New job and way more money

[Anonymous]

Anonymous wrote:Depending on the new employer, there may be on site people to help with this. I work for a Fortune 500 and we have an executive compensation department and they pay for a financial advisor/tax preparation. Not much changes W-2 wise but you should ask whether you should be paying quarterly taxes. You may also have some imputed income depending on your benefit package since some benefits become taxable at higher incomes.

Depends if the role is exec or not. $600K is L6/L7 comp before any RSU appreciation in big tech / mag 7 etc for example (which is manager and senior manager levels, so 8-10 ish YOE).

[Anonymous]

Anonymous wrote:If you have W2 wages there is no way to hide it

Yep- this high earning W2 employee.

[Anonymous]

DP but we are in a similar situation. HH W2 income (no RSUs or bonus) is almost doubling to $700-$800k. Assuming retirement is already being maxed, 529s, low existing mortgage rate/not looking to move, what financial and tax decisions would you suggest be addressed at this level? For one, tax exempt bonds become increasingly attractive for shorter term taxable accounts due to higher tax bracket. What lifestyle choices can you make that make life easier but not necessarily leading to lifestyle creep?

[Anonymous]

Recent early retiree here...

If you are maxing all of your available vehicles, see if there is a deferred comp plan available. My employer offered one to anyone designated as an HCE. I did that and when an opportunity arrived to exit early with a retirement package, that deferred comp provided a nice off ramp and funds the first five years of retirement.

I would also put as much as possible into a brokerage account. The reason is, as you near retirement having money in pretax is great but having money in pretax gives you alot of options.

Also, alot of people plan to work to age whatever. I think the reality in some fields in Corp America is that you will likely not be able to get to that number.

I would live below your means and save as much as possible. Who knows what the future holds, but with resources you will have options and not be beholden to an employer.

[Anonymous]

LOL it's really not that much money

[Anonymous]

Anonymous wrote:

Anonymous wrote:My husband has a new job that has a base salary and bonuses. This is new reality for us, as previously he was in the federal government. I'd like us to consult with a tax expert to figure out how best to manage our salaries and accounts. We do work with a financial advisor already, but she is not a tax expert. If you work with someone who helps you plan out your income vs taxes, what did you search for? What expertise and characteristics should I find? I have Googled tax advisors, but there are a million and I'd just love a starting point.

Make sure you do estimated taxes and do those payments to federal on a quarterly basis. If the income suddenly increases without a decent withholding, you may run into underpayment penalty next year.

This. We were in a similar situation, OP. We have a large year-end bonus. They do not withhold enough taxes on bonuses so the government wants you to make payments when you receive your payout or you get fined.

This was the only significant tax change for us when we started making a higher income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My husband has a new job that has a base salary and bonuses. This is new reality for us, as previously he was in the federal government. I'd like us to consult with a tax expert to figure out how best to manage our salaries and accounts. We do work with a financial advisor already, but she is not a tax expert. If you work with someone who helps you plan out your income vs taxes, what did you search for? What expertise and characteristics should I find? I have Googled tax advisors, but there are a million and I'd just love a starting point.

Make sure you do estimated taxes and do those payments to federal on a quarterly basis. If the income suddenly increases without a decent withholding, you may run into underpayment penalty next year.

This. We were in a similar situation, OP. We have a large year-end bonus. They do not withhold enough taxes on bonuses so the government wants you to make payments when you receive your payout or you get fined.

This was the only significant tax change for us when we started making a higher income.

For others reading, this depends - if your total earnings are $1M+, they will withhold at the highest rate (37%) so you don’t need to worry about this. Below that, the above is correct.

[Anonymous]

Anonymous wrote:OP, what income are we talking here? Under $1-2M and the advice is mostly the same and you can Google it yourselves / use your existing advisor. Unfortunately there’s no real tax hacks for W2 income specifically. Welcome to the working rich : )

$2M+ annual income is usually where it makes sense to get specialized advice, as that’s when you’ll maybeee want to be exploring investments to offset part of your income annually (eg investment property depreciation, maybe spouse wants to pivot into real estate FT and leverage that part of the tax code if they aren’t also in a highly paid profession, etc.). Also, many times at that level you have to set up a plan with your employer and an advisor they give you that sells your stock regularly on your behalf to avoid insider trading.

But not sure if that’s applicable here?

For context we went from $200K to $800K in 1 year (similar path - hill staffer to lobbyist) and this is what we were told by multiple firms we reached out to when we thought we needed special help.

Agree with this. I jumped from a nonprofit to tech, and most of this you can figure out yourself or w/the help of the people at your company (if you have equity or stock).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My husband has a new job that has a base salary and bonuses. This is new reality for us, as previously he was in the federal government. I'd like us to consult with a tax expert to figure out how best to manage our salaries and accounts. We do work with a financial advisor already, but she is not a tax expert. If you work with someone who helps you plan out your income vs taxes, what did you search for? What expertise and characteristics should I find? I have Googled tax advisors, but there are a million and I'd just love a starting point.

Make sure you do estimated taxes and do those payments to federal on a quarterly basis. If the income suddenly increases without a decent withholding, you may run into underpayment penalty next year.

This. We were in a similar situation, OP. We have a large year-end bonus. They do not withhold enough taxes on bonuses so the government wants you to make payments when you receive your payout or you get fined.

This was the only significant tax change for us when we started making a higher income.

For others reading, this depends - if your total earnings are $1M+, they will withhold at the highest rate (37%) so you don’t need to worry about this. Below that, the above is correct.

The 37% is on supplemental income above $1M. If you make $200k salary and get $1M in bonuses they'll withhold 22% on 800k and 37% on the 200k over the million dollar threshold. That 22% is absolutely too low though and you'll owe quite a bit of money at tax filing time.

We both elected to withhold an additional 8% on supplemental income (your employer may allow it) and make a large DAF donation every year to offset the error.

[Anonymous]

An example of a deferred compensation plan is a 457(b) plan.

A non-profit, btw, now can let all employees have both a 401(a) and a 403(b) plan at the same time. This potentially doubles the amount one can set aside tax-deferred each year.