this post was submitted on 20 Jun 2024

465 points (96.2% liked)

shitposting

1368 readers

13 users here now

Rules •1. No Doxxing •2. No TikTok reposts •3. No Harassing •4. Post Gore at your own discretion, Depends if its funny or just gore to be an edgelord.

founded 3 years ago

MODERATORS

[email protected]

465

"Getting paid more money is for fools" (lemmy.ml)

submitted 1 week ago by [email protected] to c/[email protected]

87 comments fedilink hide all child comments

top 50 comments

sorted by: hot top controversial new old

[–] Got_Bent 28 points 6 days ago* (last edited 5 days ago) (1 children)

I'm a tax accountant.

You'll never make less due to income tax for making more money.

You can start to get certain credits phased out and can become subject to things like the Medicare surcharge.

But it's still unlikely that making more will ever get you less.

In a similar track though, I refused raises for a couple years because my kid was in college. If I got a raise, I would be kicked into the next income tier of financial aid eligibility, and that could've been catastrophic. Those lines don't seem to phase as much as they seem to be hard cutoffs - at least as far as my kid's specific school was concerned. All of her financial aid (grants, not loans) came directly from the school, not the government.

I also was able to enjoy a little bit of education expense credit on my tax return because if it, but that part was nominal.

The biggest hit has been going from head of household with a dependent tax credit to single with fuck all credits. Fortunately, I can itemize my way into a deduction midway between single and head of household, so I got that going for me, which is nice.

Edit: Wow, that was a gibberish filled gummy induced wall of text. Nothing particularly factually incorrect, but man what a slew of non sequitur.

[–] [email protected] 26 points 6 days ago

badmoneyguy

username checks out

[–] [email protected] 31 points 6 days ago (4 children)

This legit happened to a college of mine, at his first job (as engineer), it took me well into his second year of employment (the time when he got the second yearly income tax stats) to get him to understand what I've been explaining to him since he was offered a raise a few months after he started.

I tried, I really did, with charts, examples, my own income tax statement, ... but no.

I never found out which part was bothering him, like theoretically, how tf ...

[–] [email protected] 8 points 6 days ago

Unfortunately he’s probably drinking raw milk these days. IYKYK.

[–] [email protected] 2 points 6 days ago (1 children)

To anyone with the math skills, I just explain it as a piecewise function. It's pretty easy to model.

[–] [email protected] 2 points 5 days ago

Its not a complicated function. And he is an engineer, he had plenty of maths in uni.

[–] [email protected] 2 points 6 days ago (1 children)

That's not how that works.

[–] [email protected] 13 points 6 days ago (2 children)

"The Bottom Line

The next time you receive a raise, don’t let concerns about tax brackets dampen your enthusiasm too much. You really will take home more money in each paycheck."

Article says that is how it works

[–] gerbler 3 points 6 days ago* (last edited 6 days ago)

I think they were just referencing the subtitle of the article

Don’t worry—that’s not how the U.S. tax system works

[–] [email protected] 2 points 6 days ago* (last edited 6 days ago)

Yes? Sounds like you're agreeing with me?!

Maybe I misunderstood the person I was responding to though for sure.

[–] thefrankring 9 points 6 days ago

You guys are getting paid?

Amateurs.

[–] [email protected] 4 points 6 days ago (2 children)

I took a 50% pay cut and my partner took a job that paid 10% less than her previous job but we moved somewhere that we got a 500k house on 1+ acre of land instead of our 800k townhouse, no land with one parking spot.

Sometimes less is more.

load more comments (2 replies)

[–] [email protected] 1 points 6 days ago (3 children)

someone failed at teaching this loser mathematics.

[–] [email protected] 11 points 6 days ago

Check his username before you eat the onion next time.

[–] plz1 3 points 6 days ago (1 children)

US public education system doesn't teach anything related to real-world finances, including how tax brackets work.

[–] [email protected] 1 points 6 days ago

I learned how taxes work when I was in 8th grade and then again in high school.

load more comments (1 replies)

[+] [email protected] -11 points 6 days ago (3 children)

Depending on the tax system that is an actual issue.

[–] MeaanBeaan 20 points 6 days ago (3 children)

At least in the US there is no possible situation where you'd get less money for making more money.

[–] Dashi 8 points 6 days ago* (last edited 5 days ago)

Exactly, or that's how it was explained to me. Say you get a 10k raise from 94k to 104k and the next bracket is at 100k. If your old percent was 20% and the 100k bracket is 25% only the "extra" 4k would be taxed at 25% and the 6k before that would be 20%.

Or so I've been told by smarter people than me. Numbers/ brackets and percentages are all made up to make it easier.

Midwest, US if it matters.

[–] [email protected] 4 points 6 days ago (3 children)

I don't believe that's actually true. I think in the USA there are a few programs that have a hard cap on income to disqualify you. Food and housing assistance related things. I'm not American so I'm not 100% sure on them but I do think there are some scenarios

[–] [email protected] 5 points 6 days ago

That's true. You'll still be making more money, but you'll also have more expenses. This doesn't apply to most people though, and for sure not ones getting a $10k raise. The progressive tax system we have only applies the tax as you progress through the levels. The first $10k will be taxed at one level, then the next bracket, then the next, etc. It's not done as one lump tax.

Different programs should be set up to slowly decrease how much you get instead of cutoff amounts. That'd remove that issue. Obviously some things are either on or off so they can't be done this way though. Ideally a lot of it should just be provided to everyone no matter what though.

[–] MeaanBeaan 1 points 6 days ago

Oh yeah. That's absolutely the case for disability I believe. If you start to make a certain amount they just take away benefits. And the amount you have to make to lose benefits it's actually less money than what the benefits themselves are.

I know people personally who are affected by that situation.

Very good thing to point out and wasn't something I was thinking about. Thank you.

I guess it would be more accurate to say your paycheck from your job will never be less money due to making more money.

[–] [email protected] 0 points 6 days ago

I'm sure there are cases but that's effectively a $4.80 / hour raise at full time, you'd need a lot of dependants or other assistance programs to make that not worth it if you're already working full time.

[–] [email protected] 1 points 5 days ago

Never say never. There are hard income limits for certain tax credits, like EV tax credits, and some weird COVID relief funds for dependents that actually do result in situations where you get less money for making more money. Also things like ability to fund a Roth IRA. I know because it has happened to me. Even following the tax table results in some situations where you can make a few bucks less by earning more, as someone pointed out above. Other folks have pointed out other benefits cliffs and higher education shenanigans. But you're generally right.

[–] zzx 3 points 6 days ago (1 children)

Can you think of some tax systems where this is true? It's not true in the United States at least. https://en.m.wikipedia.org/wiki/Progressivity_in_United_States_income_tax

[–] [email protected] -1 points 6 days ago

Its not the direct tax, it's the often counterproductive limits around welfare that many people receive alongside employment income. Welfare cliffs.

To give NZ as an example, a person can earn up to 37k and be eligible for a "community services card" which entitles them to discounts on a lot of things such as doctors fees, public transit and dental care. Earn just a dollar over thay threshold though, and you lose all the benefits, having to pay them out of pocket. Which means for someone on the cusp of eligibility, theyre often better off to turn down small pay raises.

The student allowance is similar but less punitive in that you are allowed to earn 270 per week without affecting your allowance, but after that, your allowance is reduced dollar for dollar up to the 360 per week of your allowance. A student working minimum wage would therefore need to get a 30 per hour payrise before their total income actually changed.

[–] RememberTheApollo_ 1 points 6 days ago

There are some very specific triggers to end up paying more tax than you earned - and some of those triggers are not wages (in the US). Also, those triggers are not recurring, they’re usually caused by selling capital like a home or stocks, or maxing out certain write offs, so once the extra income has been taxed you won’t see it again unless you repeat the tiggers again.

Straight up getting a raise with no other confounding factors should not cause your taxes to increase beyond your wage as the typical rule applies - you only get taxed on the wages that fall into the new tax bracket, not on all of your wages, which will still fall into their normal brackets.

load more comments