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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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29 July 2015 07:53 Mind if I ask one more question? I've

Customer Question

29 July 2015 07:53 Mind if I ask one more question? I've taken a pencil out to try and compare my rough, net after tax income in CT at $1mln/yr versus working in NYC at $1.2mln/yr. Seems a bit off but here's what I got: CT's 6.7% on $1mln = $67,000 Federal
at 34% or $340,000 no deductions ----------------------------------- Net takehome: $593,000 Then for New York city and $1.2mln/yr State tax at 8.83% = $105,960 NY City tax (3.876% plus another $18,028) and I get $64,540 Federal tax at 34% = $408,000 -------------------------------------------------------------------
Net takehome = $621,500 So Lev, using rough calculations I would get paid $200k more but net in my pocket $30k more relative to CT. WOuld you agree? Am I crazy? If so, I'll stay here methinks...
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
I will verify your calculation.
Please let me some time.
Expert:  Lev replied 1 year ago.
The issue is that you will not be taxed at flat 34% .
But a part of your income is taxed at 10%, another part at 15% another part 25% , etc.
So - to compare your federal tax liability with taxable income $1,000,000 and $1200,000
See tax rate schedule here
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf
last page - using Single filing status
$1,000,000 * 39.6% - $ 42,954.25 = $353046
Please be aware that we do not count employment taxes (social security and Medicare).
.
For CT state tax purposes
http://www.ct.gov/drs/lib/drs/forms/2014forms/incometax/ct-1040tcs.pdf
$14,300 plus $50,250 [ 6.7% of (1000,000 - 250,000) ] = ~$64,550
So take home pay would be
$1000,000 - $353046 - $64,550 = $582,404
After you move with increased wages
federal income tax
$1,200,000 * 39.6% - $ 42,954.25 = $432246
For NY state taxes
http://www.tax.ny.gov/pdf/current_forms/it/it201i_tax_rate_schedule.pdf
$70,770 plus $13552 [ 8.82% of (1200,000 - 1,046,350) ] = ~$84,322
for NYC income tax purposes
http://www.tax.ny.gov/pdf/current_forms/it/nyc_tax_rate_schedule.pdf
18,028 plus $27,132 [3.876% of (1200,000 - 500,000) ] = ~$45,160
So take home pay would be
$1200,000 - $432,246 - $84,322 - $45,160 = $638,272
Thus - you would get paid $200k more gross - and that will result
$638,272 - $582,404 = ~$56k net difference.
It looks as a little more than you calculated - but generally not as much more as your gross pay.
However - it looks as you would not loose from that move.
Expert:  Lev replied 1 year ago.
Hi again,
I hope you were able to review our estimations.
Any suggestions?
Any correction needed?