$100k pre-tax -> $??k post-tax?

rocketman08
Wed, 27 Aug 2008 14:47:23 +0000

Also, for planning after year 1 don’t forget that once you start earning ~100k or more a year there’s a very good chance you’ll start running into the Alternative Minimum Tax (AMT) tax system. This is the antiquated totally separate tax system that often really hits people hard (eg someone thinks they’re going to get a $2,000 tax refund and finds out they actually OWE the IRS $3,000). In this system, you’re taxed at 26-28% on earnings (starting with the first dollar of your AGI, unlike the scaled normal tax system) and you’re not allowed many of the deductions that the normal tax system has. You get a much larger standard deduction, but even with that many people end up owing much more than they do under the ‘normal’ tax system… you’re required to calculate your taxes using both the AMT and normal system and pay whichever amount is higher.

Probably not an issue for the first year or so, but down the line you’ll need to watch out for it. Ideally Congress will scrap the whole system (which was setup ages ago, but never adjusted for inflation… so was ment to go after the very rich and now hits the upper middle class).