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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3718
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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My wife and I have a taxable income of 400K for 2013. We

Customer Question

My wife and I have a taxable income of 400K for 2013.

We will pay about 20K State income taxes, 10K for mortgage interest, 3K real estate taxes.

Can you give me a ball park of what my federal tax will be?
Submitted: 8 months ago.
Category: Tax
Expert:  Lane replied 8 months ago.

Lane :

Hi,

Lane :

No mortgage interest, advelorem taxes dependent children?

Lane :

Use those as the only itemized deductions .. and no pre-tax contribuitons to qualified plans ... and no withholding:

Lane :























































Gross income$400,000
Qualified plan contributions-$0
Adjusted gross income=$400,000
Standard/Itemized deductions-$30,000
Personal exemptions-$1,560
Taxable income=$368,440
Tax liability before credits$97,898
Child tax credits-$0
Estimated tax liability=$97,898

Customer :

Thanks. Let me double check with you.

Customer :

ok. let me double check again for clarity

Lane :

Sure, no Children, didn't add in things like car and personal property ad velorem tax ... also not the the personal exemption starts to be phased out because of the high income level

Lane :

sure

Lane :

also, assumed no extra exemption for over age 65

Lane :

no mortgage interest

Lane :

but broad brush, that's about right ; 33% marginal, but 25% effective

Lane :

Shall I list the assumption more concisely here?

Lane :

(assumptions)

Lane :

I can asl re-paste the results if that helps

Customer :

thanks. let me give you more information. my salary is 150k and contribute 17,500 to my 403b and pay about 5000 for blue cross for my wife and me (my work pays 5000 too). I am 44 and my wife is 31. We have no kids. but this year, i took a consulting job and made 210000 extra. i have already paid the feds 66000 estimated and 11000 to the state. we will pay 10000 mortgage interest and 3000 for real estate taxes. have i paid too much estimated? yes more detail would be great

Lane :

OK great hang on

Customer :

I live in massachusetts

Lane :























































Gross income$360,000
Qualified plan contributions-$17,500
Adjusted gross income=$342,500
Standard/Itemized deductions-$31,200
Personal exemptions-$4,056
Taxable income=$307,244
Tax liability before credits$77,704
Child tax credits-$0
Estimated tax liability=$77,704

Lane :

ok, now first, 360 is the 150k +210K 17300 is reducing taxable ... and this model desn't handle state (other than including it as an itemized deduction on the federal ...

Lane :

And you'll have to bet the estinated (plus any withholding against that 77,704)

Lane :

NOW that you've given me state... let me use a different model

Lane :

Just one more minut here

Customer :

my wife makes 40k too

Lane :

ok do you have withholding for you and/or her?

Lane :

I have your estimated 60,000 and 11,000, but what about W-2 withholding

Customer :

not with me, but we don't do anything special. Can we assume 25% or so was withheld from each of our salaries.

Lane :

sure, just a sec ... probably pretty close

Customer :

Thanks at the end of the day. I was guessing 97K taxable, about 40k withheld from our salaries, and paid 66000 to the feds. looks like I overpaid or in very good shape?

Lane :

Yes definitely .. the withholding takes you over the top for a refund... the medi I use for feral and state is hanging up a bit oooone more minuts.. I'd like to give you the detailed output

Customer :

cool. thanks. standing by.

Lane :

This is the H&R Block estimator... we may have overestimated withholding

Lane :


  • Taxable Income -

  • $169918




  • Adjusted Gross income (AGI)

  • $210718



  • Greater of itemized or std. deduction

  • $33000



  • Personal exemptions

  • $7800




  • Taxes and nonrefundable credits -

  • $35605




  • Regular tax

  • $35043



  • Alternative minimum tax (AMT)

  • $0



  • Child care credit

  • $0



  • Nonrefundable American Opportunity Credit

  • $0



  • Lifetime learning credit

  • $0



  • Child tax credit

  • $0



  • Other credits

  • $0



  • Tax after credits

  • $35043



  • Self-employment tax

  • $562



  • Medicare surtax

  • $0



  • Net Investment Tax

  • $0




  • Payments and refundable credits -





  • Earned income credit (EIC)

  • $0



  • Additional child tax credit

  • $0



  • Refundable American Opportunity Credit

  • $0



  • Federal income taxes withheld

  • $47500



  • Estimated taxes

  • $60000




  • Your refund is

  • $71894

Customer :

I will get 71k back?

Lane :

Again , we may have overestimate the withholding on nyour 150,000 and your wife's 40,000 by using a 25% assumption

Lane :

Here's where I thing you really are , in simpler terms

Customer :

ok. standing by. thats seems too high.

Lane :

yep, sorry the model I normally use that does both bstate, federal AND integrates is updating but if you'll let me play with that one just one more minutsee this (assuming NO estimated or withholding .. so just simply add the 60,000 plus whatever a real withholding number to that analysis as an offset

Lane :













































Gross income$400,000
Qualified plan contributions-$17,500
Adjusted gross income=$382,500
Standard/Itemized deductions-$30,000
Personal exemptions-$1,560
Taxable income=$350,940
Tax liability before credits$92,123
Child tax credits-$0
Estimated tax liability=$92,123
Lane :

Npw, 60,000 plous only 32,000 more is break-even

Lane :

Further that would be a 16.8% withholding rate on the 190,000

Lane :

So of you ar withholding at 16.8 (probably VERY realistic, you're at breakeven)

Customer :

excellent. so 92k liability and i have paid 66k. then 26k left over. if 16%withholding then 30k withheld.

Customer :

so breakeven right now.

Lane :

Yes, check the withholding to see for sure

Lane :

But at you income levels 16% is probably conservative

Lane :

If you'd like I can move us to the Q&A mode .... not a real-tie chat but the questions will stay open and I can wait for the model I use to come back onine and give you a very detailed quote... you could also be checking on your exact withholding in the mean time

Customer :

I think I am ok. I don't have access to my taxes.

Customer :

But I can tell you last year that we got about a 5000 refund and that was just our plain old salaries. it is this extra 210k that is new. i picked 32% for estimating the feds and 5.5% for massachusetts.

Lane :

Your intuition is good ... probably conservative

Lane :

your marginal IS at 33 but your effective, given deductions, exemptions is more like 25%

Customer :

ok. i am good. thanks lane. have a good night

Lane :

Thanks much

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3718
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 6 other Tax Specialists are ready to help you
Expert:  Lane replied 8 months ago.

Thanks Michael,

If you'd like to check back here in a day or so I'll post the detailed FED + State projection

I tried the model on three different computers and 2 diff operating systems, they're definitely have an issue this evening, but you have the gist of it.

DO check back when you get the chance ... and that's again

Lane
Customer: replied 8 months ago.

anything new?

Expert:  Lane replied 8 months ago.

So Sorry, the model gets this far:


Federal Married $400,000.00 $7,600.00 $23,000.00 N/A $91,920.00
Massachusetts Married $400,000.00 $8,800.00 N/A N/A $11,000.00

And then just stalls... I get this error:
"There was an error loading the calculator! Please try again. If the problem persists, please contact us and let us know."

If you'd like to try, (when it, working it's an excellent resource)... here's the site: http://www.tax-rates.org/income-tax-calculator/


But again, if you can get the withholding we're very close

If the withholding was at least 32000 you'll be getting a refund

Lane

Any luck on pulling the withholding to date?

Customer: replied 8 months ago.

thanks. I am traveling but will send tomorrow. thanks chris

Expert:  Lane replied 8 months ago.
That's great.

Should be able to "connect all the dots" from there.

Lane
Customer: replied 8 months ago.

hi lane


I have had 22K withheld from my federal taxes with a federal taxable of 114.6K. So about 20%.


 


( am playing catch-up on maxing my 403b. Somehow I was not having the amount removed for each paycheck to get to 17.5K. Right now, I am at 12K but I have bumped my withdrawal for the last periods to get to 17.5K). If thats the case, the tax withheld should be a bit higher.


 


Lets assume my wife is the same and that should be it.


 


thanks chris


 

Expert:  Lane replied 8 months ago.

Thanks Chris.

... walking into a 10:00 meeting. ... will put this together for you within a couple of hours at most.

Lane
Expert:  Lane replied 8 months ago.
OK Chris that really just puts you back about were we were before (except that we have a better feel for withholding:

Take this, and then apply the 60,000 PLUS $38,000 20% of the 190K W-2 wages).

Estimated Tax Analysis

Gross income $400,000
Qualified plan contributions-$17,500
Adjusted gross income=$382,500
Standard/Itemized deductions-$30,000
Personal exemptions-$1,560
Taxable income=$350,940
Tax liability before credits $92,123
Child tax credits-$0
Estimated tax liability=$92,123

A tax liability of 92,123 against withholding and estimated payments of 98,000, gives a refund of $5,877.


Lane

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