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Thread: What percent to save for taxes in this situation?

  1. #1
    God/dess SarahTime's Avatar
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    Default What percent to save for taxes in this situation?

    I'm trying to be prepared for 2012 and start saving my taxes early. The last two years I have filed I did not have much camming income because I was pregnant and barely camming at all, and my husband was working also, so I actually did not end up owing anything after tax credits, etc.

    For all of 2012 my husband will be in school full time so I am going to be stepping it up on camming since it will be our only income. I need to know what percentage to save from my checks so I am not stuck with some huge amount at the end of the year.

    I have seen in other threads that 30% is a good number, but that was always based off of a single person with no children.

    I need a "personal opinion" on what a good amount is to keep out of my checks when I am married with 3 children and not a home owner. I expect to earn --- in 2012 and I can't even imagine the taxes on that....
    Last edited by SarahTime; 01-14-2012 at 07:43 PM.
    xoxo ~ Sarah




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    Banned Melonie's Avatar
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    Default Re: What percent to save for taxes in this situation?

    ^^^ your personal tax situation is actually better than most, given that you are married, given that your husband has little or no additional income plus a large tuition tax credit, given that your state does not levee an income tax etc. On the flip side, $78k is in the 25% tax bracket above $68k, but the majority of your income will be subject to a 15% federal income tax. Tack on another 15% in social security - medicare tax on every dollar earned. This 30% combined rate will be reduced somewhat by exemptions, FIVE dependents, deductions, and of course the tuition tax credit. So you're probably talking about an effective tax rate somewhere around 24%.

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    God/dess SarahTime's Avatar
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    Default Re: What percent to save for taxes in this situation?

    Thank you Melonie!!!

    24% still feels really high. Bleh. Such is life in the US I guess.
    xoxo ~ Sarah




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    Banned Melonie's Avatar
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    Default Re: What percent to save for taxes in this situation?

    ^^^ admittedly, the amount of 'reduction' in tax liability you'll get from hubby's tuition tax credit, legitimate business expense write-offs, having enough personal tax deductions to itemize etc. could all reduce the 24% figure I threw out.

    As to the 24% figure being 'high', all I can say is welcome to the world of 'small business'. All independent contractors get hit with a 7.6% 'employer's' share of social security - medicare tax in addition to a 7.6% 'employee' share of SSI - medicare tax. This is a significant difference in determining effective tax rates over 'straight job' employees, where their straight job employer must pick up a 7.6% share out of company profits.

    Also be thankful that unlike NY, CA and many other states, you don't have to tack on another 3-4-5% for state income tax !!!

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    God/dess Zofia's Avatar
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    Default Re: What percent to save for taxes in this situation?

    Quote Originally Posted by Melonie View Post
    Also be thankful that unlike NY, CA and many other states, you don't have to tack on another 3-4-5% for state income tax !!!
    Try 5-6-7% in North Carolina! The good news is sales tax on cars, boats and airplanes is capped at $1500. Dang, shoulda bought a boat.

    Z

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    Veteran Member Robertjordan's Avatar
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    Default Re: What percent to save for taxes in this situation?

    I think 24% is a very safe number assuming the information you gave us is accurate. I plugged in your information and did not make any other assumptions and I came up with ~ 23%.

    I'd bet you'll probably have expenses against that income, possibly itemized tax deductions, child tax credits, tuition deductions, etc. that will lower that rate. Plus if the government extends the social security tax cut that's another 2% less you'd owe. You could probably do 20% and still be pretty darn safe.

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