My household gross income is 105K. What is the next tax bracket?

[Anonymous]

Not OP, but thank you for explaining this @10:31.

[Anonymous]

Anonymous wrote:Hi. I'm currently negotiating salary increase and am cautious about going into a higher tax bracket. Now, I'm making 105K(gross) What is the income amount to enter next tax bracket for a couple with one child?

One option would be to try to negotiate for a lower salary, which would take you into a lower tax bracket. Have you considered that?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hi. I'm currently negotiating salary increase and am cautious about going into a higher tax bracket. Now, I'm making 105K(gross) What is the income amount to enter next tax bracket for a couple with one child?

One option would be to try to negotiate for a lower salary, which would take you into a lower tax bracket. Have you considered that?

Ha. Stop.

[Anonymous]

Gee, a lot of grumpy people in the finance forum today!

[Anonymous]

Anonymous wrote:There may be reasons not to want to increase salary in certain circumstances, but not OP's. For example, last year my taxable income (after HSA and IRA deductions) was hovering right at the $80K mark. Singles who earn up to $80K can take the full American Opportunity Tax credit for college of $2,500. You get a prorated reduced amount with income up to $90K. And then nothing.

I was trying to decide if I should take on freelance work and what that would do to that credit since I'd be putting in the work but reducing a very good tax credit.

But couldn’t you just put the extra into an IRA or other retirement vehicle in order to reduce your taxable income and claim the credit?

[Anonymous]

Others have already stated the obvious.
One of the only reasons you wouldn't want your salary to increase is if it the increase is small and it makes you ineligible for certain deductions.
For example couples with an AGI over 199k cannot contribute to an IRA or Roth IRA.
There are many other deductions and tax breaks that phase out at that income.

If your AGI is 198k and you get a small 2k raise that put you at 200k AGI, this raise may not be worth it, it will cost you more.
But of course if the raise is 10k, you win anyway.

In your case at 105k, you are far away from these figures. Take your raise and enjoy the money.

[Anonymous]

Wow! OP, consider me impressed! You managed to make 105K (and are getting a raise!) without know basic math and how progressive taxation works!

That’s like bragging you graduated from Harvard without reading a single book.

[Anonymous]

Anonymous wrote:Others have already stated the obvious.
One of the only reasons you wouldn't want your salary to increase is if it the increase is small and it makes you ineligible for certain deductions.
For example couples with an AGI over 199k cannot contribute to an IRA or Roth IRA.
There are many other deductions and tax breaks that phase out at that income.

If your AGI is 198k and you get a small 2k raise that put you at 200k AGI, this raise may not be worth it, it will cost you more.
But of course if the raise is 10k, you win anyway.

In your case at 105k, you are far away from these figures. Take your raise and enjoy the money.

Are there really phaseouts such that you'd be better off with a lower income? I'm skeptical. Going through a phase out might increase your marginal tax rate, but above 100%?

pp cited being ineligible for a Roth IRA contribution, but there are no income limits for an equivalent backdoor Roth.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Others have already stated the obvious.
One of the only reasons you wouldn't want your salary to increase is if it the increase is small and it makes you ineligible for certain deductions.
For example couples with an AGI over 199k cannot contribute to an IRA or Roth IRA.
There are many other deductions and tax breaks that phase out at that income.

If your AGI is 198k and you get a small 2k raise that put you at 200k AGI, this raise may not be worth it, it will cost you more.
But of course if the raise is 10k, you win anyway.

In your case at 105k, you are far away from these figures. Take your raise and enjoy the money.

Are there really phaseouts such that you'd be better off with a lower income? I'm skeptical. Going through a phase out might increase your marginal tax rate, but above 100%?

pp cited being ineligible for a Roth IRA contribution, but there are no income limits for an equivalent backdoor Roth.

The Savers Credit (up to 2k) for contributions to qualified retirement plans. Not available for couples over 55k AGI.
Education Credit (up to 2.5k). Not available for couples over 160k.
The Child Care Tax credit. For 2017, it phaseouts at 110k AGI.

If you are just a few 100 bucks below those thresholds, you should avoid crossing over or it will hurt you.

[Anonymous]

Not OP, but people should be nicer. We should encourage some basic financial education in schools. I graduated high school in the 90s so maybe this is done now. I think a lot of young people run into credit problems, and don't know how to best save for retirement etc.

[Anonymous]

Anonymous wrote:Not OP, but people should be nicer. We should encourage some basic financial education in schools. I graduated high school in the 90s so maybe this is done now. I think a lot of young people run into credit problems, and don't know how to best save for retirement etc.

I agree with this. Instead of making fun of OP, we should be furious as Americans that this type of basic financial literacy is not taught in schools!

[Anonymous]

I find it easier looking at tax brackets that are written like this:
https://files.taxfoundation.org/20170123140911/TaxFoundation-FF534.pdf

Married Filing Joint Taxable Income Brackets and Rates, 2017 Rate Taxable Income Bracket Tax Owed 10% $0 to $18,650 10% of taxable income 15% $18,650 to $75,900 $ 1,865.00 plus 15% of the excess over $18,650 25% $75,900 to $153,100 $ 10,452.50 plus 25% of the excess over $75,900 28% $153,100 to $233,350 $ 29,752.50 plus 28% of the excess over $153,100 33% $233,350 to $416,700 $ 52,222.50 plus 33% of the excess over $233,350 35% $416,700 to $470,700 $112,728.00 plus 35% of the excess over $416,700 39.60% $470,700+ $131,628.00 plus 39.6% of the excess over $470,700

I think this gives a better idea of how the marginal brackets work.

[Anonymous]

Anonymous wrote:Ugh this is painful OP.

+1. So painful that someone making over 100K a year has literally no idea how basic taxes work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ugh this is painful OP.

+1. So painful that someone making over 100K a year has literally no idea how basic taxes work.

I work in engineering. We're supposed to be smart, math-savvy people, right?

I once had a colleague tell me that his wife stopped working because her job pushed their whole household into a higher tax bracket, so they actually made less money if she worked.

??????

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Ugh this is painful OP.

+1. So painful that someone making over 100K a year has literally no idea how basic taxes work.

I work in engineering. We're supposed to be smart, math-savvy people, right?

I once had a colleague tell me that his wife stopped working because her job pushed their whole household into a higher tax bracket, so they actually made less money if she worked.

??????

Unfortunately, this is not as rare as it should be. There are many people who don't understand the marginal rates and think that their full income is subject to the highest tax bracket that they qualify for. What's amazing to me is that many of the people who believe this are in the top 3 tax brackets. How does someone with that little basic education (or ability to figure it out via Google) make that kind of money?