Originally Posted by
ZeroTT
I wonder if this is sort of possible.
I understand how marginal tax rates work on an annualized basis. You don’t ever lose money by making more
but what about withholding? Could a midyear shift in income cause required withholding to increase such that for a few months you lost ground? You still don’t lose money over the year but maybe a transient dip in take home pay?
I'm not a financial advisor. Witholding is really just a zero interest loan you make into an escrow account with the government, so you're guaranteed to be able to afford your approximately $20k tax bill every April. You could withhold nothing, take all of that money, invest it into SPY and make 15-30% off of it, but just make sure you can afford the bill in its entirety when it comes due. If weird stuff happens with your pay and you haven't withheld enough, you owe some money when your taxes come due. If you overpaid, you get the excess paid back to you at straight value, without any interest.