How much will we "take home" when practicing?

[Poety]

Hi everyone,

I have a question - spurred by another post about loans. Can anyone tell me how much we will actually take home if we make say 130,000 after residency? I mean after taxes and the sort.

I know no one knows the exact amount since everyone is different with different things they can claim, I just mean a general amount one could look at.

Would it be about 100,000 after taxes?

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[ClearDay]

Hi everyone,

I have a question - spurred by another post about loans. Can anyone tell me how much we will actually take home if we make say 130,000 after residency? I mean after taxes and the sort.

I know no one knows the exact amount since everyone is different with different things they can claim, I just mean a general amount one could look at.

Would it be about 100,000 after taxes?

That sounds about right. You can also check out the 'net paycheck estimate' on salary.com

 

[Poety]

thanks so much!

 

[skypilot]

It would be more like 91k assuming your Federal and State income tax rate added up to 30 percent.

Get a good CPA to advise you on how to save on taxes by loading up your 401k plan and buying a house as a shelter.

 

[Poety]

It would be more like 91k assuming your Federal and State income tax rate added up to 30 percent.

Get a good CPA to advise you on how to save on taxes by loading up your 401k plan and buying a house as a shelter.

ouch, that hurt, it really hurt - my feelings, my pocket and everything else!

I'm going to have my brother (hes a cpa) do my accounting - hes also going to help me start up my own practice since i have NO CLUE about finances oy!

 

[DrMom]

Remember that something like 7% goes to FICA alone (which gets phased out at something like $110k), plus you still have state and federal taxes in addition.

 

[skypilot]

ouch, that hurt, it really hurt - my feelings, my pocket and everything else!

I'm going to have my brother (hes a cpa) do my accounting - hes also going to help me start up my own practice since i have NO CLUE about finances oy!

Just remember that all that money is going to good use by the federal government.

 

[Sebastian.]

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[Sebastian.]

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[DrMom]

Again, thanks, but what does that mean??

FICA is social security & medicare.

If you own a house you can deduct the interest you pay on your mortgage on your taxes (to an extent, subject to your income level).

 

[Poety]

130,000-9100(7% FICA) = 120,900
130,000(0.3)[that 30% someone was saying for taxes] = 39,000

120,900-39,000 = 81,900

81,900/12 = 6825/mos NOT including what ever other taxes they take out!

 

[DrMom]

remember your student loan payments, too

 

[Poety]

Mom, you're not even playing nice anymore

6825 - 1200(loan) = 5625 take home at 130,000/yr I NEED TO MAKE MORE THAN THAT!!!

what tax bracket are we in when we make that kind of money? is there some tax table?

 

[DrMom]

Just trying to be (sadly) realistic.

When non-medical people around me comment about all of the money I'll be making in a few years, I tell them what my monthly student loan payments are (purportedly) going to be. That usually shuts them up.

 

[ericdopt]

Mom, you're not even playing nice anymore

6825 - 1200(loan) = 5625 take home at 130,000/yr I NEED TO MAKE MORE THAN THAT!!!

what tax bracket are we in when we make that kind of money? is there some tax table?

I guess now would be the perfect time to introduce you to the works of Ayn Rand.

Don't forget, your child(ren) will lower your overall taxes.

 

[DrMom]

poety, see if you can find anything @ irs.gov

 

[EctopicFetus]

The thing I love about medicine is the average doc (in all fields) makes about 200K and most of us have NO IDEA about money. Take some time when you have it and read Personal Finance for dummies or something like that. It is a better investment than harrisons and a lot cheaper and an easy read!

Here goes. First without the below explanation you can assume that your take home after 401(k) etc will be about 60% of all your $$$. So from 130K expect take home of 80K. This is the harsh truth. (I worked for a few yrs I know)

Lets say you make 200K, first we will talk about Social Security (FICA) and Medicare, SS is 6.2% but only on the first 90K or so (not 110K) as listed. So thats about 6K per yr, then another 1.45% on ALL our money. So throw in another $2900. So using rounding thats 9K right off of the top. The lets talk about Federal Taxes, assuming after deductions (which ill discuss later) your taxable income is 150K (which might be high) and you are married your federal taxes will be about 36K see http://www.irs.gov/pub/irs-pdf/i1040tt.pdf Then dont forget about 401(k) which will be (assume you are responsible and max it out) 15K which will be the max in a few yrs. Then the state of your choice takes money. Since this is dependant on your location I will assume 5% on your 200K which is 10K. (Cali is very high and some states, Fl, TX, NV, and others have no state tax) Then dont forget about health insurance for your family 300/month or 3600 per yr. So from the initial 200K we we lose 9K to FICA and Medicare, then 36K to Federal Tax, 10K to your lovely state http://www.taxadmin.org/fta/rate/ind_inc.html , then 15K to 401(k) (retirement) then 3600 to health insurance. So 200K-9K-36K-10K-15K-3.6K, so being a math person.. that leaves you with ~132K. So in this example you would have payed 68K or 34%. Then you have to have life insurance, pay your student loans etc.

As far as a house, this is a great way to lower your taxes, you can deduct the mortgage interest and property taxes. On a 500K home you could be looking at 30K or so that reduces your taxable income. I hope this answers many of the questions of people on here. Here is a site I found a while ago http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp Dont forget kids are also a deduction but they def dont pay for themselves. The part that really sux is you pay 46K or so in taxes (not including FICA and friends) and I am not sure what you are getting for your money! Anyhow.. If you have a burning Q PM me.. otherwise ill chekc this later...

Peace

 

[skypilot]

What the hell are you talking about?? I'm guessing you're don't mean that you're buying a house "as a shelter.....from rain and the elements". Really, what does your jargon mean? I'd like to understand.

Heh heh, sorry, did I mention that I used to be a CPA? Anyway by "shelter" I meant tax shelter. There are several different tax shelters available to a doctor. If a doctor is considered self employed a large portion of their income can be placed into a retirement fund before paying taxes and taxes are only payed on the remaining income ie.

$130,000 - $15,000 deposit to retirement fund = $115,000 remaining gross income.

Then any interest on a loan taken out to buy a house or condo is deducted:

$115,000 - $20,000 interest on house loan = $95,000

Then interest on student loans may be tax deductible and if you work for a job with a payback program the loan payed off by the payback program is not credited to your income. (but your salary will probably be lower)

$95,000-$2000 student loan interest = $93,000

You pay taxes on only $93,000 x .30 = $31,000

$130,000 - $31,000 = $99,000 instead of $91,000

But you have put $15,000 into your retirement account and hopefully you made an investment in a house that will eventually pay off. (If the real estate market does not crash in the next couple of years!)

In any case, you are not going to get rich right away but you can live very well on $131k per year as long as you do not rush out to buy that Beemer on the first day out of residency. Stick with the Toyota until you have your loans paid off or you hit it big on the stock market.

 

[DrMom]

Thanks for fixing the FICA #, ectopic. I was pulling that off of the top of my head & hadn't bothered to look it up.

 

[EctopicFetus]

Heh heh, sorry, did I mention that I used to be a CPA? Anyway by "shelter" I meant tax shelter. There are several different tax shelters available to a doctor. If a doctor is considered self employed a large portion of their income can be placed into a retirement fund before paying taxes and taxes are only payed on the remaining income ie.

$130,000 - $15,000 deposit to retirement fund = $115,000 remaining gross income.

Then any interest on a loan taken out to buy a house or condo is deducted:

$115,000 - $20,000 interest on house loan = $95,000

Then interest on student loans may be tax deductible and if you work for a job with a payback program the loan payed off by the payback program is not credited to your income. (but your salary will probably be lower)

$95,000-$2000 student loan interest = $93,000

You pay taxes on only $93,000 x .30 = $31,000

$130,000 - $31,000 = $99,000 instead of $91,000

But you have put $15,000 into your retirement account and hopefully you made an investment in a house that will eventually pay off. (If the real estate market does not crash in the next couple of years!)

In any case, you are not going to get rich right away but you can live very well on $131k per year as long as you do not rush out to buy that Beemer on the first day out of residency. Stick with the Toyota until you have your loans paid off or you hit it big on the stock market.

Good point on the self employment stuff. You can then also write off some car lease stuff. But I dont believe you included FICA/Medicare. Also keep in mind that there is a salary cap (like in sports j/k) to take the student loan interest deduction. Also for taxes since most people live in states with a state income tax.. more money goes to our political friends (lawyers who run this place). Def stick with the toyota and build yourself a little cushion!

 

[EctopicFetus]

Thanks for fixing the FICA #, ectopic. I was pulling that off of the top of my head & hadn't bothered to look it up.

Thanx Dr. Mom.. BTW you rock as a MOD!

 

[Poety]

wow, you guys were great thanks so much for all that info!!

I also called my brother who said exactly what you two said - to the tee. He's like, why are you worrying now? I'm like because I feel broke before I've even started!

I'm definitely going to do the investment stuff, adn since my husband will have his own company, and I'll have my own practice with minimal overhead (I'm going into psych) I think we'll be ok since - I guess those are other ways to cut the taxes down a bit too. This whole thing is really complicated.

I think I'll stick with my 04 Chevy Trailblazer for the next 10 years I really don't NEED a lot of money - I'm actually more concerned about saving for my daughters college/prof school (if she chooses) and what not - and I got really scared seeing that 4000/mos I can definitely live quite well on 8000/mos and still have money to save for her and have a nice house. Thats all I need really

Thanks SO MUCH for all the replies and I echo the above sentiments MOM YOU ARE A GREAT MOD!

 

[ClearDay]

I didn't see any mention of malpractice insurance - that should be a significant amount, right?

 

[DrMom]

I didn't see any mention of malpractice insurance - that should be a significant amount, right?

Sometimes that is paid for by the practice or hospital, but you make a very valid point since some of us will be paying that ourselves.

 

[ClearDay]

Sometimes that is paid for by the practice or hospital, but you make a very valid point since some of us will be paying that ourselves.

How much is malpractice insurance for family practitioners? I know the actual premium varies depending on your practice, location, etc, but does anyone know the approximate range?

 

[Hurricane]

Can anyone tell me how much we will actually take home if we make say 130,000 after residency? I mean after taxes and the sort.

Depends on how good your accountant is As for me, I've got a little brother studying to be a tax lawyer, so I shall trade free psych advice for free tax advice...

 

[OldPsychDoc]

Don't forget, your child(ren) will lower your overall taxes.

While also raising your overall cost of living...

#1 starts college before I finish paying back MY student loans!!!!!

It's an open question as to whether they raise or lower one's overall quality of life!!!!

 

[ericdopt]

While also raising your overall cost of living...

#1 starts college before I finish paying back MY student loans!!!!!

It's an open question as to whether they raise or lower one's overall quality of life!!!!

touche! Yes, my first will be 7 when I'm done with residency, and I'm scared for the future as my loans are $200K +!. Thank god my wife is breastfeeding our newest...I'm trying to figure out how to get the 3 yo to go back to exclusive breastfeeding. It might save a little money

 

[Sebastian.]

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[EctopicFetus]

Sebastian what didnt you get?

 

[GoPistons]

it is sad that people don't understand this stuff well... this is why doctors get screwed over financially time and time again... check out medicare cuts that are coming soon... i, too, will vouch for personal finance for dummies... it is great...

 

[Poety]

I completely agree gopistons, med schools should maybe add a financial class into the curriculum. I mean, I worked and owned a home prior to matriculating so I know some stuff (not about deductions or high tax brackets) but that stuff would be HARD to know if you went straight from college to medical school!

Plus I have a brother (little brother) whos an accountant - the weasel is going to charge me for his work but hey- at least I'll know I'm getting the best deal I can

 

[toofache32]

Just trying to be (sadly) realistic.

When non-medical people around me comment about all of the money I'll be making in a few years, I tell them what my monthly student loan payments are (purportedly) going to be. That usually shuts them up.

How much in general? I haven't thought about it much yet.

 

[toofache32]

...I'm trying to figure out how to get the 3 yo to go back to exclusive breastfeeding. It might save a little money

Hmmm....not a bad idea I might mention to my wife. Maybe I should go back to being breastfed also.

 

[turtle md]

Plus I have a brother (little brother) whos an accountant - the weasel is going to charge me for his work but hey- at least I'll know I'm getting the best deal I can

Maybe you could return the favour and charge him for any and all tidbits of medical advice. That's what I started doing after being plagued with numerous questions from my family - shut them right up!

 

[EctopicFetus]

Well I think that this stuff in MD school might be too early. During residency would be better and I think a few progs do offer this. IMO though buying a simple book and reading it during 3rd yr or something is a way better method of getting this info. Asking schools to teach it would be a huge waste of time as many of the people who "teach" this are not good at teaching it. The books on the other hand with use of the net to look up specific things you dont understand is a great way of getting to know 95% of everything you would need for the rest of your life.

 

[Ross434]

Yeah but the mortgage deduction is going to be phased out. Starting soon.

http://money.cnn.com/2005/10/25/pf/taxes/homededuction_proposal/index.htm

And dont forget about property taxes.

 

[Methyldopa]

I highly recommend reading Personal Finance for Dummies. Great book! I think all high school/college student should have a course in finance, rather than graduates having no clue what a money market account is, but realizing that somehow they racked up a thousand dollar credit card bill!

 

[EctopicFetus]

Yeah but the mortgage deduction is going to be phased out. Starting soon.

http://money.cnn.com/2005/10/25/pf/taxes/homededuction_proposal/index.htm

And dont forget about property taxes.

Those are just proposals. I think it might be hard for them to really change it too drastically. As such even with a cap of 172K (the low end) if you pay 6% in interest you are looking at 10K or so off your taxes. This obviously gets much more complex when you look at standard deductions etc. Anyhow owning a home is a great investment and provides at least some tax relief. factor in at least 5K in taxes on a "doctor's" home (at the min).

 

[OldPsychDoc]

Hmmm....not a bad idea I might mention to my wife. Maybe I should go back to being breastfed also.

Check this out, too, and imagine how much you can save on Pampers!
http://www.timl.com/ipt/