[NDOG1980]

Hey all,

I'm new here and had just a quick question. Thanks in advance for any help you can lend!

My wife and I are working through What Color Is Your Parachute, and also working on our definition of "enough". I've created a spreadsheet that we have entered in all of our projected spending for 5 different lifestyle scenarios (#1: 2 jobs - minimum; #2 2 jobs - ideal; #3 2 jobs with kids; #4 1 at 1/2 time + 1 at full time with kids; #5 1 at full time with kids).

The spreadsheet adds up all expense categories to suggest the total amount of money we should be earning to support each possible lifestyle scenario.

I am having trouble figuring out how to project taxes owed for each scenario. This is a major factor in how much total money we need to provide for each scenario on a yearly basis. Any suggestions?

 

[ilovechocolate]

I have no suggestions as to your questions, but welcome to the Village! There are some very knowledgeable folks here who I think can help you.

Good for you and your wife for working together to deal with financial issues.

 

[alaska_tiger_36]

Welcome to the village!

Check out this annual calculator for 2013/2014. But you can play with different salary amounts and see what your take home will be. It doesn't include state, local or school taxes.

Annual Federal Tax Calculator 2013/2014 | Online Tax calculator

Now for future years......if you can figure out the US government and how they are going to jack with our taxes you have a better crystal ball than I do.

 

[CookieLee]

I've tracked our annual net realized tax burden for all taxes paid compared to gross income for years now. Including social security, medicare, federal income taxes, state income taxes, property taxes and sales taxes, we pay about 16% of our gross income. I know that percentage seems low but that is the beauty of all those deductions that the tax laws give us (mortgage deduction, standard deduction, childcare tax credits, charity deduction, 401k and medical premiums paid with pre-tax dollars, etc.)

If that figure still seems low or if you don't think you'll be able to maximize your deductions (i.e., you won't be owning a house or you have no children or you just think the tax burden will become much heavier in the years to come), I recommend you estimate between 20 - 30%.

 

[miss_cas]

I would look online for a calculator for this. IRS.gov may have a good calculator. Because US taxes work like this (numbers are only for example purposes): For a single person the US tax system works like this.

$40k example income
First $10k of income is taxed at 10%
Next $25k of income is taxed at 20%
Next $5k of income is taxed at 30%

It is much harder to figure with two earners and worse if someone works two jobs. These are just federal taxes too...all the states work differently.

 

[telephus]

What part of the taxes are you having a hard time figuring out?

You should be able to take gross income in each scenario.

Next figure out AGI adjustments.

Next, figure out your deductions - standard deduction or itemized deductions, whichever applies.

Next, figure out any credits.

Then, you have your answer.

You will need to recalculate for state taxes, although this should be easier since most states have fewer deductions/credits than federal.

You can find online calculators that will do a lot of this for you.


It seems like you are trying to run a lot of scenarios. Just remember that there are a lot of factors that go into taxes, and life events can have a drastic change. I estimate my taxes every year, and I haven't had one year in the last 10 that something didn't happen to throw it off - either a layoff, new job, new baby, bought a house, etc.

 

[NDOG1980]

Thanks everyone. This has been very helpful.

Ended up using TurboTax TaxCaster https://turbotax.intuit.com/tax-tools/calculators/taxcaster/.

Worth a look if you've got similar questions. Cheers!