Teach me - Basic Finance Taxes and Health Insurance

amother

Wed, Nov 27 2019, 11:08 am

I grew up in a poor home
We paid for food with foodstamps
We had insurance through medicaid
We lived in a section 8 apartment

I want something different for my family
I don't know how to go about it though
Maybe it doesn't even pay to try?!

How much taxes gets deducted from your earnings?
Do investments get taxed?
How do people stay with money leftover after health insurance costs?

Where can I learn basic financial info?

baby12x

Wed, Nov 27 2019, 11:16 am

You're question isn't really about taxes.

If you want to improve your financial future then you need to:
1. Get a good job
2. Stick to a budget
3. Save for unexpected expenses, the future and retirement

Everything else: healthcare, taxes, investments etc depend on how much you make, how many kids you have etc.

https://adimesaved.com/basic-g.....nance

amother

Azure

Wed, Nov 27 2019, 11:44 am

DO NOT USE CREDIT CARDS

sorry for shouting. I wish someone had shouted this at me years ago.

(Unless you have a proven track record of paying it off every single month. Even then, I'm not sure if it's worth it.)

Basic formula: make more money then you spend. Figure out where your money is going. And decide if that's where you want your money to go. If you are spending more than you're bringing in, either cut expenses or raise income (or both).

If you need to be on programs, be on them. But figure out how to raise your income so you can get off them.

I'll do basic taxes in a separate post.

amother

Azure

Wed, Nov 27 2019, 12:05 pm

Basic taxes in USA on income:

7.65% social security/medicare - this amount gets withheld from everyone who works as an employee (your boss matches this amount to give the irs 15.3%). 6.2% is capped around $130,000. In other words, even if you have 20 kids, you will be paying the IRS 7.65% of your income til $130,000.

* if you are self-employed, you get to pay about 14-15% to the irs. Yay for being self-employed.

Federal income tax, state income tax, and in some places city income tax is tax on your income. It often depends on how many kids you have. Its not a straightforward percentage. Some states have a flat rate while other states have no income tax.

Google "payroll tax calculator" to see how much money your take home check should be considering how many kids you have and other factors.

During the year, you make payments to irs/state. Once a year you file a tax return to see if you owe them money or they owe you. (There are credits based on kids if you have).

Investments are generally taxed as income, when you realize a gain. But there are different rates and factors. You should speak to an accountant or financial advisor for specifics.

baby12x

Wed, Nov 27 2019, 2:13 pm

amother [ OP ] wrote:

thanks for your replies

so I think my question really is
how do I know by how much I need to raise my income to afford being off programs?

Is your point to get off programs or to better your financial situation?
If its about the programs than there are income limits that you can look up depending on your state and family size.

IF YOU WANT TO IMPROVE YOUR FINANCIAL SITUATION:
Work on improving your income. This can be by getting a job that isn't "worth it" to get experience, to get promotion opportunities (people with a job are more likely to get a better job than someone without a job), to increase your skills.
Work on living within your means and saving. No matter how hard that is.
Use the programs as tools to get yourself in a better situation.
The point shouldn't be to not be on programs. The point is to be doing well enough so you don't need programs. The only way to do that is to get in a better place financially (see above 2 things)

amother

Lemon

Wed, Nov 27 2019, 2:14 pm

1) Figure out exactly how much you are earning now.

2) Use a tax calculator to see what taxes would cost for different income amounts. https://turbotax.intuit.com/ta.....ster/ Try a few different numbers. Write them down.

3) Get an estimate of health insurance costs using this calculator: https://www.healthcare.gov/see-plans/ Try plugging in a few different income amounts to see what things would cost.

4) See what income level can cover taxes + insurance while still leaving you the same amount of money to live on.

Now you have your goal.

amother

Pearl

Wed, Nov 27 2019, 5:28 pm

As others allude to, it is very short sighted to think about whether working will cause you to make too much money to be eligible for programs.

The point would be to figure out a long term strategy so that your income is sufficient.

There well might be a period of time when you are theoretically worse off because your income is too high for some programs and so you have to spend your money.

However, you are investing in yourself because if you obtain education or skills training, your income will increase so that you will become economically self sufficient. Moreover, you would be providing your children with a role model of parents who are economically self sufficient and end the cycle of poverty you seem to be trapped in. There is a culture of dependency that people become immersed in - as somewhat shown by your initial post in which you seem to lack even the fundamentals of how earning a salary comes before the issue of figuring out how much you can make from government programs.

I was raised to assume that I would have to work - it was a given as my mother worked and our lifestyle would not have been sustainable without her economic contribution - or my father's salary either I will add.

amother

Wed, Nov 27 2019, 11:35 pm

So grateful to all of you

Am I seeing right?
Does the below mean that people who earn less pay more taxes and self employed pay even more?! Is this why so many freelancers form LLC's? [please excuse my ignorance!]

I pasted this from a message above:
7.65% social security/medicare - this amount gets withheld from everyone who works as an employee (your boss matches this amount to give the irs 15.3%). 6.2% is capped around $130,000. In other words, even if you have 20 kids, you will be paying the IRS 7.65% of your income til $130,000.

* if you are self-employed, you get to pay about 14-15% to the irs. Yay for being self-employed.