Taxes...wtf!
I just started plugging in numbers into H&R and I'm blown away! I owe almost $25K in fed & state taxes over the shit I paid throughout the year...wtf! I'm in Bay area, married filing jointly. Spouse is stay at home. I know my tax strategy is non-existent with no kid, no home mortgage, no side business incorporated, no tax loss harvesting etc. I only have 401k & IRA. No brokerage, so no capital gains/losses. But this is insane! I was better off not jumping jobs for a better role & higher comp! Is there anything that can be done now before I actually file for the taxes? What can be done for next year? Leave Cali..the Bay area? :( TC is $260k all cash. Total taxes - $86K (including the $25k owed)
You took a 25k loan from the government interest free, I don’t know what ur b**ching about
It seems weird: if all of your comp is cash it should be properly withheld. You should check your W4 with your employer? How much tax did you pay all in all?
All in including the $25K owed and the fed, CA state, social sec, Medicare & mandatory CASDI...$86K.
Yeah...that sounds about right. Thanks.
Make sure to check if your brokerage properly reported your basis on your stock vesting. If the brokerage took taxes out on RSUs at vest time, it is likely they didn’t report it, because they are not required to.
Op mentioned “all cash” though
Yeah...I only have 401k & IRA. No brokerage, so no taxable capital gains/losses.
My company uses Schwab, and although the 1099s automatically import to Turbo tax, we also have to manually go in and adjust the basis on each vesting: otherwise we would end up double paying.
Should have done your math ahead of time
You need to incorporate, work through your company, pay yourself min wage salary
OP, this is most likely the consequence of 10k cap on State+Property tax. Even if you don’t own property your state tax is higher than 10k. Before tax reform you could deduct it entirely, now you can only deduct 10k. Having spouse or owning a house won’t help you. Basically, tax reform screwed all high wage workers (read all tech workers) living in high tax states (such as CA). Read carefully how the penalty applies - there is a provision that if you paid at least as much as your total tax last year then penalty is waived (I think this is still true).
Always put “0” on your W4, and even withhold a little extra to be safe. But to be honest either your W4 is really wrong or the company fucked up and miscalculated the amount to take out of your paycheck each pay period, it happened to be before the had me in the wrong brackets and I’m glad I caught it early
Move to Seattle
Dude - we are way overcrowded. Don’t move here. Traffic is now officially worse than LA.
^ lol STFU dude. Be empathetic. OP: move to Seattle and enjoy 0 state tax 😉