Tax Liability
12-31-2023 | 06:44 PM
#42
Line Holder
Joined: Oct 2019
Posts: 282
Likes: 1
half the currency printed in the US since 1776 was printed during covid. Now we’re in a period of quantitative tightening, ie. taking currency out of circulation, $1t so far.
interest rates need to come down, even though they’re historically low. this usually is accompanied by a correction in the stock market and increased unemployment. if it also is associated with deflation unemployment Will generally reach 10%.
there has been a significant increase in houses for sale this fall, inventory never goes up in the fall with exception of 2007.
the average home price is ~$450k which requires an income of $120k, which means only 8% of households can afford the average home.
it cost 50% more per month to own than rent, and rents have fallen to the point they can’t support the average mortgage.
I don’t believe this can continue and imo we’re due for a housing correction, hopefully sooner than later.
research past cycles of the economy, inflation, interest rates, housing and employment and you can see where we are statistically.
the wild card is how far will the government go to artificially affect the inevitable. I believe the more they do the bigger the correction will be when it finally happens.
interest rates need to come down, even though they’re historically low. this usually is accompanied by a correction in the stock market and increased unemployment. if it also is associated with deflation unemployment Will generally reach 10%.
there has been a significant increase in houses for sale this fall, inventory never goes up in the fall with exception of 2007.
the average home price is ~$450k which requires an income of $120k, which means only 8% of households can afford the average home.
it cost 50% more per month to own than rent, and rents have fallen to the point they can’t support the average mortgage.
I don’t believe this can continue and imo we’re due for a housing correction, hopefully sooner than later.
research past cycles of the economy, inflation, interest rates, housing and employment and you can see where we are statistically.
the wild card is how far will the government go to artificially affect the inevitable. I believe the more they do the bigger the correction will be when it finally happens.
Maybe they will just keep printing more money? I have heard those points you mentioned above. Some even saying that we should have already seen a correction based on those points in 2023.
01-02-2024 | 09:57 AM
#43
On Reserve
Joined: Apr 2020
Posts: 184
Likes: 7
From: 737 FO
The term printing money is way over used. The Fed expands its balance sheet by increasing liquidity. Once the crisis is over it takes the money out of circulation. If I give you a dollar and you give it to someone and they give it to someone and that person gives it back to me $4 was circulated but nothing was printed. People confuse this with the deficit. The deficit is meaningless unless its measured against something of relevence. The public debt is in far better shape than the average household in terms of GDP and national wealth. Also, look and see who owns most of the public debt.
01-12-2024 | 11:05 AM
#44
Line Holder
Joined: Jul 2007
Posts: 836
Likes: 27
Tax/Money gurus...I have a couple of questions.
The 'make up' NEC contribuition that is being credited this year: What does the IRS consider the source of that? Is it a company contribution (thus lowering their yearly max) or is it individual contribution?
If the credit for the 'make up' NEC is being given to the company, is there anyway to capture the excess the company would have been paying? I assume the MBCBP won't do that.
I hear some guys are figuring the RB amount to be taxed at 35-37%. Why? No one will be in that bracket with the RB and we have a progressive tax. A 12-yr CA should only be sitting at the 22-24% bracket for the 2/20 paycheck. The IRS doesn't do 'look ahead' taxes.
Thanks.
The 'make up' NEC contribuition that is being credited this year: What does the IRS consider the source of that? Is it a company contribution (thus lowering their yearly max) or is it individual contribution?
If the credit for the 'make up' NEC is being given to the company, is there anyway to capture the excess the company would have been paying? I assume the MBCBP won't do that.
I hear some guys are figuring the RB amount to be taxed at 35-37%. Why? No one will be in that bracket with the RB and we have a progressive tax. A 12-yr CA should only be sitting at the 22-24% bracket for the 2/20 paycheck. The IRS doesn't do 'look ahead' taxes.
Thanks.
01-12-2024 | 11:16 AM
#45
Gets Weekend Reserve
Joined: Jul 2007
Posts: 4,277
Likes: 274
From: B737CA
I hear some guys are figuring the RB amount to be taxed at 35-37%. Why? No one will be in that bracket with the RB and we have a progressive tax. A 12-yr CA should only be sitting at the 22-24% bracket for the 2/20 paycheck. The IRS doesn't do 'look ahead' taxes.
Thanks.
01-12-2024 | 11:32 AM
#46
Line Holder
Joined: Jul 2008
Posts: 977
Likes: 106
Withholding is done so estimated taxes are paid throughout the year. If you don't have enough withheld, you'll owe interest and penalties on the taxes you were supposed to pay. (Independent contractors, for example, have to send check to the IRS throughout the year to account for this.) If you don't withhold enough, you have to write a check when you do your taxes. If you withhold too much, you get a refund.
The software that companies use -- like Workday -- figure out how much to withhold by estimating what your total salary will be for the year, and thus how much you'll owe in taxes. They do this by looking at your gross pay and extrapolating it to be your annual salary. That works fine unless you get an abnormally large check that's all calculated as normal salary, as our RB will. It'll see something like $150K and think you make $1.8M a year, and withhold taxes commensurate with that number. Yes, it'll be too much, but it will be refunded when you do your taxes. (Not with interest, unfortunately.)
So no, you're not going to get taxed at 35-37%. The software just isn't set up to handle it as a bonus for tax withholding purposes, so it'll withhold too much from that check.
01-12-2024 | 11:39 AM
#47
Gets Weekends Off
Joined: Apr 2013
Posts: 4,590
Likes: 434
There are strategies to compensate for the over-withholding of the RB paycheck. I have heard a few of them from smart and not so smart people, and am going with a least risk strategy for me, which is to allow the over-withholding to occur and then to adjust my forward withholding based on my estimated taxes for the year. It should result in a zero tax bill plus or minus a few hundred bucks. My days of giving the government a tax free loan for a year died with zero percent interest.
Some have advocated declaring exempt from withholding for the feb 20th check and then writing a check for estimated taxes. This could result in penalties (doubtful, but possible) and I am not willing to risk the possible outcome.
Some have advocated declaring exempt from withholding for the feb 20th check and then writing a check for estimated taxes. This could result in penalties (doubtful, but possible) and I am not willing to risk the possible outcome.
01-12-2024 | 11:41 AM
#48
Line Holder
Joined: Jul 2007
Posts: 836
Likes: 27
Pepole are using "withheld" and "taxed" interchangeably, and they shouldn't.
Withholding is done so estimated taxes are paid throughout the year. If you don't have enough withheld, you'll owe interest and penalties on the taxes you were supposed to pay. (Independent contractors, for example, have to send check to the IRS throughout the year to account for this.) If you don't withhold enough, you have to write a check when you do your taxes. If you withhold too much, you get a refund.
The software that companies use -- like Workday -- figure out how much to withhold by estimating what your total salary will be for the year, and thus how much you'll owe in taxes. They do this by looking at your gross pay and extrapolating it to be your annual salary. That works fine unless you get an abnormally large check that's all calculated as normal salary, as our RB will. It'll see something like $150K and think you make $1.8M a year, and withhold taxes commensurate with that number. Yes, it'll be too much, but it will be refunded when you do your taxes. (Not with interest, unfortunately.)
So no, you're not going to get taxed at 35-37%. The software just isn't set up to handle it as a bonus for tax withholding purposes, so it'll withhold too much from that check.
Withholding is done so estimated taxes are paid throughout the year. If you don't have enough withheld, you'll owe interest and penalties on the taxes you were supposed to pay. (Independent contractors, for example, have to send check to the IRS throughout the year to account for this.) If you don't withhold enough, you have to write a check when you do your taxes. If you withhold too much, you get a refund.
The software that companies use -- like Workday -- figure out how much to withhold by estimating what your total salary will be for the year, and thus how much you'll owe in taxes. They do this by looking at your gross pay and extrapolating it to be your annual salary. That works fine unless you get an abnormally large check that's all calculated as normal salary, as our RB will. It'll see something like $150K and think you make $1.8M a year, and withhold taxes commensurate with that number. Yes, it'll be too much, but it will be refunded when you do your taxes. (Not with interest, unfortunately.)
So no, you're not going to get taxed at 35-37%. The software just isn't set up to handle it as a bonus for tax withholding purposes, so it'll withhold too much from that check.
01-12-2024 | 12:43 PM
#49
Thread Starter
Furloughed Again?!
Joined: Aug 2007
Posts: 4,950
Likes: 110
From: Boeing 737
There are strategies to compensate for the over-withholding of the RB paycheck. I have heard a few of them from smart and not so smart people, and am going with a least risk strategy for me, which is to allow the over-withholding to occur and then to adjust my forward withholding based on my estimated taxes for the year. It should result in a zero tax bill plus or minus a few hundred bucks. My days of giving the government a tax free loan for a year died with zero percent interest.
Some have advocated declaring exempt from withholding for the feb 20th check and then writing a check for estimated taxes. This could result in penalties (doubtful, but possible) and I am not willing to risk the possible outcome.
Some have advocated declaring exempt from withholding for the feb 20th check and then writing a check for estimated taxes. This could result in penalties (doubtful, but possible) and I am not willing to risk the possible outcome.
01-12-2024 | 01:19 PM
#50
Line Holder
Joined: Jul 2008
Posts: 977
Likes: 106
Ok. Is it worth changing the 'exemptions' on the W4 to mitigate that bad math? I used the www.irs.gov/w4app and it coughed up a large number to use in the dependents override space to lower the withheld amount.
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