Work & no eligibility for govt programs? Or no work & get it

amother

Mon, Mar 15 2021, 4:11 pm

grateful for your input
Quote:
We have a 401k. Its turned out to be a great way to lower our tax rate. Anyone that pays taxes should do this. Unfortunately only one of our employers offer a 401k. We have savings just because of this.
Can you explain how this works?

amother

Fuchsia

Mon, Mar 15 2021, 4:15 pm

amother [ Ivory ] wrote:

Op, since you quoted me ill respond as well.

The bonus statement you quoted wasnt mine, but unfortunately I am in the same situation. After taxes I hope the bonus will cover the grocery bill for Pesach.

Dh has made the decision early on to worry about our future. My parents were on government programs. Now that they are retired they have nothing. Bh they had a house that sold well, they are living off of that and renting.

We have a 401k. Its turned out to be a great way to lower our tax rate. Anyone that pays taxes should do this. Unfortunately only one of our employers offer a 401k. We have savings just because of this.

We would need to almost double our income to live without struggling. I dont see it happening.

I also know people that cheat the system. They are on unemployment and working, getting paid in cash while on government programs. Im not referring to these people. Its between them and god. (Dh feels like the government is to blame, since they caused this )

I see Biden is now looking to raise my taxes to pay for all the stimulus. We should have a tzidoka organization helping out middle class families. If not for taxes I would be living comfortably.

Ask you accountant, but I think you can do your own 401K. Dh and I both do it independently.

amother

Purple

Mon, Mar 15 2021, 4:30 pm

amother [ Fuchsia ] wrote:

Ask you accountant, but I think you can do your own 401K. Dh and I both do it independently.

Money put into a 401(k) is generally matched by your employer, so that is ideal. But you can still put money into an IRA on your own.

Other ways to save money on taxes - child care credits and deductions (not the child tax credit, this is different), hsa account for medical bills if your employer offers it, health insurance paid through your employment is deductible as well.

American Opportunity Act gives you around $2000 tax credit a year if anyone in your family is going to college.

Real estate is a good investment because of the huge tax deduction. If you are an independent contractor or you own your own business you can deduct many expenses.

These are just some ideas.

Amarante

Mon, Mar 15 2021, 4:35 pm

I wanted to add that you can do either an IRA or a Roth IRA.

You are not taxed on money you put in a standard IRA until you withdraw. You are taxed on money you put in a Roth IRA but not taxed when it is withdrawn. Depending on your finances, one can be better than another - you should consult a tax person.

Unless you are being matched by an employer, there might not be an advantage to your employer 401 since your investments are limited to the ones offered by the employer.

Amarante

Mon, Mar 15 2021, 4:40 pm

amother [ Ivory ] wrote:

I see Biden is now looking to raise my taxes to pay for all the stimulus. We should have a tzidoka organization helping out middle class families. If not for taxes I would be living comfortably.

Are you making more than $400,000? Because that is the income level which might have an increase - and that would be generally adjusted gross - e.g. actually taxable income after deductions.

If you make more than $400,000 and have trouble buying food for Pesach, you might take a look at your budget.

amother

Mon, Mar 15 2021, 4:46 pm

Amarante I should have such problems. $400,000 yearly...
In either case - it's easier for me to understand why
so many people who don't have ambition or particularly
good skills make the choices they do. It's literally the easy way
and the repercussions are too far down the line or too insignificant to matter

Amarante

Mon, Mar 15 2021, 4:49 pm

amother [ OP ] wrote:

I was responding to amother Ivory who was complaining that Biden was planning to raise her taxes and also complaining that she had no money for Pesach food.

Since the income threshold for raising taxes would be $400,000 either amother Ivory is misinformed in terms of what income levels might be taxed or is incredibly profligate in terms of having financial issues with an income of $400,000. Smile

The current stimulus is so helpful to working and truly middle class people like you and other posters.

amother

Fuchsia

Mon, Mar 15 2021, 4:51 pm

amother [ OP ] wrote:

We haven't yet seen the long term repercussions of people living on today's standards with government aid for income. I have no doubt they will not be pretty.
If you think about people who did it somewhat successfully, know that they lived in a different era. By that, I mean think about how much lower their expenses and how easy it once was to gain government aid.
Many programs have cut either amount of ppl they serve, or services they offer.
it is no longer the easy way out for most people, and many people have come to realize it. Not everyone has.
And, for a select few people it may work long term, but they really have to fit a very specific criteria.

amother

Silver

Mon, Mar 15 2021, 5:01 pm

Something else: There is a quirk in how bonuses are withheld. The withholding assumes you get that bonus every week like it's your ordinary salary, so it's withheld at the higher rate.

But when you go to actually file your taxes, it is figured out again by your total income, and your overpayment is refunded. We don't always realize this, because tax time is so complicated. My husband used to get a substantial portion of his pay as a bonus, so we dealt with this.

In the short term you can lose out by earning just over a threshold especially for Medicaid, which is a benefit worth far more than the salary increase. But long term, staying on programs may not be sustainable (also, what you can actually get varies a lot depending on where you live, your family etc). In the long term, if you can increase your income, it will be the most help. It's also good to know which jobs and companies provide the best benefits. It can be worth it to make a little less, but at a company with good benefits, then to make some more money elsewhere--your total compensation would be higher because of the value of the benefits.

It is not always legal to choose to be paid by 1099 (the IRS periodically cracks down on inappropriate use of independent contractors).

amother

Sapphire

Mon, Mar 15 2021, 5:40 pm

Amarante wrote:

The current stimulus is so helpful to working and truly middle class people like you and other posters.

Except for middle class people who are making between 160k and 400k.

Like me.

And I could REALLY use the extra money.

amother

Purple

Mon, Mar 15 2021, 7:02 pm

amother [ OP ] wrote:

so who would be able to advise re all the options how to get paid etc. [1099 or other/401K/best company benefits etc.]
I'm thinking mesilah counselors may not be qualified.
Is it an accountant? a tax expert?

You can ask the company that you/or your husband work for all of these questions. A 1099 may not be legal; just letting you know that.

If the company offers 401(k) or basically any other benefit - grab it with both hands.

If your/your husband's company doesn't - you can open an IRA yourself. You just need to make sure it pays because if you are not paying taxes anyway (and depending on your income bracket/amount of children you have, you may not be paying federal taxes) then an IRA isn't much help.

I think consulting with an accountant might be a good idea.

amother

Forestgreen

Mon, Mar 15 2021, 7:03 pm

amother [ Smokey ] wrote:

Even if you earn little at your job, some jobs come with benefits and much better health insurance than medicaid.

A low paying job can be a stepping stone towards a better paying one, plus you can get raises, so even if right at this moment you can only get a low paying job, it's still better than depending on programs.

The crazy thing is in Lakewood there are drs who take Medicaid over excellent. private insurance. I had to leave my gp bec o that. There is a popular OT who only takes Medicaid. Not private. You can barely find great OTs who will take private in network. Medicaid gives orthotics. Private does not. Ppl have easier time getting braces on Jersey care then private. those with Jersey care go to same drs as those with private. There is no better care one of the other. Just no copay sand free medicine. Some hospitals can’t go to but there are excellent alternatives

amother

Blonde

Mon, Mar 15 2021, 7:42 pm

amother [ Forestgreen ] wrote:

Not true at all for the bolded! You have Medicaid and got braces? Because most ppl I know are paying out of pocket !!

amother

Forestgreen

Mon, Mar 15 2021, 7:47 pm

amother [ Blonde ] wrote:

Not true at all for the bolded! You have Medicaid and got braces? Because most ppl I know are paying out of pocket !!

I know tons of ppl getting through Jersey care (starting with all my extended family members )
They don’t pay full.

amother

Ivory

Mon, Mar 15 2021, 7:51 pm

amother [ OP ] wrote:

Find out of your employer offer a 401k. Its pretax and lowers your taxable income.

amother

Ivory

Mon, Mar 15 2021, 7:52 pm

amother [ Fuchsia ] wrote:

Ask you accountant, but I think you can do your own 401K. Dh and I both do it independently.

My employer doesnt offer a 401k. The only way I can save for retirement is with a Roth Ira, which is after taxes.