Saving money during residency

[rakangh94]

Hello everyone,

I am to start my residency this July in Brooklyn. Salary is around $61000 pre-taxes. Is anyone familiar with the net income after taxes for J1 holders as I heard we pay less taxes than American graduates?

Also, I am planning to save around $1k per month. Assuming I pay $2k rent per month and commute to the hospital by either walking or public transportation, being single, and having no loans to payback, do you think this is possible?

Thanks

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[ddjamb]

Aren't taxes based on income and not on visa status? If a J1 visa pays less taxes, I am interested in knowing the rationale behind it.
With a salary of $68K, it's about $4k/month net
You can play with this here: PaycheckCity.com | Paycheck Calculator Result

 

[AMEHigh]

I did my intern year in Brooklyn. I think my salary was 64k. My rent was $1350. I was able to live just fine.

 

[managedcarefin]

Aren't taxes based on income and not on visa status? If a J1 visa pays less taxes, I am interested in knowing the rationale behind it.
With a salary of $68K, it's about $4k/month net
You can play with this here: PaycheckCity.com | Paycheck Calculator Result

J1 aren't American Citizens so they don't pay social security or Medicare taxes.

How the US Taxes J1 Visa Holders & Other Aliens | J1 Tax Refund

 

[ddjamb]

interesting. Thank you

 

[DrPcv]

J1 aren't American Citizens so they don't pay social security or Medicare taxes.

How the US Taxes J1 Visa Holders & Other Aliens | J1 Tax Refund

That is only true for the first couple of years (and in reality only for your intern year). After you will be paying for SS/Medicare. From the IRS website: However, foreign scholars...physicians, au pairs, summer camp workers, and other non-students in J-1, Q-1 or Q-2 nonimmigrant status who have been in the United States more than two calendar years are RESIDENT ALIENS and are liable for social security/Medicare taxes... It is the calendar year of entry which is counted toward the two calendar years. Thus, for example, a foreign teacher who enters the United States on December 31, 2012 counts 2012 as the first of his two years as an "exempt individual."

Now a personal opinion (and not a professional advice of course): read the fine print on your W4s, I had more than one co-resident surprised with a 3-4k bill from the IRS because of the allowances they have on their W4. Most people don’t realize or forget that you will have to pay it back at some point. Remember you can always ask for less allowances (or even ask for none, ie putting a 0 in your W4).

 

[Raryn]

Now a personal opinion (and not a professional advice of course): read the fine print on your W4s, I had more than one co-resident surprised with a 3-4k bill from the IRS because of the allowances they have on their W4. Most people don’t realize or forget that you will have to pay it back at some point. Remember you can always ask for less allowances (or even ask for none, ie putting a 0 in your W4).

I'll agree you should read the instructions on your W4, though the rest of your advice is +/-. The typical single resident with one job is entitled to 2 federal allowances.

Most people incorrectly put 0-1 and get a refund - which is fine if you're OK with giving an interest-free loan to the feds. I'm personally happier getting my money when I earn it.

 

[gutonc]

I'll agree you should read the instructions on your W4, though the rest of your advice is +/-. The typical single resident with one job is entitled to 2 federal allowances.

Most people incorrectly put 0-1 and get a refund - which is fine if you're OK with giving an interest-free loan to the feds. I'm personally happier getting my money when I earn it.

To add to this...if you really have no idea what you should be putting for your allowances, pick something (0, 1 or 2) to start and then, after 4-6 months, use the IRS Withholding Calculator to calculate what it should be for the rest of the year. I adjusted mine 4x last year (had messed up the year before) and the calculator got the refund amount correct to within $2-300. I've since updated it twice this year (salary went up, planned deductions changed) and am currently on track to be within $200 of neutral for the year.

 

[mvenus929]

I'll agree you should read the instructions on your W4, though the rest of your advice is +/-. The typical single resident with one job is entitled to 2 federal allowances.

Most people incorrectly put 0-1 and get a refund - which is fine if you're OK with giving an interest-free loan to the feds. I'm personally happier getting my money when I earn it.

Eh... I put one and got a very small refund (a couple hundred) second year, and then owed every year after that. I am now keeping 0 on my W4 because it really sucks trying to come up with $1000 at the beginning of the year to pay taxes.

 

[Raryn]

Eh... I put one and got a very small refund (a couple hundred) second year, and then owed every year after that. I am now keeping 0 on my W4 because it really sucks trying to come up with $1000 at the beginning of the year to pay taxes.

Are you married?

Most commonly what you're describing is only the case if there's more than one job total in the household. Either one person with two jobs or two people each with a job.

 

[Piebaldi]

Hello everyone,

I am to start my residency this July in Brooklyn. Salary is around $68000 pre-taxes. Is anyone familiar with the net income after taxes for J1 holders as I heard we pay less taxes than American graduates?

Also, I am planning to save around $1k per month. Assuming I pay $2k rent per month and commute to the hospital by either walking or public transportation, being single, and having no loans to payback, do you think this is possible?

Thanks

That's not bad. My fellowship salary is 60k in FL. Not exactly great - especially after being an attending for almost a year. Gahh. I would be happier with 68k. But 2k/month in rent seems reasonable, maybe another 1k/month in food. Do you have a family?

 

[DrPcv]

I'll agree you should read the instructions on your W4, though the rest of your advice is +/-. The typical single resident with one job is entitled to 2 federal allowances.

Most people incorrectly put 0-1 and get a refund - which is fine if you're OK with giving an interest-free loan to the feds. I'm personally happier getting my money when I earn it.

I definitely agree with you there. The point I was trying to make is that (specially as a foreign grad, although I've seen it also in American grads) people tend to just answer all the boxes and end up with several allowances without even understanding what that means then they use the money for something else and when tax day comes they are surprised by the amount they owe to the IRS.

OP, probably the best people to answer your questions are other people in your program that might be on a similar situation like you (J1 holders, no debt). Remember that you are not going only to pay taxes (federal and state in your case) with your salary but also other things like health insurance, dental, disability, etc so your take home might be less than expected.

 

[Merely]

I did my intern year in Brooklyn. I think my salary was 64k. My rent was $1350. I was able to live just fine.

Damn that’s cheap rent

 

[AMEHigh]

Damn that’s cheap rent

Yes I got incredibly lucky. It was a true 1-bedroom too. It was in a decent building, 1 block from the subway that went directly to my hospital. It was the 3rd place I looked at and I put in an application for it right away!

I’m moving back to NYC in a couple of months and I hope I get lucky again

 

[rakangh94]

That's not bad. My fellowship salary is 60k in FL. Not exactly great - especially after being an attending for almost a year. Gahh. I would be happier with 68k. But 2k/month in rent seems reasonable, maybe another 1k/month in food. Do you have a family?

I edited my post to the right salary, it was a typo.

I don't have a family just yet but might be married in 1-2 years.

 

[rakangh94]

Thank you for all the informative posts. I lack basic knowledge about US taxes. Can someone briefly explain what the W4?

 

[rakangh94]

I definitely agree with you there. The point I was trying to make is that (specially as a foreign grad, although I've seen it also in American grads) people tend to just answer all the boxes and end up with several allowances without even understanding what that means then they use the money for something else and when tax day comes they are surprised by the amount they owe to the IRS.

OP, probably the best people to answer your questions are other people in your program that might be on a similar situation like you (J1 holders, no debt). Remember that you are not going only to pay taxes (federal and state in your case) with your salary but also other things like health insurance, dental, disability, etc so your take home might be less than expected.

I did ask around and I got many different answers. It all comes down to rent, how wise one is in spending etc..
Aren't all these covered by the program? I remember seeing all these benefits mentioned in the contract.
I talked to one of my friends who is a resident there and he told his take home pay is around 1830 bi-weekly.