I'm an engineer, hubby is an IBM salesman (both 46 yrs old). Together last year we earned $210,000. Though payroll witholding, we had $38,000 taken out of our paychecks by the IRS, $11,000 witheld by the state (maximum witholding rates, zero deductions). We had to write out an additional check on January 15th for another $8,000 to the IRS. $57,000 in state and Federal income taxes on an income of $210,000--how would you like to pay that?
For the smart-@ss freepers who say "get a better accountant," you obviously don't know what you're talking about. Our problem is that we are "evil rich" people with one child and a paid-off mortgage. Because of our income, we can't do IRA's, Roth IRA's education savings accounts, etc. etc. Yes, we max out our 401k's every year!!! We don't even get a full deduction for our daughter because of our income bracket. Ever heard of that neat little trick in the tax code? Most people haven't.
Since we don't own our own business, we can't reduce our taxes with fake expenses like so many small business owners do.
Welcome to the real world of the U.S. Tax Code, farmall!!!
You can thank (among others) your socialist buddies at the NEA for continuing to vote for scumbag Democrats who can't do anything except raise my taxes and create new wasteful ogovernment programs.
The government increased the maximums on 401K and 403B contributions beginning this year. The limit is increasing by $500 to $11,000 for 2002, and then it will increase by $1000/year until it reaches $15,000 in 2006. I know it's not much, but it's something. Also, once a taxpayer reaches 50, he/she can begin to contribute more to 401Ks.
Also, under the new tax law, workers age 50 and older can contribute even more of their salary to their 401K plans beginning in 2002, provided plan rules allow. Here are the amounts of the catch-up provisions and the years when they take effect, excluding any employer contributions:
Year | Maximum Tax-Deferred Contribution for All Workers | Catch-Up Contribution (for age 50+) | Total Contribution with Catch-Up |
2002 | $11,000 | $1,000 | $12,000 |
2003 | $12,000 | $2,000 | $14,000 |
2004 | $13,000 | $3,000 | $16,000 |
2005 | $14,000 | $4,000 | $18,000 |
2006 | $15,000 | $5,000 | $20,000 |
Also, check out the Education IRAs. The maximum is only $500 (per taxpayer?). I believe it started last year, so you might still be able to set up an account by 4/15/02 to claim it on your 2002 taxes.
What the heck is that supposed to mean? You can only expense against income you make from the buisness to begin with.