Taxes: Yikes

[owlegrad]

I wish that for paying my 27%-38.95% of taxs that the government at the end of the year would just send me a thank you letter. Sure the education system is why were here making so much money, but more importantly thank us for putting the time in and making this money. Thank you letter & a gift card to P.F changs would be nice, its the least we deserve. 6 or more years of school to get taxed at an unacceptable rate with no thank you, that just sad . We should all send one letter a day until they send us a freaking hall mark thank you card with our god darn gift certificate.

Good one.

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[shaq786]

Just got my paycheck...its a good feeling but I got taxed 33%!!!!! Yes I confirmed it and made sure everything was correct.

I am single, do not plan to buy a house, no dependants, or anything like that. It wont change for a long time(so please do not suggest).

What are my chances of getting some of that money back? And how much of that money can I get back on my tax return? I live in Georgia.

 

[xiphoid2010]

Just got my paycheck...its a good feeling but I got taxed 33%!!!!! Yes I confirmed it and made sure everything was correct.

I am single, do not plan to buy a house, no dependants, or anything like that. It wont change for a long time(so please do not suggest).

What are my chances of getting some of that money back? And how much of that money can I get back on my tax return? I live in Georgia.

You can put some your money into 401K, traditional IRA, and health flex account, that would decrease your tax burden. But your net take home pay will go down as well. Donating to charity, moving >50 miles to a new job, paying your student loan interest this year, will also your taxes and get you some refund when you file.

Being single, no dependents, no mortgage, you are pretty much only able to take standard deductions, so pretty much you are paying taxes on the entire amount of your income. Sorry.

 

[pezdispenser]

This is the first year I start working as an RPh. So I was wondering, when it come to doing tax-return, do most pharmacist end up paying or getting a refund check? I wasn't sure if i should pick the highest or lowest state tax on my paycheck. thanks.

This is completely up to you by setting the allowances on your W-4, and is a personal preference. In your first year because you're getting taxed as if you're earning a pharmacist's salary for the whole year, you will probably get a refund unless you set your W-4 very high like 14+ allowances. I prefer to set my W-4 so I owe ~$100 in April next year. Use the IRS withholding calculator to work it out: http://www.irs.gov/individuals/page/0,,id=14806,00.html

 

[pezdispenser]

Just got my paycheck...its a good feeling but I got taxed 33%!!!!! Yes I confirmed it and made sure everything was correct.

I am single, do not plan to buy a house, no dependants, or anything like that. It wont change for a long time(so please do not suggest).

What are my chances of getting some of that money back? And how much of that money can I get back on my tax return? I live in Georgia.

If you just started as a pharmacist, you will probably get a very large refund. Say you're earning $10,000 per month, they'll still tax you like you're earning $120,000 for the full year, so federal tax will be about 22% or $2,200 per month. If you leave it like this, they'll take $8,800 in tax for 4 months this year.

But your total salary at the end of the year after working 4 months will only come to $40,000. To work out your tax like on your tax return, for singles subtract the $5,800 standard deduction and one $3,700 personal exemption, so your taxable income is $30,500 and the tax for the year should be only $4,150 or 10%. For this example, that's a $4,650 tax refund.

Alternatively, you can use the IRS withholding calculator at http://www.irs.gov/individuals/page/0,,id=14806,00.html, plug in the numbers and it will tell you the number of allowances to put on your W-4 to get a minimal tax refund. That is, you are paying the correct amount of taxes and getting more money in your pocket with each paycheck instead of waiting until April next year for a tax refund.

 

[R2pharmD2]

If you just started as a pharmacist, you will probably get a very large refund. Say you're earning $10,000 per month, they'll still tax you like you're earning $120,000 for the full year, so federal tax will be about 22% or $2,200 per month. If you leave it like this, they'll take $8,800 in tax for 4 months this year.

But your total salary at the end of the year after working 4 months will only come to $40,000. To work out your tax like on your tax return, for singles subtract the $5,800 standard deduction and one $3,700 personal exemption, so your taxable income is $30,500 and the tax for the year should be only $4,150 or 10%. For this example, that's a $4,650 tax refund.

Alternatively, you can use the IRS withholding calculator at http://www.irs.gov/individuals/page/0,,id=14806,00.html, plug in the numbers and it will tell you the number of allowances to put on your W-4 to get a minimal tax refund. That is, you are paying the correct amount of taxes and getting more money in your pocket with each paycheck instead of waiting until April next year for a tax refund.

You can put some your money into 401K, traditional IRA, and health flex account, that would decrease your tax burden. But your net take home pay will go down as well. Donating to charity, moving >50 miles to a new job, paying your student loan interest this year, will also your taxes and get you some refund when you file.

Being single, no dependents, no mortgage, you are pretty much only able to take standard deductions, so pretty much you are paying taxes on the entire amount of your income. Sorry.

Just got my paycheck...its a good feeling but I got taxed 33%!!!!! Yes I confirmed it and made sure everything was correct.

I am single, do not plan to buy a house, no dependants, or anything like that. It wont change for a long time(so please do not suggest).

What are my chances of getting some of that money back? And how much of that money can I get back on my tax return? I live in Georgia.

I think one active thread on taxes is enough. Merging threads.

 

[schamj01]

You didn't read my entire statement. I said 100K family income is actually very low if you have children that you want to send to private school. My friend in pharmacy school just send her son to pre K and damn the tuition is high. Here is just one of the private schools around the area here...and this isn't even the most expensive school around here. http://www.woodward.edu/admissions/tuition/index.aspx
If I had children I would want the best for them and private school is def the way to go, but on 100K it could be a stretch. If you had 2 or more children you would be using up more than 50% of your income.

...I went to a fine private school for 14 years. Tuition there is about $4,000 a year. How is that not affordable at 100k? Are private schools everywhere else that much more expensive. Because I know of a few other ones in my area that are under 6k a year...

 

[genesis09]

My first part-year working, I received a very nice refund of about $10k. My first full year working I got a refund of about $2500. I put 0 exceptions on my W-4. You can get penalized if you under withhold. If you have multiple sources of income, in a few years, you can get stuck paying estimated taxes.

 

[BenJammin]

Welcome to the real world. Try marrying another pharmacist and Obama would call you rich and raise your taxes more. You now have to start paying your "fair" share even though 47% of Americans pay no federal income tax. Do your part and vote Republican.

Hahaha 95% of most pharmacists don't even make enough for a Republican to care. Average salary is $90,000 right? Obama has said repeatedly that those of us making less than $200,000 will not have our taxes raised.

Besides, I make more money when there's a Democrat in office since they actually care about the value of our dollar so I'm praying to god that Obama gets reelected.

 

[Pharmacy Kid]

What's the most you've ever lost in a coin toss?

 

[Ackj]

Since SHC didn't answer:

$15600 after taxes
Rent: $500x12= $6000
Utilities $100x12 = $1200 (that's pretty low)
Transportation (taxes, insurance, gas) = $1200 (assuming car is paid in full, note also that many people do not have access to public transportation, as is the case where I live)
Health insurance: $150x12 (high deductible plan, hopefully Joe won't need it) = $1800
Food/clothing/misc: $300x12 = $3600
Phone (the most basic landline phone which we have is $30, let's not consider VOIP since Joe doesn't have the internet) $30x12 = 360

$1440, that's $120 per month for car repairs, medical expenses, entertainment (!) not to mention retirement savings. Or state and local taxes.

I'm living close to this. Rent is more, utilities less, still covered under parent's healthcare. I definitely do not spend $300/month on food and clothing. In fact I can't even remember the last time I bought clothes. I bought a new pair of dress shoes with the $50 I got from my grandparents a few months ago, but that's all I can think of. I don't go on vacations, but I can go to the movies or out to dinner. I splurged and bought a playstation last year, although I certainly could've gone without that if I was destitute. Only "aid" I get is student loans, which I get $400/semester as living expenses. I don't think I'm poor, and I could definitely live like this indefinitely if there was no alternative. If not for school, I would be able to work more, so I'd make a little more money too.

Do I have to budget my money? Absolutely, but if I blew it all on beer, I wouldn't expect somebody to pay for my food and housing to make up for it.

Of course I'm not factoring in disasters, injuries, car breakdowns. If you're injured and can't work, that's completely different, and I understand the need for federal aid. Medical bills can easily throw off a tight budget, but that's why you need to have some savings.

 

[Ackj]

What's the most you've ever lost in a coin toss?

Just saw that movie for the first time about 3 weeks ago. Was really good, and then the ending just was way over my head.

 

[Pharmacy Kid]

Just saw that movie for the first time about 3 weeks ago. Was really good, and then the ending just was way over my head.

I just finished it one minute ago. I couldn't understand what the sheriff was talking about besides something about two dreams so I'm gonna read the plot online now.

 

[pezdispenser]

I'm bumping this thread to remind newly graduated pharmacists that you may need to set your W-4 tax withholding allowances quite high for your first year, like 7+, if you had no income for the first half of the year but full pharmacist's income for the second half. This will keep the IRS from withholding too much tax out of your paychecks, so you will not have a massive refund next year, but you will take home more on each paycheck. You will need to put your W-4 withholding allowances back down to normal next year.

You can use the IRS withholding calculator at http://www.irs.gov/individuals/page/0,,id=14806,00.html to work it out.

If you just started as a pharmacist, you will probably get a very large refund. Say you're earning $10,000 per month, they'll still tax you like you're earning $120,000 for the full year, so federal tax will be about 22% or $2,200 per month. If you leave it like this, they'll take $8,800 in tax for 4 months this year.

But your total salary at the end of the year after working 4 months will only come to $40,000. To work out your tax like on your tax return, for singles subtract the $5,800 standard deduction and one $3,700 personal exemption, so your taxable income is $30,500 and the tax for the year should be only $4,150 or 10%. For this example, that's a $4,650 tax refund.

Alternatively, you can use the IRS withholding calculator at http://www.irs.gov/individuals/page/0,,id=14806,00.html, plug in the numbers and it will tell you the number of allowances to put on your W-4 to get a minimal tax refund. That is, you are paying the correct amount of taxes and getting more money in your pocket with each paycheck instead of waiting until April next year for a tax refund.

 

[sisson329]

Awww...look at the cute little Ayn Rand reading sociopath.

Well it is kind of what we do best. America has been pretty well known for it.

Source: History

 

[Ackj]

I'm bumping this thread to remind newly graduated pharmacists that you may need to set your W-4 tax withholding allowances quite high for your first year, like 7+, if you had no income for the first half of the year but full pharmacist's income for the second half. This will keep the IRS from withholding too much tax out of your paychecks, so you will not have a massive refund next year, but you will take home more on each paycheck. You will need to put your W-4 withholding allowances back down to normal next year.

You can use the IRS withholding calculator at http://www.irs.gov/individuals/page/0,,id=14806,00.html to work it out.

Are you allowed to set your allowances that high without having dependents? I'll admit my ignorance on the topic, but my HR departments have always asked me "You want zero or one?"

 

[pezdispenser]

Are you allowed to set your allowances that high without having dependents? I'll admit my ignorance on the topic, but my HR departments have always asked me "You want zero or one?"

Yes, you can. I think it is a common misconception that the number of allowances corresponds with the number of people. Actually the first allowance is the $5,950 standard deduction and each allowance after that is $3,800 in deductions. Each person and dependent does get a $3,800 exemption, which does count as 1 allowance, but you still need to count the standard deduction, any other deductions, and allowances can be increased to allow for a partial year of income.

 

[gnuel]

So an easy way to calculate would be to the amount of income you're missing out on minus the std deduction and other deductions, then divide by 3800? So if an RPH is to start work this year in August, that's $70,000 - 9750 = ~60K/3800 = ~15 additional allowances?

 

[pezdispenser]

So an easy way to calculate would be to the amount of income you're missing out on minus the std deduction and other deductions, then divide by 3800? So if an RPH is to start work this year in August, that's $70,000 - 9750 = ~60K/3800 = ~15 additional allowances?

Hmm, no I don't think that works because giving yourself an additional 60k tax free is not the same as not earning 60k or 70k.

You had better use the IRS calculator. You can enter the date that you started working if it was partway through the year.

I made my own spreadsheet which calculates everything including withholding allowances, overtime, 401(k), etc and my end of year tax refund or bill.

 

[JamesL1585]

I'm bumping this thread to remind newly graduated pharmacists that you may need to set your W-4 tax withholding allowances quite high for your first year, like 7+, if you had no income for the first half of the year but full pharmacist's income for the second half. This will keep the IRS from withholding too much tax out of your paychecks, so you will not have a massive refund next year, but you will take home more on each paycheck. You will need to put your W-4 withholding allowances back down to normal next year.

You can use the IRS withholding calculator at http://www.irs.gov/individuals/page/0,,id=14806,00.html to work it out.

Thanks a lot for this, very thoughtful of you!

 

[type b pharmD]

I'm bumping this thread to remind newly graduated pharmacists that you may need to set your W-4 tax withholding allowances quite high for your first year, like 7+, if you had no income for the first half of the year but full pharmacist's income for the second half. This will keep the IRS from withholding too much tax out of your paychecks, so you will not have a massive refund next year, but you will take home more on each paycheck. You will need to put your W-4 withholding allowances back down to normal next year.

You can use the IRS withholding calculator at http://www.irs.gov/individuals/page/0,,id=14806,00.html to work it out.

Just a word of caution on this front. I could see how having 7-8 months of huge checks would be nice, but be prepared for a large reduction in take home pay the following year. Personally I dont know how I would do making calculations for a future standard of living that was significantly below what i'd be earning at graduation (ie, first year, taxed as if a 60-70k income, but making huge checks, then next year, suddenly facing a major tax increase). Just depends how wise financially you are. I also dont want to be in the business of loaning money to the govt either.

And to the recent posters above, regarding the question of number of withholding allowances/exemptions, the language regarding # of dependents, filing jointly etc, is meant as a guide. Legally, the # of allowances can be whatever you want it to be in order to get your withheld tax to be the appropriate amount. The only time you are getting into hot water is if you are having less tax withheld than your yearly tax obligation divided by number of paychecks.

 

[schamj01]

wow, I actually distinctly remember reading this a year ago

 

[gnuel]

Hmm, no I don't think that works because giving yourself an additional 60k tax free is not the same as not earning 60k or 70k.

You had better use the IRS calculator. You can enter the date that you started working if it was partway through the year.

I made my own spreadsheet which calculates everything including withholding allowances, overtime, 401(k), etc and my end of year tax refund or bill.

Hm..does this sound reasonable?

I filled in the IRS calculator with the following data:
- Expected total salary: $70,000
- Federal income tax withheld from last salary payment: $976 (used paycheck city to calculate the federal tax on 80 hours x $57)
- Total of Federal Income Tax held to date: $1000 (from interning)
- Begin job on August 1
- 0 for everything else (temp to hire position so no benefits yet..)

It gave me: For the only job you entered (which has a projected salary of $70,000): 16 allowances.


But yeah, definitely thanks a bunch for this heads up!

 

[naseuy]

thumbdown

Do you realize that if you have a family 100K is nothing...if you have children that you want to send to private schools because you actually care about their education, then 100K is most likely not even enough....

Damn, I went to public school. I should've known that my parents didn't care about me.

Flat taxes means everyone paids the same percentage in taxes. If you pay 20% everyone paids 20%. If you pay 50% everyone pays 50%. That is the most fair way to do it. Yes, some people can afford to pay more...just like other people can get their ass off and find a job too...



You didn't read my entire statement. I said 100K family income is actually very low if you have children that you want to send to private school. My friend in pharmacy school just send her son to pre K and damn the tuition is high. Here is just one of the private schools around the area here...and this isn't even the most expensive school around here. http://www.woodward.edu/admissions/tuition/index.aspx
If I had children I would want the best for them and private school is def the way to go, but on 100K it could be a stretch. If you had 2 or more children you would be using up more than 50% of your income.

I'm sorry, maybe it isn't fair to tax low income families to the point where they cannot afford food and shelter. But as a society, shouldn't those of us who are better off look out for people who are struggling? It's interesting that you brought up Bill Gates, he's doing his part, and the Bill and Melinda Gates Foundation is doing great things in expanding healthcare, and serving poverty stricken populations.

As far as 100k being a stretch for private school. This is the best example of first world problems I have ever heard.

 

[pezdispenser]

Hm..does this sound reasonable?

I filled in the IRS calculator with the following data:
- Expected total salary: $70,000
- Federal income tax withheld from last salary payment: $976 (used paycheck city to calculate the federal tax on 80 hours x $57)
- Total of Federal Income Tax held to date: $1000 (from interning)
- Begin job on August 1
- 0 for everything else (temp to hire position so no benefits yet..)

It gave me: For the only job you entered (which has a projected salary of $70,000): 16 allowances.


But yeah, definitely thanks a bunch for this heads up!

Oh maybe the IRS calculator is not very intuitive. Maybe you can check the box that says: "If you held a job earlier this year but are no longer employed in that job" so it will give you some boxes to put in your prior intern income and taxes separately, since the income level is so much lower and it could be treated as a separate job.

Then, on the page that says "For the job you now hold…" and the boxes "Enter the total wages, salary, and tips (excluding bonuses) you expect to receive in 2012" and "Enter the total Federal income tax withheld to date in 2012", only enter the income and taxes on your pharmacist paychecks.

I calculated it manually with this example:
6 months as an intern earning $10k, 1 allowance, $837 tax withheld.
6 months as an RPh earning ($57/hr x 80hrs) $59,280.
The 1st paycheck with 1 allowance so $961 tax withheld on that one.
But change to 5 allowances for the rest of the year so only $797 tax withheld on each paycheck.
The total tax withheld at the end of the year will be $11,369.
The actual tax bill will be $10,915.
So you will still get a $454 tax refund.

 

[pezdispenser]

One more bump to remind new grads if you followed this advice, you should now put your W-4 withholding allowances back down to normal for 2013. Usually 2 allowances is normal.

I'm bumping this thread to remind newly graduated pharmacists that you may need to set your W-4 tax withholding allowances quite high for your first year, like 7+, if you had no income for the first half of the year but full pharmacist's income for the second half. This will keep the IRS from withholding too much tax out of your paychecks, so you will not have a massive refund next year, but you will take home more on each paycheck. You will need to put your W-4 withholding allowances back down to normal next year.

You can use the IRS withholding calculator at http://www.irs.gov/individuals/page/0,,id=14806,00.html to work it out.

 

[BenJammin]

My first part-year working, I received a very nice refund of about $10k. My first full year working I got a refund of about $2500. I put 0 exceptions on my W-4. You can get penalized if you under withhold. If you have multiple sources of income, in a few years, you can get stuck paying estimated taxes.

That's not good. At all. You should NEVER get a refund that big. You may look at it as a big dollar amount that's now in your pocket but I look at it as a $10,000 interest free loan that you gave to Uncle Sam.

 

[xiphoid2010]

Also a reminder for those converting to Roth IRA (eg. Rollover IRA, gains on non-tax deductible IRA contributions) , do your conversion by year end, good chance 2013 taxes will be higher. Especially for those who are married to another high income spouse.

 

[JamesL1585]

Another bump for new grads of 2013. Perez bumped it last yr so I thought I'd return the favor. Good luck

 

[Digsbe]

Personally, I'm more worried about high interest student loans and repayment than I am over taxes but taxes are still a concern of mine.

Before I started pharmacy school I spend about 2 days calculating out loans, expected future salary, taxes on a single person, and working that into possibly buying a home with a mortgage. It's depressing to see at the end of the day how much money you actually get to keep compared to what you worked to earn.

 

[xiphoid2010]

Personally, I'm more worried about high interest student loans and repayment than I am over taxes but taxes are still a concern of mine.

Before I started pharmacy school I spend about 2 days calculating out loans, expected future salary, taxes on a single person, and working that into possibly buying a home with a mortgage. It's depressing to see at the end of the day how much money you actually get to keep compared to what you worked to earn.

my wife and I paid over 40K in federal taxes for 2012. That's with having 2 dependents.. We can't hardly deduct anything due to income level. This year will be even worse. I should study up on Apple and how to go off-shore.

 

[Momus]

my wife and I paid over 40K in federal taxes for 2012. That's with having 2 dependents.. We can't hardly deduct anything due to income level. This year will be even worse. I should study up on Apple and how to go off-shore.

Wow, how did you pay so little? I paid 47k last year... single filing as 01 fed and state. That's BS lol

 

[xiphoid2010]

Wow, how did you pay so little? I paid 47k last year... single filing as 01 fed and state. That's BS lol

Oh, the usual, maxed 401k, FSA, 2 dependents. Deduction wise, charitable donations, property tax and mortgage interest. No state tax helps, since I can then deduct sales tax. Didn't qualify for child care, healthcare, student loan interest etc due to income level. Ended up $42k total tax, had to send a $8.5k when filing. Luckily no penalty since we still held more tax than last year.

 

[Tonyg89]

WOW! 42k in taxes
Im scared now for when i become a pharmacist lol
I guess ill stop bitching about having $100 taken out every week for taxes lol

 

[Momus]

Oh, the usual, maxed 401k, FSA, 2 dependents. Deduction wise, charitable donations, property tax and mortgage interest. No state tax helps, since I can then deduct sales tax. Didn't qualify for child care, healthcare, student loan interest etc due to income level. Ended up $42k total tax, had to send a $8.5k when filing. Luckily no penalty since we still held more tax than last year.

I didn't have property tax and mortgage interest last year. But this year, I can deduct $12k mortgage interest and 5.6k property tax this year, bring down my tax liability to around $35-40k fed.

What did you donate? I donated nothing ever >_>; LOL...

 

[pezdispenser]

Don't scare people. You guys have spousal income or lots of overtime.

My 2012 was:

$132k gross
- $17k 401(k)
- $14k itemized deductions (mortgage interest, property tax, sales tax)
- $3,800 one exemption

$20k federal tax. This is only about 15% of my gross income.
$0 state income tax
$4,624.20 Social Security. It was only 4.2% last year and topped out at $110,100. Once you pass this, you get a nice bump up in your paychecks in December.
$1,800 Medicare 1.45%

 

[njac]

My social security stops getting taken out earlier, like October or so, so I actually fill out a new w4 and have them increase the amount of taxes taken out of my checks for the last part of the year.

 

[akaykay]

My social security stops getting taken out earlier, like October or so, so I actually fill out a new w4 and have them increase the amount of taxes taken out of my checks for the last part of the year.

Just remember this year that social security tax went up to 6.2%, so for those of you who maxed out early at $4,600 now you have to wait until you reach $7,050

 

[xiphoid2010]

What did you donate? I donated nothing ever >_>; LOL...

money to church and lots and lots of clothing that my wife bought
but hardly ever worn.

 

[xiphoid2010]

Don't scare people. You guys have spousal income or lots of overtime.

I would hope that most members of our profession marry, and to a spouse who makes a decent income.

But just as a disclaimer, my federal tax bill is as 2 married pharmacists living in Texas. Thank goodness for no state tax.

 

[Momus]

money to church and lots and lots of clothing that my wife bought
but hardly ever worn.

How do you prove you are donating money to church? Does the church give you a receipt or you just made up a # I am donating $50/week to the collection bag x 52 weeks?

 

[xiphoid2010]

How do you prove you are donating money to church? Does the church give you a receipt or you just made up a # I am donating $50/week to the collection bag x 52 weeks?

You can deduct $240 without receipt which covers the change you give ushers. We agreed that we want to five more in reality, so we made 2 checks to each our churches near year end, and yes, you just ask church kindly for documentation for tax purpose. The only thing is putting $10 in the pan during regular service might make you look stingy to nosy ones sitting next to you, but just learn not to be so image conscientious.

Ps, the reason we used checks is it serves as another form of documentation in case we get audited and can't find the church acknowledgement.