Consequences of increasing income

amother

Mon, Jan 24 2022, 12:15 pm

Other than not being eligible for Medicaid what are the consequences of earning more?
What else am I 'losing'?
And is paying for own health insurance that bad?
Or should I negotiate getting insurance through the business?

amother

Blush

Mon, Jan 24 2022, 12:17 pm

Heath insurance can cost you 20k a year or more, depending on different factors.
You will pay more taxes.
The schools might expect more tuition.
Your siblings will expect you to help them out financially.

amother

Blush

Mon, Jan 24 2022, 12:30 pm

amother [ OP ] wrote:

So health insurance is a big one

I will pay more taxes on the increase or on my entire salary?

I'll have to deal with schools and siblings I guess

It depends. I think once you’re in a new tax bracket you pay a bigger percentage.

amother

Milk

Mon, Jan 24 2022, 12:35 pm

amother [ Blush ] wrote:

How do your siblings know your income?!

amother

Blush

Mon, Jan 24 2022, 12:36 pm

amother [ Milk ] wrote:

How do your siblings know your income?!

Mine don’t but they think they do. Lol. When we had absolutely no money (just enough cash for our next grocery order) they asked us to pay for something for a cousin. As a gift because we are Bh so well-off.

amother

Blush

Mon, Jan 24 2022, 12:38 pm

I will add that you do need to run your numbers and see- but it’s usually worth it in the long run to take the raise if there’s potential to make a lot lot more later on, rather than always trying to figure out how to stay under the limits for different programs and stuff.

amother

Milk

Mon, Jan 24 2022, 12:45 pm

amother [ Blush ] wrote:

It depends. I think once you’re in a new tax bracket you pay a bigger percentage.

You only pay the higher percentage on the increase that is in the next tax bracket.

For married filing jointly, if you are earning $35,000, that's at a 12% tax rate.
If your income increases to $60,000, your still paying a 12% tax rate.
If your income increases to $90,000, then anything your making above $81,050 is at a 22% tax bracket.
You can put $ into 401k, fsa etc so you can stay in the lower tax bracket, but again, there is a huge jump from not being eligible for medicaid and jumping into the next tax bracket.

causemommysaid

Mon, Jan 24 2022, 12:48 pm

amother [ Blush ] wrote:

It depends. I think once you’re in a new tax bracket you pay a bigger percentage.

It's a progressive tax system so you pay more only on the higher bracket.

However it's sneaky because once you hit certain numbers you phase out of many tax credits so essentially you are paying more on everything.

amother

Buttercup

Mon, Jan 24 2022, 12:48 pm

amother [ Blush ] wrote:

It depends. I think once you’re in a new tax bracket you pay a bigger percentage.

You only pay a bigger percentage for the diff in brackets.

This isn’t real numbers. But say up to 150k is 20% and more than that is 25%

If you make 175 you’re only paying 25% on 25k not on the full $175k

amother

Milk

Mon, Jan 24 2022, 12:50 pm

amother [ Blush ] wrote:

Then your posts aren't relevant to OP.
You said that a consequence of increasing income will mean your siblings will expect $$$.
It seems your siblings expect $$$ whether ror mot you can actually afford it, bit that has no bearing on OP.
(I understand what you mean, because of my personal situation, but I know its not general, Soni don't feel it applies to OP. My siblings assume I'm struggling, and in debt, which is far from the reality, I live below my means, because I'm terrified of being in that place. When my income doubled, I kept my expenses as before, because they all know that I used to not make the end of the month. They wouldn't dream my salary right now. I know other siblings are "expected" to help out, so I do understand what your saying)

amother

Dandelion

Mon, Jan 24 2022, 12:50 pm

amother [ OP ] wrote:

appreciate the detailed clarification alot
it's so scary to get off programs
I did it but do feel dumb at times

We did it. It was super hard at first but we are much better off financially now

amother

Milk

Mon, Jan 24 2022, 12:56 pm

cupcake123 wrote:

More income means more expenses. For example you will notice your food, clothing, restaurant, bill went up as well

Well, if you wait till you "notice" then yea, I guess.

But like I wrote, my income more than doubled, and my budget didn't change. Previously, I wasn't making it, when my salary increased, the remainder went into savings.

I still had my food budget, restaurant budget, etc.

amother

Milk

Mon, Jan 24 2022, 12:58 pm

amother [ OP ] wrote:

appreciate the detailed clarification alot
it's so scary to get off programs
I did it but do feel dumb at times

Many of us have been there, it is scary at times.
Especially the first raise, where all your money may go straight to health insurance, but next year, when you get another raise, you will be better off, IYH.

amother

Wine

Mon, Jan 24 2022, 1:18 pm

One thing you can do is contribute more to retirement account or FSA account to keep income down on your taxes until you are able to 'blow through' the expenses such as full tuition and loss of child tax credits.

And if you're able to help siblings that's wonderful. Tzedakah to family members is great. But def not a reason not to consider taking a raise. That's pretty sad if siblings feel that if a family member is living more comfortably than they are 'owed' some of the income. Just say "sorry we can't" if you would like you can explain that although you are making more money now until recently you couldnt pay your bills and were on programs and therefore have a lot of catch up to do before you are financially stable enough to help them too.