Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If we are married filing jointly, I see that we are typically in the 22% marginal tax rate. For 2024 22% starts for income above $94,300. But we typically have the standard deduction. For 2024 it's $29,200.

So, does this mean we are only taxed 22% for income above $123,500?

I am thinking to do our best to stay under $123,500 in federal taxable income if this is the case.

Thanks for any feedback.

Essentially. The marginal tax rate of 22% kicks in for TAXABLE income above $94,300.

Another way to think of it is there is a zero tax rate on your first $29,200 of adjusted gross income. Then the next 70K or so is taxed at 12%. Then the 22% rate kicks in for the next $100k or so. And then the 24% rate. And so on.

Op here. Thanks.

We are thinking put enough into 403b and/or 457b to get us right below $123,500 federal taxable. Then focus on Roth IRA's. That way any money going into the Roth is taxed at 12% first.

This is pretty dumb.

Why? It minimizes taxes and encourages saving for retirement in the most tax advantaged way.

You are vastly overthinking this. As other have pointed out, your tax burden if you make $123,501 is 22 cents higher than if it is $123,500. There is no advantage or disadvantage to being in one side or the other of a marginal tax rate cutoff.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If we are married filing jointly, I see that we are typically in the 22% marginal tax rate. For 2024 22% starts for income above $94,300. But we typically have the standard deduction. For 2024 it's $29,200.

So, does this mean we are only taxed 22% for income above $123,500?

I am thinking to do our best to stay under $123,500 in federal taxable income if this is the case.

Thanks for any feedback.

Essentially. The marginal tax rate of 22% kicks in for TAXABLE income above $94,300.

Another way to think of it is there is a zero tax rate on your first $29,200 of adjusted gross income. Then the next 70K or so is taxed at 12%. Then the 22% rate kicks in for the next $100k or so. And then the 24% rate. And so on.

Op here. Thanks.

We are thinking put enough into 403b and/or 457b to get us right below $123,500 federal taxable. Then focus on Roth IRA's. That way any money going into the Roth is taxed at 12% first.

Ummm, real question: are y'all anti-government extremists? Because jerry rigging things to this extent to avoid taxes shows ... unusual priorities.

But they're not avoiding taxes. They're only deferring taxes on the 403 and 457 contributions, and they'll be subject to RMDs.

If they plan to retire early, RMDs with higher tax rates may not be an issue.

I don't see how they are going to retire early if their joint income is so close to $123,500 that they are making decisions about whether to max out a 403b and/or 457b or put money in a Roth IRA. If that were my income, I would be putting every dollar I could in tax-deferred vehicles and reducing my overall tax burden since putting wage income into tax-deferred retirement vehicles reduces your other taxes as well (state taxes, FICA, etc.) I think Medicare is the only one that comes out pre-tax no matter what.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If we are married filing jointly, I see that we are typically in the 22% marginal tax rate. For 2024 22% starts for income above $94,300. But we typically have the standard deduction. For 2024 it's $29,200.

So, does this mean we are only taxed 22% for income above $123,500?

I am thinking to do our best to stay under $123,500 in federal taxable income if this is the case.

Thanks for any feedback.

Essentially. The marginal tax rate of 22% kicks in for TAXABLE income above $94,300.

Another way to think of it is there is a zero tax rate on your first $29,200 of adjusted gross income. Then the next 70K or so is taxed at 12%. Then the 22% rate kicks in for the next $100k or so. And then the 24% rate. And so on.

Op here. Thanks.

We are thinking put enough into 403b and/or 457b to get us right below $123,500 federal taxable. Then focus on Roth IRA's. That way any money going into the Roth is taxed at 12% first.

This idea is not dumb. However there is a saying about letting the tax tail wag the dog. If keeping your accounts simple increases your taxes by a bit, it could be worth it. Depending on your overall wealth at retirement, you may find it was better to pay 22% tax to contribute to a Roth. There are so many factors, but you are thinking about this properly overall.

There is no one right answer. Save 15-20% of your income in some way, shape or form. There are benefits and drawbacks to every decision. Endless analysis is not helpful but your idea is not dumb.

90% use the standard deduction in addition to whatever tax credits they may be eligible. (Earned income, child, teacher expenses, etc6

Anonymous wrote:

Anonymous wrote:The 10K SALT tax deduction limit on itemization pushed a lot of folks to take the standardized deduction.

That was deliberate policy to “simplify” the tax code.

I know, I know …

They did —they simultaneously raised the amount of the standard deduction. And judging by the number of folks who are saying they now take the standard deduction, it worked.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If we are married filing jointly, I see that we are typically in the 22% marginal tax rate. For 2024 22% starts for income above $94,300. But we typically have the standard deduction. For 2024 it's $29,200.

So, does this mean we are only taxed 22% for income above $123,500?

I am thinking to do our best to stay under $123,500 in federal taxable income if this is the case.

Thanks for any feedback.

Essentially. The marginal tax rate of 22% kicks in for TAXABLE income above $94,300.

Another way to think of it is there is a zero tax rate on your first $29,200 of adjusted gross income. Then the next 70K or so is taxed at 12%. Then the 22% rate kicks in for the next $100k or so. And then the 24% rate. And so on.

Op here. Thanks.

We are thinking put enough into 403b and/or 457b to get us right below $123,500 federal taxable. Then focus on Roth IRA's. That way any money going into the Roth is taxed at 12% first.

This is pretty dumb.

Why? It minimizes taxes and encourages saving for retirement in the most tax advantaged way.

OP didn't do an analysis that took into account when they plan to retire or what their post retirement income will be, so there's no way to conclude that they're either saving in the most tax advantaged way or minimizing taxes over their lifetime. And I doubt they're wealthy ebough to retire all that early.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If we are married filing jointly, I see that we are typically in the 22% marginal tax rate. For 2024 22% starts for income above $94,300. But we typically have the standard deduction. For 2024 it's $29,200.

So, does this mean we are only taxed 22% for income above $123,500?

I am thinking to do our best to stay under $123,500 in federal taxable income if this is the case.

Thanks for any feedback.

Essentially. The marginal tax rate of 22% kicks in for TAXABLE income above $94,300.

Another way to think of it is there is a zero tax rate on your first $29,200 of adjusted gross income. Then the next 70K or so is taxed at 12%. Then the 22% rate kicks in for the next $100k or so. And then the 24% rate. And so on.

Op here. Thanks.

We are thinking put enough into 403b and/or 457b to get us right below $123,500 federal taxable. Then focus on Roth IRA's. That way any money going into the Roth is taxed at 12% first.

Ummm, real question: are y'all anti-government extremists? Because jerry rigging things to this extent to avoid taxes shows ... unusual priorities.

But they're not avoiding taxes. They're only deferring taxes on the 403 and 457 contributions, and they'll be subject to RMDs.

If they plan to retire early, RMDs with higher tax rates may not be an issue.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If we are married filing jointly, I see that we are typically in the 22% marginal tax rate. For 2024 22% starts for income above $94,300. But we typically have the standard deduction. For 2024 it's $29,200.

So, does this mean we are only taxed 22% for income above $123,500?

I am thinking to do our best to stay under $123,500 in federal taxable income if this is the case.

Thanks for any feedback.

Essentially. The marginal tax rate of 22% kicks in for TAXABLE income above $94,300.

Another way to think of it is there is a zero tax rate on your first $29,200 of adjusted gross income. Then the next 70K or so is taxed at 12%. Then the 22% rate kicks in for the next $100k or so. And then the 24% rate. And so on.

Op here. Thanks.

We are thinking put enough into 403b and/or 457b to get us right below $123,500 federal taxable. Then focus on Roth IRA's. That way any money going into the Roth is taxed at 12% first.

This is pretty dumb.

Why? It minimizes taxes and encourages saving for retirement in the most tax advantaged way.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If we are married filing jointly, I see that we are typically in the 22% marginal tax rate. For 2024 22% starts for income above $94,300. But we typically have the standard deduction. For 2024 it's $29,200.

So, does this mean we are only taxed 22% for income above $123,500?

I am thinking to do our best to stay under $123,500 in federal taxable income if this is the case.

Thanks for any feedback.

Essentially. The marginal tax rate of 22% kicks in for TAXABLE income above $94,300.

Another way to think of it is there is a zero tax rate on your first $29,200 of adjusted gross income. Then the next 70K or so is taxed at 12%. Then the 22% rate kicks in for the next $100k or so. And then the 24% rate. And so on.

Op here. Thanks.

We are thinking put enough into 403b and/or 457b to get us right below $123,500 federal taxable. Then focus on Roth IRA's. That way any money going into the Roth is taxed at 12% first.

Ummm, real question: are y'all anti-government extremists? Because jerry rigging things to this extent to avoid taxes shows ... unusual priorities.

But they're not avoiding taxes. They're only deferring taxes on the 403 and 457 contributions, and they'll be subject to RMDs.