUs annually before any appreciation and my base salary is “only” $300K.

You wouldn’t count those RSUs as HHI if the account is set up to sell at vest?

If it made that big a difference, sure, but it's like $50k.

[Anonymous]

HHI is very personal. I need $100k cash a year to pay all bills and live well. This money comes from several sources. My tax rate on this money is 0% (negative actually).

[Anonymous]

Anonymous wrote:

Anonymous wrote:Odd that folks are excluding investment income and all their W2 adjustments

+1

Agree. Almost all of our income is investment income. Tax treatment of investment income (LT capital gains tax rates) is so much better than W2 income except for the 3.8% Obamacare tax (Net Investment Income Tax). Salaries are for suckers.

Totally get it. Not everyone is capable of working hard enough and producing enough value that someone else would be willing to pay for their efforts. Some people are otherwise so useless that the only way they can generate income is by loaning to others and demanding interest, dividends, and gains in return.

Keep plugging away, PP, and maybe someday you’ll get there.