The only things certain in life are death and taxes. Today’s show may make you rethink the latter.
- Rant on Americans’ perception of the GOP tax plan
- The real price of a purchase
- Difference between salary, AGI, and taxable income
- Our tax planning process
- How to choose between ROTH and TRAD
Notes from the show:
Disclaimer and Edit: It’s come to our attention since publishing this show that the saver’s credit info is incorrect. The saver’s credit allows for a percentage of your first $4,000 in retirement contributions to be credited to your taxes and NOT a percentage of your total retirement contributions up to $4,000 (Mrs. CTF will save you the rant about the inability of certain professions to write coherent sentences that can’t be misinterpreted by half of the internet). As such, the saver’s credit is a maximum of $400, not $4,000 at our income level. The clearest way to figure it out is to read the actual IRS Form 8880. Seriously, the IRS article on this subject is a hot mess. The change in the credit amount won’t affect the Countdowns zero tax bill in 2018, but it may affect some listeners/readers. Thanks to listener TayTay for the heads up and clarification.
Again, we’re not tax professionals. This is what we do with our taxes. Consult your own tax professional about yours. 🙂
The Tax Planning Sheet that we use is below. The formulas and brackets within it are for our own situation. We think it still gives you a fairly good idea though of what we’re talking about. We review this for the next year at the end of the previous year once raises and COLAs have been announced and periodically make adjustments throughout the year. It also works great for seeing how certain job decisions will impact our taxes. As Mr. CTF pointed out in the podcast, seeing the tax ramifications (along with other variables) of taking a higher paying job in the private sector made the decision between the two jobs easier.
While the numbers have been rounded a bit and the state info has been removed, it still gives you an idea of our numbers while allowing us to maintain some anonymity.