Pharmacists: How much tax is taken out your paycheck?

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akaykay

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My pharmacist told me that she has a 31% tax :oops: that is crazy. I'm wondering, is it better to extend your loan repayment period so that you won't have a lot of taxes taken out or just deal with the tax because I really want to pay off my loans as soon as possible but that percentage is a bit high for me. (oh by the way, I'm not greedy. I just want to be able to support my parents and grandparents.
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I think it depends on how you handle your finances. I know I won't like paying out that much money but I will delay buying other things instead. I plan on driving my current car as long as possible, however it is 10 years old right now so I'll be lucky if it makes it through pharmacy school. I'll also want to have kids soon after pharmacy school most likely so I'll want to be able to save money for college for them too. I know I'll want to pay off my debt as soon as possible to just get it done with.

Do you really want to be paying off your student loans still in 30 years when you will be eligible for retirement at most places?
 
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The best thing to do is to sit down with your accountant or tax adviser and he/she will advice on the best course for you. It depends on what deductions you have, will you be able to itemize or will you have to take the standard deduction?

At a pharmacists wages you can't ask for more than +/- $1,000.00. That means next year you will either have up to a $1,000.00 refund or owe $1,000.00. You do not want a $5,000.00 refund or tax bill.

Your effective tax rate will depend on what your state and local taxes are where you live.
 
Agree with Old Timer - your tax rate will vary & change with your state of life.

Right now, I'm taking >45% out for taxes, but my SO is self-employed. So, we get to play with his income more than mine.

You balanace what you want to take home, what you want pre-tax, post-tax, health care/child care (thank god I'm beyond that), etc contribution.

We used to laugh when I'd get my check stub and for 2 weeks, I'd get paid about $45. But, I paid all the health care, chld care, fully contributed to defferred comp, etc....

30% is not unrreasonable for federal. Add your state tax & you pay a lot. If you make up an SO's contribution, like I do....you often go to work for pennies:D
 
after all withdrawls, I take home about 60% of gross income.
I also claim 0 on my w-2.
 
pharmboy30 said:
after all withdrawls, I take home about 60% of gross income.
I also claim 0 on my w-2.
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I always get confused on this. If you claim zero, do they take out more taxes than if you claimed 1 or 2? I think I might have it backwards.
 
No state income tax in Texas....so less tax I have to pay!!:thumbup:
 
geekinthepink said:
I always get confused on this. If you claim zero, do they take out more taxes than if you claimed 1 or 2? I think I might have it backwards.
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The number is the # of deductions you want to take. It normally can reflect how many dependents you have (you are a depenent of yourself, so single people will use 1).

But, you can use any number you want - up to 999 I think. This puts more money in your pocket month, but doesn't reduce your tax rate. So, if you did have to pay tax and are not paying quarterly estimates, you might actually have a penalty in April since you didn't pay the tax in a timely manner. (The more you pay, the more they want you to pay thru the year).

I have 0 deductions plus extra taken out, but my SO owns his own business & pays quarterly estimates. Mine is just to be the safety net - his does the bigger money movement.
 
Federal Income Tax: $909.49 approx 21.9% (claiming single zero) which will come to $23,646.74 for a year.

FICA (social security): $256.20
Medicare: $59.91
State Tax: None in Florida

We itemize deductions, have a home based business to claim other deductions, but still expect to pay in $40,000/year between me and my husband. We're in the 36% tax bracket, so it could be worse.
 
MountainPharmD said:
Yeah but how much is that propetry tax on your house? Sort of negates the whole we do not have to pay state taxes.
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Dood...that depends.

State Income tax can be as high as 9% at higher bracket. But the property tax in my area is 2.75%. Yeah...for a single income earning pharmacist household with a $300,000 to $400,000 house, it's a wash... but higher income earning household with a modest house will significantly benefit.

That's why you see a lot of PGA tour players in Texas and Florida.

For Texas households with $500,000+ income means they are saving $45,000 per year in taxes. Now that household living in a $500,000 (and you know 500k can get you a nice mansion) house with 2.75% property tax means they pay less than $15,000 per year in property taxes.

Beats the heck out of New Jersey where you pay state income tax then you're levied 2%+ property tax where you can't get a shack for $500,000.

So, making a lot of money + living in a modest house in states with no income tax is mo better.
 
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Epic said:
Dood...that depends.

State Income tax can be as high as 9% at higher bracket. But the property tax in my area is 2.75%. Yeah...for a single income earning pharmacist household with a $300,000 to $400,000 house, it's a wash... but higher income earning household with a modest house will significantly benefit.

So, making a lot of money + living in a modest house in states with no income tax is mo better.
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whoa! I've been to Texas. You can get a freakin castle with a moat complete with sleeping princess in tower for 400G. I'm just saying...
 
For me I work at CVS, and well its not a union, but they take away almost half of my income
 
You can go live in Texas. Go tip cows for fun. Or whatever it is you do for fun down there. Living in NJ is the best. Next to NYC, the center of the world. There isn't any place better in the world.
 
All told, about 26% including federal, fica, and state.
 
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farmadiazepine said:
You can go live in Texas. Go tip cows for fun. Or whatever it is you do for fun down there. Living in NJ is the best. Next to NYC, the center of the world. There isn't any place better in the world.
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"Jersey's a great place to be from."

Favorite quote from someone at the MVC during my car inspection, that about sums it up.
 
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My wife and I file jointly and my salary doesnt even cover our taxes....thank you uncle sam
 
PumpkinSmasher said:
My wife and I file jointly and my salary doesnt even cover our taxes....thank you uncle sam
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Then there is really only one or two things going on, either your wife makes a boatload more than you or you don't make squat. I paid almost 28K to the Feds this year, glad of it, because I make a crap load of money. It's better than making 50K and paying less taxes, just sayin....
 
Old Timer said:
Then there is really only one or two things going on, either your wife makes a boatload more than you or you don't make squat. I paid almost 28K to the Feds this year, glad of it, because I make a crap load of money. It's better than making 50K and paying less taxes, just sayin....
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I agree, it is a fortunate problem to have but when I sit down and see my entire salary is going to taxes I cringe a little bit. 140k in taxes is a lot...
 
farmadiazepine said:
You can go live in Texas. Go tip cows for fun. Or whatever it is you do for fun down there. Living in NJ is the best. Next to NYC, the center of the world. There isn't any place better in the world.
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Yeah, that's exactly what we do in Texas for fun. Please pass the word to everyone.

With as many people flooding into the state as there has been the last few years, any negative stereotype needs to be spread like wildfire.
 
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Why would extending your loan period change your taxes owed? I don't think it has any effect.
 
bobanderson214 said:
Yeah, that's exactly what we do in Texas for fun. Please pass the word to everyone.

With as many people flooding into the state as there has been the last few years, any negative stereotype needs to be spread like wildfire.
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Austin is a great city but housing is far from cheap to live in the nice areas of hill country
 
MatCauthon said:
Why would extending your loan period change your taxes owed? I don't think it has any effect.
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Well if you saved the money you get from student loan interest deduction, over 25 years if invested... thats a lot of money ($50,000-100,000) . But doesnt make sense as a reason to extend loans on its own.
 
type b pharmD said:
Well if you saved the money you get from student loan interest deduction, over 25 years if invested... thats a lot of money ($50,000-100,000) . But doesnt make sense as a reason to extend loans on its own.
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yeah, especially because most of us don't get the deduction. Also, there has been discussion that the feds are looking to get rid of that deduction. The extra interest owed easily outweighs the tax deduction. One has to be careful when talking to older pharmacists who graduated with loans in the 2-3% range. Their student loan advice doesn't apply to younger pharmacists who are paying 2-3x plus more in interest rates (and also have much higher principal loans).
 
18% Federal
0% State
6.2% Social Security
1.45% Medicare
=====
25.65%

Single, 2 W-4 Allowances, 7% 401(k)

That's all fairly standard and you can go to websites like http://www.paycheckcity.com/calculator/salary/ to figure out the taxes for your state.

Usually people freak out and say "half my paycheck goes to taxes!" because they claim 0 W-4 Allowances, which is incorrect for most people and causes too much tax to be withheld. Or, they don't realize that Social Security and Medicare already takes up 7.65%. In fact, if you work for an employer, the employer pays another 7.65%, but if you're self-employed or 1099, you pay the whole 15.3%! Just for SS and Medicare!
 
Anybody got hit by AMT this year? Freaking first time for me here. Sucks that thousands $ of legit deductions gone to waste.

But over all not terrible. Paid about 13.5% federal income tax, not counting SSI and medicare/aid. No state or local income tax, thank you texas!
 
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Paid $3k AMT 2 years ago... That's because I made like ~250k... But, 2013 is a lot less and I paid $400 in AMT. 2014 will be worse, I only get base salary and no OT >_>. Investment income from foreign bank (my mom name - so 0 tax LOL), property, stocks and bond are around $40k a year to offset loss of OT.
 
xiphoid2010 said:
Anybody got hit by AMT this year? Freaking first time for me here. Sucks that thousands $ of legit deductions gone to waste.

But over all not terrible. Paid about 13.5% federal income tax, not counting SSI and medicare/aid. No state or local income tax, thank you texas!
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How come you only pay 13.5% in Fed income tax? Is your salary as a pharmacist between 55-65k/year?
 
Temperature101 said:
How come you only pay 13.5% in Fed income tax? Is your salary as a pharmacist between 55-65k/year?
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Lol, no. Married with 2 kids, 401k, insurance, lots of tax deductions (FSA, child care, charitable donations, mortgage interest, property tax, sales tax, job related expenses, etc) . would have been even lower except for hitting AMT.

And keep in mind, I'm talking effective tax rate, not marginal tax rate. 13.5% effective fed income tax isn't low, since an average american household with $50-$75K income pay only 5.7%. http://money.cnn.com
 
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I pay 32% tax in Texas. Recent grad and debt free. How can
I get some money back next year?
 
xiphoid2010 said:
Lol, no. Married with 2 kids, 401k, insurance, lots of tax deductions (FSA, child care, charitable donations, mortgage interest, property tax, sales tax, job related expenses, etc) . would have been even lower except for hitting AMT.

And keep in mind, I'm talking effective tax rate, not marginal tax rate. 13.5% effective fed income tax isn't low, since an average american household with $50-$75K income pay only 5.7%. http://money.cnn.com
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If it wasn't for the AMT how much would you have paid?
 
dariasea said:
I pay 32% tax in Texas. Recent grad and debt free. How can
I get some money back next year?
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Have a lot of children and a spouse who doesn't work. If you get married & have quadruplets, you can be rolling in the dough by next year.
 
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BMBiology said:
You and your wife had a total of 70 k in tax deduction?
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No, dont have it in front of me right now, but it was something like $30k deduction itemized.

I computed effetive tax rate by dividing total fed income tax by the gross income. You guys might be trying to use AGI instead.
 
xiphoid2010 said:
No, dont have it in front of me right now, but it was something like $30k deduction itemized.

I computed effetive tax rate by dividing total fed income tax by the gross income. You guys might be trying to use AGI instead.
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Effective tax rate is computed based on AGI since you haven't really pay any tax on your 401k, HSA, FSA deferral. That's how Turbotax and bankrate.com do it
 
Momus said:
Effective tax rate is computed based on AGI since you haven't really pay any tax on your 401k, HSA, FSA deferral. That's how Turbotax and bankrate.com do it
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Sure income taxes is deferred on 401k contributions, but its not like it's not income. If it's not why are we paying FICA tax on it? Just thinking out loud.

Anyway. If we use agi as the base, then it would be closer to 16%. A bit lower if there were no AMT.
 
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