Jump to content
Fantasy Football - Footballguys Forums

Personal Finance Advice and Education!


No. 16

Recommended Posts

2 hours ago, NutterButter said:

Since 401 is typically pre-tax, how does that factor into your calculation?    How about a company match?  I assume college savings count but what about home equity?  I know lots of questions.  Just trying to determine if I could get to your percentage as a fun little exercise.   

Pretty easy calc.  I take total income and subtract all taxes (fed, state, local, RE, car) to get "real income".  I get expenses for the year from Personal Capital.  Then it's just (real income-expenses)/real income.  So it ignores home equity and ignores company match.  It does encapsulate my contributions to 401k and HSA.

BTW, real income is a bit different than taxable income(purely a tax form number) as that's clouded a bit with deductions that don't really reflect what you really keep in your pocket at the end of the day.  My "real income" is a bit higher than taxable income on tax forms.

Edited by Sand
  • Like 1
Link to comment
Share on other sites

 

1 hour ago, The Z Machine said:

Just did my first run at my 2020 taxes.  Not good.  Even though my allowances are at 0 (and I have 2 kids), I still owe a boatload in federal taxes (and might have to pay a penalty).  I should get some back in state taxes.  I am wondering why the amount withheld for federal would be so out of line compared to state.  Should I ask for additional $$ withheld for federal aside from the typical for 0 allowances.

Not sure how you end up there.  Did you have a ton of stock gains or something similar that don't have withholding?

Link to comment
Share on other sites

4 minutes ago, Sand said:

Pretty easy calc.  I take total income and subtract all taxes (fed, state, local, RE, car) to get "real income".  I get expenses for the year from Personal Capital.  Then it's just (real income-expenses)/real income.  So it ignores home equity and ignores company match.  It does encapsulate my contributions to 401k and HSA.

BTW, real income is a bit different than taxable income that gets entered there as that's clouded a bit with deductions that don't really reflect what you really keep in your pocket at the end of the day.  My "real income" is a bit higher than taxable income on tax forms.

Gotcha.  I don't track expenses so your approach isn't an option for me.   Oh well.   So much for that exercise.  

Link to comment
Share on other sites

6 minutes ago, Sand said:

 

Not sure how you end up there.  Did you have a ton of stock gains or something similar that don't have withholding?

Not much.  Only like 1% of my earnings were from long-term cap gains.  No short-term stock sales.

  • Sad 1
Link to comment
Share on other sites

1 minute ago, The Z Machine said:

Not much.  Only like 1% of my earnings were from long-term cap gains.  No short-term stock sales.

I'm not a tax accountant, but something is off there.  Max withholding should cover your income.  

One solution is to breed a few kids.  Helps on taxes.  Real income is way, way worse, though.

  • Laughing 1
Link to comment
Share on other sites

The tax reform a few years back that capped SALT deductions hit me pretty hard.  It added quite a bit of to my taxable income.  Example: in 2017, my taxable income was only 70% of AGI, whereas in 2019 it was 88%.  That was 100% due to the tax law changes.  My AGI only went up 12% over those 2 years.  This change has cost me more than $100k total over the last 3 years. 🤮

It seems I'm not doing a good job of putting income into tax-deferred or non-taxable avenues. 

Edited by The Z Machine
  • Thanks 1
Link to comment
Share on other sites

7 minutes ago, Sand said:

I'm not a tax accountant, but something is off there.  Max withholding should cover your income.  

One solution is to breed a few kids.  Helps on taxes.  Real income is way, way worse, though.

I already have 2 kids.  Don't plan on any more.

  • Love 1
Link to comment
Share on other sites

Can someone explain the best way to utilize an HSA?  I know I've read on here that it's good to invest that money and just try and use your regular dollars to pay medical bills if possible.

But I probably need a better explanation on that. I realize it's better to save more money that to spend it, but the simpleton in me says I'm spending that money anyway no matter what pile it comes out of.

I ask because I have two kids in braces and I'm on an expensive medication that I have to pay out of pocket for until my deductible is satisfied.

So if anyone has some good advice here, it would be much appreciated. Thanks.

  • Like 1
Link to comment
Share on other sites

9 minutes ago, ChiefD said:

Can someone explain the best way to utilize an HSA?  I know I've read on here that it's good to invest that money and just try and use your regular dollars to pay medical bills if possible.

But I probably need a better explanation on that. I realize it's better to save more money that to spend it, but the simpleton in me says I'm spending that money anyway no matter what pile it comes out of.

I ask because I have two kids in braces and I'm on an expensive medication that I have to pay out of pocket for until my deductible is satisfied.

So if anyone has some good advice here, it would be much appreciated. Thanks.

Yes, you are.  But if you spend your non-HSA money (assuming you have the cash flow to afford to do so), then the HSA's pre-tax dollars grow tax-free - double benefit.

I put off doing this for a couple of years because of the same thinking. But if your company contributes enough to make up most of the increase in deductible it becomes almost a no-brainer.  Worst case is you do have to use the HSA money for medical expenses now (I did at one point for an ER visit) and can't let it sit there and grow, but even then you benefit from paying medical expenses with pre-tax dollars.  

Edited by SFBayDuck
  • Thanks 1
Link to comment
Share on other sites

1 hour ago, The Z Machine said:

The tax reform a few years back that capped SALT deductions hit me pretty hard.  It added quite a bit of to my taxable income.  Example: in 2017, my taxable income was only 70% of AGI, whereas in 2019 it was 88%.  That was 100% due to the tax law changes.  My AGI only went up 12% over those 2 years.  This change has cost me more than $100k total over the last 3 years. 🤮

It seems I'm not doing a good job of putting income into tax-deferred or non-taxable avenues. 

Are you maxing out 401ks?

Link to comment
Share on other sites

34 minutes ago, ChiefD said:

Can someone explain the best way to utilize an HSA?  I know I've read on here that it's good to invest that money and just try and use your regular dollars to pay medical bills if possible.

But I probably need a better explanation on that. I realize it's better to save more money that to spend it, but the simpleton in me says I'm spending that money anyway no matter what pile it comes out of.

I ask because I have two kids in braces and I'm on an expensive medication that I have to pay out of pocket for until my deductible is satisfied.

So if anyone has some good advice here, it would be much appreciated. Thanks.

Hard to optimize without knowing your situation.  If you have after tax monies it's mathematically better to use that instead of HSA. But then you lose liquidity, which may be important to you. The longer you can shield HSA monies to grow tax free the better your stash down the road.  If you don't have the cash, though, using the HSA is just fine - you're getting the tax-free/tax-free use out of it.  That ain't bad at all.

If you can swing it and you have it available setting up an FSA to cover known braces costs (I think an FSA covers braces - check that, though!) and shielding the HSA is a good move.  Again, you need the extra cash to throw at that.  

But, in the end, I wouldn't stress too much over it.  I fully believe if you get 90% there, don't sweat that extra 10% squeeze.  You're doing good using the HSA in the manner you are, though it isn't the most mathematically efficient way - you almost never get to the theoretical max, anyway.

I mean, if you use the HSA, then take your liquid cash and buy a 70k super max F350 for ####s and giggles, then maybe you should rethink your use of funds...

  • Thanks 1
Link to comment
Share on other sites

8 minutes ago, Desert_Power said:

The tax change a couple years back certainly reduced my percent owed, but the withholdings have also been difficult for us to match up

Mine went up the first year because of the loss of personal exemptions (and a bit of SALT).  And I ended up with deductions that were right on the 24,500 line - that's the worst place to be.  Last couple of years we've bundled charity - double one year and zero this year to be way over or way under the line.  That's gotten me back down to about the same tax percentage owed as previous. 

Link to comment
Share on other sites

2 hours ago, Sand said:

I'm not a tax accountant, but something is off there.  Max withholding should cover your income.  

You'd be surprised.  It's not working out like that this filing season, in my experience.  Many of my clients with max withholding still owing....not really sure if the IRS tables are screwed up or what the problem is.

  • Thanks 1
Link to comment
Share on other sites

5 minutes ago, Steve Tasker said:

You'd be surprised.  It's not working out like that this filing season, in my experience.  Many of my clients with max withholding still owing....not really sure if the IRS tables are screwed up or what the problem is.

Maybe we need state level withholding tables to account for those super high SALT states?

Link to comment
Share on other sites

11 minutes ago, Steve Tasker said:

You'd be surprised.  It's not working out like that this filing season, in my experience.  Many of my clients with max withholding still owing....not really sure if the IRS tables are screwed up or what the problem is.

It was screwed up last year too.  I didn't get any stimulus money either, BTW.  Well, maybe like $200 on a debit card or something.  No check, that's for sure.

What's the ratio of AGI to taxable income for you guys?  In 2019, my AGI was 88% of my taxable income.  It might be higher in 2020.

Link to comment
Share on other sites

15 hours ago, Sand said:

Would it fly to just average those two and call it good?  If the IRS calls you down on that it seems a reasonable solution.

That’s reasonable.  The odds of an audit are low, although I’m not a tax professional.  
 

@Gawain my friend was able to get a value.  I’ll DM it to you. 

ETA: @Gawain, the message system said you were not able to receive messages.

Edited by Andrew74
Link to comment
Share on other sites

1 hour ago, HaFo SaFo said:

You could pay $1000 today out of pocket, and save the receipt. You can reimburse yourself at any time in the future from the HSA. Tomorrow, next year, 30 years from now. Let's say in 10 years your $1000 becomes $2000. Your water heater bursts and you need cash quickly. Take the $1000 out of the HSA, tell them it's for $1000 in expenses you have a receipt for, and you pay no penalty... all the money is yours to do with as you please. Then you have spent your $1000 but you still have $1000 in the HSA to continue growing. All the growth it makes in the HSA is tax-free forever* (*except in NJ and CA).

I upload all receipts into Google Drive, and then have a Google sheet that I update to track all medical expenses so I know what I can access at any given time.  So right now I'm working to pull together a housing down payment and identifying buckets of money I can pull from if needed - savings, taxable brokerage account, bitcoin in Paypal, cash buried in coffee cans, IRA withdrawals, HSA, etc.  My IRA and HSA are last on that list that I'd want to access, but I know what I can dip into if I have to.

  • Like 1
Link to comment
Share on other sites

1 hour ago, The Z Machine said:

It was screwed up last year too.  I didn't get any stimulus money either, BTW.  Well, maybe like $200 on a debit card or something.  No check, that's for sure.

What's the ratio of AGI to taxable income for you guys?  In 2019, my AGI was 88% of my taxable income.  It might be higher in 2020.

2019 - 82%, 2020 - 87%.  That ratio has gone up a bunch since TJCA.

Link to comment
Share on other sites

4 hours ago, The Z Machine said:

The tax reform a few years back that capped SALT deductions hit me pretty hard.  It added quite a bit of to my taxable income.  Example: in 2017, my taxable income was only 70% of AGI, whereas in 2019 it was 88%.  That was 100% due to the tax law changes.  My AGI only went up 12% over those 2 years.  This change has cost me more than $100k total over the last 3 years. 🤮

It seems I'm not doing a good job of putting income into tax-deferred or non-taxable avenues. 

This is me. Married claiming zero + estimated + extra deductions each check. Can’t write off jack. Straight W2 working for the man. Mortgage is down to almost all principal. Time to start a general partnership and get some losses. I’ll pay fair share but it’s always something. AMT. Then SALT cap in CA. Sucks

Link to comment
Share on other sites

6 minutes ago, Judge Smails said:

This is me. Married claiming zero + estimated + extra deductions each check. Can’t write off jack. Straight W2 working for the man. Mortgage is down to almost all principal. Time to start a general partnership and get some losses. I’ll pay fair share but it’s always something. AMT. Then SALT cap in CA. Sucks

I'm always like $1k over the itemized limit for deductions, so the rise in standard deduction didn't help me a whit.  And the only reason I get into itemization is by increasing charitable giving each year (which is a good thing).

  • Like 1
Link to comment
Share on other sites

7 hours ago, The Z Machine said:

.

What's the ratio of AGI to taxable income for you guys?  In 2019, my AGI was 88% of my taxable income.  It might be higher in 2020.

The only reason difference for us is the standard deduction.

But my federal effective tax rate is like 3%, same with the state.

Link to comment
Share on other sites

On 3/9/2021 at 7:40 AM, stbugs said:

That’s crazy. With 3 kids, no clue how I’d ever do that until they were out on their own. I know we’re at least 20ish% although I guess I should count college payments in there since I’m trying to not touch investments for that and have done decent so far. Would definitely bump up the %.

I have 1 kid who's pretty much flown the coop and 1 teenager left.  Biggest thing is the house is paid, as are the cars.  So no debt overhang other than living expenses.

My base "cost to live", which includes house taxes, utilities, insurance, and food is about 20k a year.  Now, I'm nowhere near that in real expenses,  but I have managed to get bare bones living costs down pretty good.

  • Like 3
Link to comment
Share on other sites

18 hours ago, The Z Machine said:

I'm always like $1k over the itemized limit for deductions, so the rise in standard deduction didn't help me a whit.  And the only reason I get into itemization is by increasing charitable giving each year (which is a good thing).

If charity monies are significant you can bundle charity for 2 years into one year to increase itemized deductions one year and then take the standard the next.  The further you are away from that $24,800 line the better.

  • Like 1
Link to comment
Share on other sites

4 hours ago, HaFo SaFo said:

Couldn't hurt, she'd probably owe $0 or get a refund, plus, then get the stimulus credit too. Right?

Likely to get a few pennies back from the IRS, so worth doing.  No stimulus, though - I assume she's a dependent.

  • Like 1
Link to comment
Share on other sites

My daughter works and makes a couple thousand a year. We don’t withhold Federal taxes, so she doesn’t get a refund.  She does get a state refund.  Plus I think it’s good for her to do it so she learns.  

Link to comment
Share on other sites

19 hours ago, Sand said:

I have 1 kid who's pretty much flown the coop and 1 teenager left.  Biggest thing is the house is paid, as are the cars.  So no debt overhang other than living expenses.

My base "cost to live", which includes house taxes, utilities, insurance, and food is about 20k a year.  Now, I'm nowhere near that in real expenses,  but I have managed to get bare bones living costs down pretty good.

That's impressive too. 

I haven't calculated our bare minimum expenses, but our basic expenses without the mortgage (food at home, necessary house maintainance, taxes, etc) run just under $60k.  Which I'm okay with, as the pension covers it. 

Link to comment
Share on other sites

11 hours ago, Andrew74 said:

My daughter works and makes a couple thousand a year. We don’t withhold Federal taxes, so she doesn’t get a refund.  She does get a state refund.  Plus I think it’s good for her to do it so she learns.  

This. 

My 18yo did his last year and got like $30 back from the state, 0 fed. 

My 16yo was mildly disappointed that he can't do taxes yet, he started in January. He's my nerd who takes the SAT Saturday as a sophomore.

Edited by -OZ-
Link to comment
Share on other sites

5 hours ago, -OZ- said:

That's impressive too. 

I haven't calculated our bare minimum expenses, but our basic expenses without the mortgage (food at home, necessary house maintainance, taxes, etc) run just under $60k.  Which I'm okay with, as the pension covers it. 

While Sand's costs seemed ridiculously low, yours without the mortgage seem really high.   What's the breakdown of that 60k?

Link to comment
Share on other sites

8 minutes ago, NutterButter said:

While Sand's costs seemed ridiculously low, yours without the mortgage seem really high.   What's the breakdown of that 60k?

If that's a lot, we probably just define basics differently. These aren't just the bare minimums.  Keep in mind, there's 7 of us.

Roughly speaking, on average for a month: 

$1,500 food

$1,000 misc kids stuff and entertainment. 

$500 home maintenance 

$500 utilities including cell

$500 vehicle (gas, maintenance and insurance)

$1,000 charitable giving

Edited by -OZ-
Link to comment
Share on other sites

10 minutes ago, -OZ- said:

If that's a lot, we probably just define basics differently. These aren't just the bare minimums.  Keep in mind, there's 7 of us.

Roughly speaking, on average for a month: 

$1,500 food

$1,000 misc kids stuff and entertainment. 

$500 home maintenance 

$500 utilities including cell

$500 vehicle (gas, maintenance and insurance)

$1,000 charitable giving

Gotcha.  Thought we were talking bare minimum.   Missed you switching classifications.   That's some food bill.   

Link to comment
Share on other sites

12 minutes ago, NutterButter said:

Gotcha.  Thought we were talking bare minimum.   Missed you switching classifications.   That's some food bill.   

4 of us eat like health conscious teenage boys. 

I don't think we could bring it under $40k sustainably.

Edited by -OZ-
Link to comment
Share on other sites

For the first time I will hit the max 401k contribution this year (sometime in November).

  • Do I lower my 401k contribution -1% and contribute 1% in an IRA starting now?
  • Do I do nothing until November and then contribute something to an IRA in December?
  • Do I just leave everything alone and keep contributing what I do to 401k?
Link to comment
Share on other sites

Also does anyone know anything about Restricted Stock Units (RSUs)? Apparently, Im in the top 20% of my company and was given RSUs as an incentive. They vest fully after 3 years (1/3 a year). Do I sell these immediately after vested? Do I have to pay taxes before vested?

Link to comment
Share on other sites

22 hours ago, NutterButter said:

Gotcha.  Thought we were talking bare minimum.   Missed you switching classifications.   That's some food bill.   

Mine was absolutely bare minimum to not get the house auctioned away, to have power and water, and to eat.  Nothing else.  If I start including cars and charity my costs get larger pretty quick.  

  • Like 1
Link to comment
Share on other sites

9 minutes ago, HaFo SaFo said:

 

At the very least, if you find the need to use your HSA to pay bills, find yourself a good rewards credit card. Either travel points or cash back, and use that card to pay your bills. Save the receipt, then withdraw from your HSA to pay the credit card bill. That way you're getting to pocket 2% cash for yourself or a trip to Hawaii out of it.

Oh yeah, we already do that. We pay all our bills on a credit card and get a sweet check back from Costco every year.

Link to comment
Share on other sites

49 minutes ago, HaFo SaFo said:

 

At the very least, if you find the need to use your HSA to pay bills, find yourself a good rewards credit card. Either travel points or cash back, and use that card to pay your bills. Save the receipt, then withdraw from your HSA to pay the credit card bill. That way you're getting to pocket 2% cash for yourself or a trip to Hawaii out of it.

2% back funding a Hawaii trip means... oof.

Link to comment
Share on other sites

2 hours ago, jobarules said:

For the first time I will hit the max 401k contribution this year (sometime in November).

  • Do I lower my 401k contribution -1% and contribute 1% in an IRA starting now?
  • Do I do nothing until November and then contribute something to an IRA in December?
  • Do I just leave everything alone and keep contributing what I do to 401k?

Depends on if your match is each pay period or a safe harbor match end of year. If each pay period, make sure you have a contribution each period. If safe harbor, option 2. 

Link to comment
Share on other sites

2 hours ago, jobarules said:

Also does anyone know anything about Restricted Stock Units (RSUs)? Apparently, Im in the top 20% of my company and was given RSUs as an incentive. They vest fully after 3 years (1/3 a year). Do I sell these immediately after vested? Do I have to pay taxes before vested?

The way RSUs have always worked for me that a certain number of shares are withheld  to pay taxes.  So if I have 100 RSUs vesting, I may only get 65 deposited into my account, with the other 35 held back for taxes.  I always sell them right away, but do not have to.

Link to comment
Share on other sites

3 minutes ago, Gawain said:

Depends on if your match is each pay period or a safe harbor match end of year. If each pay period, make sure you have a contribution each period. If safe harbor, option 2. 

Company match is 4% each pay period. So basically I will miss out on that match in December if I hit the limit early. Makes sense and I didnt even think about that. Thanks!

Link to comment
Share on other sites

5 minutes ago, themeanmachine said:

The way RSUs have always worked for me that a certain number of shares are withheld  to pay taxes.  So if I have 100 RSUs vesting, I may only get 65 deposited into my account, with the other 35 held back for taxes.  I always sell them right away, but do not have to.

Thank you. When do I have to pay taxes? When they vest? For example, I see them on my paycheck now (in 2021) but I can't sell them until next year.(2022). Would I have to include them when I file taxes in 2022?

Link to comment
Share on other sites

2 minutes ago, jobarules said:

Company match is 4% each pay period. So basically I will miss out on that match in December if I hit the limit early. Makes sense and I didnt even think about that. Thanks!

Yeah that’s why I switched from percentage of pay to $812.50 a paycheck. I used to like maxing out early in the year when I had some nice commission checks, but then realized I was leaving a little company match on the table by doing that. 

  • Like 1
Link to comment
Share on other sites

18 minutes ago, SFBayDuck said:

Yeah that’s why I switched from percentage of pay to $812.50 a paycheck. I used to like maxing out early in the year when I had some nice commission checks, but then realized I was leaving a little company match on the table by doing that. 

Do I miss out on some tax benefits doing this though? (ie changing 13% pre-tax to 12% pre-tax, 1% post tax)?

Should I wait until October to make the switch? 

Edited by jobarules
Link to comment
Share on other sites

1 hour ago, jobarules said:

Thank you. When do I have to pay taxes? When they vest? For example, I see them on my paycheck now (in 2021) but I can't sell them until next year.(2022). Would I have to include them when I file taxes in 2022?

For mine, the RSU taxes are taken care of by not giving me some of the shares - those shares go to pay taxes on them. So the tax implications when I file are minimal, as the taxes were withheld when the shares vested - it's just paid by not receiving all the vesting shares, instead of paycheck withholdings or something like that. They are reported on my taxes, but the implications at tax time are minimal if I sell right away.  If I hold the shares, then I pay taxes on any gains beyond the price I received them at when they vested.

  • Like 1
Link to comment
Share on other sites

8 hours ago, jobarules said:

Company match is 4% each pay period. So basically I will miss out on that match in December if I hit the limit early. Makes sense and I didnt even think about that. Thanks!

I didn't either. I jacked that up last year.  I knew I was over-contributing to my 401(k) but I figured that extra amount in my paycheck in Devember would be nice for holiday bills. 

Looking at it now, I got 0 company match for my last 2 pay periods.

This year I am scaling back to make sure I am just over the limit - make sure I get that sweet, sweet company match.

Link to comment
Share on other sites

3 minutes ago, KGB said:

When you guys talk HSA, your are talking health savings account, right?

I thought you could only use that for health expenses?

You can use it for anything and pay taxes on gains, or you can hold it until 65(?) and it’s tax free for anything. So triple tax advantaged (going in, gains and coming out) if you don’t use for health care and keep until retirement age.

  • Thanks 1
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Recently Browsing   0 members

    No registered users viewing this page.

×
  • Create New...