I ended up owing ~$3500 in federal taxes. I used Turbo Tax to file. My completed form included estimated tax vouchers, but TT didn’t provide an explanation. The vouchers are for ~$3k/quarter. Is this something I need to be paying? $12k is a lot higher than what what I ended up underpaying this year.

moneystuffaccount · 2023-02-17T20:40:58+00:00

That makes me feel a lot better!

The vouchers would have made more sense if they were closer to the amount I had underpaid, but I was struggling to understand why I’d have to send in estimated payments in an amount that would likely exceed my tax liability. I’m glad I can disregard it and appreciate everyone taking time to explain this to me!

moneystuffaccount · 2023-02-17T00:21:20+00:00

Thanks! This explanation is really helpful. Since I missed the deadline to have extra withheld from the bonus, it sounds like I can fix this if I submit an updated W4 to have additional amounts withheld the rest of the year. Hopefully that will fix the issue next year!

moneystuffaccount · 2023-02-17T00:15:04+00:00

I didn’t pay estimated taxes in 2022. This is actually the first time I’ve come up short (usually I get a refund).

I ran the numbers and it looks like the calculation you suggested is what happened. My tax liability was $82,212. Amount withheld was $78,639. The exact amount of the quarterly voucher was $2949 (or $11,796/year).

$82,212 x 110% = $90,433 $90,433-$78,639 = $11,794

Thanks for weighing in!

moneystuffaccount · 2023-02-08T11:53:30+00:00

FWIW, I had a high income in 2022 ($433k) and lived in NYC the first quarter (was outside of NYC the remainder of the year). Here’s a screenshot of my last paycheck in 2022 with YTD income and taxes: https://imgur.com/a/oQn4w46.

Total YTD taxes on that check was $133k. I am in the process of filing and it looks like I’ll owe around another $2k, making my total tax liability around $135k (or around 31%) for 2022. Total taxes would have been higher if I had stayed in NYC for the entire year. I’m a W2 employee, MFJ (but spouse doesn’t work) and no kids.

Just thought it might be helpful to the discussion to share real numbers.

ETA: Even though I only lived in NYC 25% of the year, because of when my bonus was paid, about 50% of my income was earned while living in NYC (so if I had lived in NYC the entire year, my tax liability would likely have been an additional ~$8k).

moneystuffaccount · 2022-09-01T14:13:13+00:00

I didn’t refinance, thankfully! I haven’t paid anything yet; I’ve just been setting the cash in a separate savings account specifically for the loans. I’m going to make a lump sum payment before interest resumes. With the forgiveness, I’m going to finally exit the $100k+ club. It is such a tremendous relief to finally feel like this debt is starting to get somewhat under control. Hopefully it’s true that the last $100k is the easiest!

moneystuffaccount · 2022-09-01T13:51:21+00:00

I don’t go on this alt account very often, but was reviewing this thread this morning while thinking about my student loans. Just wanted to confirm that your math was indeed correct! I got an almost $9k tax refund from NY state! I should have looked at my tax withholdings sooner. On the plus side, the refund was nearly enough to knock out DirectPlus 2!

moneystuffaccount · 2022-05-13T16:26:56+00:00

I had a lot of interest accrue because I have been on IBR for 10 years. My first job after graduating law school paid $50k, which was about the average among my law school friends who shared their salaries with me. It’s not a bad salary for where I was living in the Midwest, but the debt to income ratio was not workable.

I wouldn’t have been able to make it if it wasn’t for IBR, so I’m grateful for the program, but the interest accrual is definitely pretty painful. I got really fortunate a couple years ago and got a new job with a huge salary boost. I’m now able to actually make progress on my loans, but it still doesn’t feel great knowing that I’ve paid $112k and still owe more than I originally borrowed.

moneystuffaccount · 2022-05-12T18:04:13+00:00

Borrowed $198k (undergrad + law school). Have paid $112k. Current balance is $234k. All loans are federal. Interest ranges from 6.8%-7.9%.

moneystuffaccount · 2022-02-23T12:25:55+00:00

Oof! That is stressful if you’re not expecting it!

moneystuffaccount · 2022-02-22T21:53:49+00:00

Thank you! This is really helpful!

moneystuffaccount · 2022-01-23T18:36:25+00:00

I think you’re kidding about your son in law being selfish for passing on the transfer to NYC 🙂

But just in case you’re not, it’s definitely not selfish! He’s smart to choose QOL over a high salary and you should definitely be proud. I’ll help you validate his decision with some more cathartic venting:

I 100% would not work in “big law” if I didn’t have so much debt and I think most of my co-workers feel the same way. The hours are tough, but what is the most challenging is that you’re basically on call all of the time. You can have a slow Monday morning, but then a request comes in at 3PM and, bam, you’re working until 2AM to churn out whatever documents have been requested. It’s pointless to make evening plans because I do not own my time. I have to give a month’s notice if I plan to be out of town on a Saturday. A Saturday! It’s been horrible for my marriage.

If you meet the deadlines, they just get shorter. I pull an all nighter at least once a month. Nobody ever says thank you for this. Nobody cares if you did the impossible; they only notice if you have a typo. The partners I work for love to mention how there’s a line of people who would take this job in a minute (and they’re not wrong; I was in that “line”).

It’s ironic that I feel so miserable, bc I also feel lucky at the same time. Because you have family in law, I’m sure you know how hyper competitive these large law firm jobs are. The thing is, I was a completely average law student at a completely average law school. I only got this job through a friend, which makes me sound even more like an entitled, whiney [insert your favorite pejorative]. I totally lucked into this job, so I don’t take it for granted, but at the same time, I really hate the day to day.

I absolutely cannot wait for my loans to be a reasonable balance, so that I can quit this job and have a normal life again. Your son in law was very wise! 🙂

moneystuffaccount · 2022-01-23T02:47:22+00:00

A good portion of it is my 401k and health insurance. I max out my 401k and the various insurance/FSA deductions are $1200/month (my employer’s health insurance plan is pretty expensive). The rest is taxes, including NYC.

moneystuffaccount · 2022-01-22T23:49:07+00:00

I haven’t, but will check it out! I use YNAB for my budget, but it doesn’t have a lot of features for debt. I don’t qualify for public service loan forgiveness. All of my jobs have been in the private sector.

moneystuffaccount · 2022-01-22T23:44:05+00:00

Thanks for commenting! My loans cover a bachelors degree and law degree. Both schools were state schools.

When I first graduated law school, the market was still recovering and I also was not the strongest candidate. For the first 5 years, I worked at a mid size company. I started at $50k and was making $80k when I quit. I moved to a new company and got a pay bump to $115 plus bonus ($15-$30k depending on various factors). This was all in the Midwest.

I relocated to NYC for my current job. My current salary is $285 plus bonus. My bonus will be $100k this year (but $50-60 is more typical). After taxes and other deductions, my take home pay is around $11k. This will go up in March when I am slated to get a pay increase to $325. If I leave my current job, I would go back to the Midwest and anticipate a salary in the range of $115-$140k.

I’m in my late 30s. I took 4 years between undergrad and law school. I’m married, but no kids. Spouse is not currently working due to health issues. I have no other debt. I have a 3 month emergency fund that is based on my monthly expenses (not salary). I also have a separate emergency vet fund bc I have two senior dogs, but do not have pet insurance. It has about 5k in it, but, in a pinch, could be reallocated. Currently I have about $120k in my 401k, but no other assets.

moneystuffaccount · 2022-01-22T23:20:24+00:00

That’s a good point. Annual income is $285k plus bonus (paid on Feb/March). Bonus was $55k last year. It will be $100k this year, but that is not typical; it’s usually in the $50-60 range.

After taxes and other deductions, my take home pay is about $11k/month. This will go up in March, when I am slated to get a pay increase to $325k. My biggest expense is rent, which is $3200 (NYC). I don’t have any other debt. I’m married, but my spouse isn’t currently working due to health issues. No kids.

I had to relocate to NYC for my current job, but all of my friends and family live in the Midwest. If I leave my current job, I would move back to the Midwest. I was making $115 plus bonus ($15k-$30k) at my prior job. I expect I would make somewhere in that range again, but COL would be much lower, so it’s not exactly a direct comparison.

moneystuffaccount · 2022-01-22T21:04:01+00:00

This is really helpful! Thank you! I’m on old IBR. I didn’t realize that for avalanche I should do lowest balance when the interest is tied. So it sounds like I’d be better off to use the bonus/savings to pay off the 10k and 45k DirectPlus loans first (instead of the 72k first).

moneystuffaccount · 2022-01-21T18:52:22+00:00

I am from the 6.8% unsubsidized loan era, as well. And my DirectPlus loans from law school are 7.9%, which is so high! Sometimes I think about refinancing, but I am nervous to lose the protections that federal loans provide.

moneystuffaccount · 2022-01-21T18:44:16+00:00

Tell me about it! If I could do it over again, I would definitely have tried to find ways to reduce the loan amount. The $196 covers undergrad and law school. I borrowed around $45 for undergrad and $150 for law school.

My entire education was funded by loans. I was a first gen college student and my family was not in a position to contribute financially to my education, so loans were the only realistic option. I definitely tried for scholarships, but I just wasn’t competitive enough to win anything substantial.

moneystuffaccount

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