Turn down a raise b/c of tax bracket?

[cptacek]

I think most of the people making this argument (don't want to get paid more because they will have to pay more taxes) just look at their take home pay and not what actual taxes they pay for the whole year. If they do go up a tax bracket and don't change their W4, then the take home pay each payday might go down, but at the end of the year they would probably get a refund? I doubt any of them actually calculated it out.

[moneybags]

#1 - if a person planned for a $0 refund, then losing the credit would imply decreasing take home.

Anyone with kids making $109k and getting a raise to $111k will see this happen (child tax credit maxes at 110k). Wife and I are close to this now.

You won't lose the entire credit at 110k. It is phased out. If you have 1 kid, you lose the credit entirely at 129K. In that case, if your income goes up 19K, you are taxed on the 19K and lose the 1K credit (assuming 1 kid).

[jIM_Ohio]

You won't lose the entire credit at 110k. It is phased out. If you have 1 kid, you lose the credit entirely at 129K. In that case, if your income goes up 19K, you are taxed on the 19K and lose the 1K credit (assuming 1 kid).

Correct on phase outs. At same 110k other things begin to get phased out. Student loan interest comes to mind, education credits are close to same income...

The phase out of one credit may not decrease take home, but removal of 2-3 might.

[TBH]

#1 wouldn't affect your take-home pay each week, would it? Wouldn't that show up when you filed your taxes?

It could--you can file a special form and get an advance payment on your EIC as part of each paycheck. I used to do that, but I don't qualify for the EIC any more.

[disneysteve]

It could--you can file a special form and get an advance payment on your EIC as part of each paycheck. I used to do that, but I don't qualify for the EIC any more.

Didn't know that.

Interesting thread. So apparently, there are ways in which an increase in gross income could actually result in a decrease in net income. Well that certainly sucks, doesn't it.

[Goldy1]

Yes my husband generally has made double of what I have earned, and in some years more if I was in between jobs. For tax year 2006, when I wasn't working the whole year, we were able to take a tax deduction for putting money into roths. (It helped bring down dh's gross also putting into his 401K also)
I don't mean we just didnt' make too much to contribute to roths, but when we did our tax program on the computer, we realized we got some kind of tax break if we put money into a roth b/c we were under a certain amount of gross income. We chose to go max the roths at the time due to this great tax break meant to encourage modest income folks to plan for retirement I assume. when we did taxes for 2007, we got no additional tax break for contributing to the roth but would have if I had made a few thousand less.
My first child is due soon so I do not know anything yet about how this will affect taxes, but it won't be claimed until we do 2009 taxes in 2010. I find taxes interseting, but at times confusing.

[Goldy1]

also I chose to work b/c my money still helps a lot even if it ha snot been as much as I wished it was, and it is good for my well being, and to keep my skills up to date.