My taxes are just too high, should I retire?

[feh]

I understand your frustration. I pay a lot of taxes as well. But I also make a lot of money. My friend put it all in perspective with something his dad told him: son, you will be very happy that first time you pay $1,000,000 in taxes.

+1

This is a first world "problem".

[doingitallwrong]

If you're already ineligible for the various credits, have you considered filing separately? You still wouldn't get the credits, but individually you might be in a lower tax bracket. (I know being a CPA you've probably already thought of that, but just in case! )

[riverwed070707]

Sounds like a good problem to have to me. Knowing your background, I can understand the frustration of seeing those dollars disappear but I feel like a little perspective change could be good for you. What about all the people making less in a year than what you pay in taxes? Those who are lucky to contribute $5k to their retirement and thats a stretch as its 15% of their total income? Lots of two income households who can't afford to travel, put their kids in sports or buy a new car even though the old one is about to break down. This isn't the poorest of poor, this is a scenario for tons of middle class families. If you're burnt out or tired of your job, i get that and maybe it is worth considering an early retirement or cutting back hours or whatever you need to do to refresh but I would try to avoid just looking at the could-have-had dollars and feeling like you're being cheated. Glass is half full Reggie!

[corn18]

This looks similar to mine.

1% of gross City (the gross part hurts)
5.75% State
6.2% SS (this goes away after $117,000)
1.45% Medicare
0.9% Medicare additional (this kicks in at $250,000 for married, but payroll has to start withholding this @ $200,000 regardless of filing status. You get the difference back at the end of the year if you make more than $200,000)
39.6% Federal (this is the tax bracket. my marginal rate is 26%)

On paper, that looks like I pay 54.9% tax on every dollar I make. That simply is not true. The only tax on that list that is on gross income is my city tax. The rest are marginal taxes. My ACTUAL tax rate for all of my income is 39%. Still a ridiculous amount.

I use the 39% number to make decisions like you are making. As for what I would do? I guess it depends on your long term goals. I have a 15 year plan that requires my current income level for another 10 years. I am willing to give up 39% of it to meet my goals. If I had been a better saver, I could quit, but I wasn't. You have gone through many life changing things in the past year. Take a deep breath and set a 10 year plan. Then see how your income fits into that plan.

Tom

[Reggie]

Those are the rates that apply to every dollar I earn so I'm not forgetting the lower rates., I'm just saying that maybe it isn't worth it. DH pushes my income into those tax brackets. I work a lot and there are expenses for working as well. I'm thankful that we make a good salary, but maybe we would be better off overall if I didn't work.

I'm not b*tchn really!

My glass is more than half full !

[Ticker]

We have the same issue, with my income we are pretty much at flat 50% tax by the time all the stuff is added up. It is extremely irritation since I read about the corporations and politicians paying 10-20% tax. At the moment I don't see any way to reduce the tax rate and pretty much all deductions (other then 401k) are gone.
As far as you'll be happy when you write your first 1000000 in taxes.... you won't be. Especially if you have to do it again and again. And see very (VERY) little in return.

T.

[autoxer]

DH pushes my income into those tax brackets. I work a lot and there are expenses for working as well. I'm thankful that we make a good salary, but maybe we would be better off overall if I didn't work.

I'm not b*tchn really!

My glass is more than half full !

You could tell your husband to work less, so that your income is more valuable.

And work on a long term strategy that will shift your income from salary to capital gains.

[corn18]

And work on a long term strategy that will shift your income from salary to capital gains.

That's the key. Wealth vs. income. The Millionaire Next Door taught me that.

Why don't you form an LLC and become a consultant? You certainly have an in demand skill set and you could do one off projects and funnel the income through the company. Put the LLC into an irrevocable trust and pay yourself out of the trust. That's how Mitt does it.

[KTP]

Yep, taxes suck at a certain level. We ran the numbers for a job I wanted to take and found out we would pay around 60% in taxes, commuting costs, clothes. Who wants to work for $0.40 on the dollar?

You can't fix the system, so the best thing to do is get out and start engineering your income to pay little or zero tax. Or negative tax, which is even better.

[LivingAlmostLarge]

I have the exact same problem. And the truth is that it's not worth it like MM said for me to work like her spouse. We wouldn't probably net anything extra after working expenses, daycare for sure. Now if we don't have daycare, but we still employ a part-time nanny I'm not sure even I'd break even. Just someone to get kids off to school in morning.

[jIM_Ohio]

Ask your employer to put a keg in the breakroom, and see if that changes your perspective.

I changed jobs three times in last 2 years, my current employer has a keg in breakroom, so the taxes don't matter, I actually enjoy working.

I don't recommend this for doctors offices though.

[corn18]

Ask your employer to put a keg in the breakroom, and see if that changes your perspective.

I changed jobs three times in last 2 years, my current employer has a keg in breakroom, so the taxes don't matter, I actually enjoy working.

I don't recommend this for doctors offices though.

I'll second this. We always had a keg in our ready room. Not on the aircraft carrier though. I think the rule was no smoking within 12 hours and no drinking within 50 ft. I could be wrong. Many brain cells were lost in the defense of our great nation.

[Singuy]

I really don't understand what you 2 percenters are crying about but the U.S tax system pretty much caters to the rich and really screws the poor.

Just look at the brackets, name another bracket in which your tax jumps 10%(from 15%-25%)? Also after you make 117k, you no longer have to pay for SS, so there's a 6-7% tax break right there.
Lastly, if you are making 500k/year, you probably have a house paid off, but still buys one set of toilet paper like any 48k earners would...except those people have to face a 10% tax hike and probably can't afford a houses.

Also like what another poster said, the more you make, the more you earn. Yes the U.S government takes a bigger chunk, but that doesn't mean you are not gaining more money.

Just for the record, my wife and I are nearing the top tax bracket. We hate paying a lot of taxes, but the money we do keep really give us more options than someone making the average household income. So be greatful and stop making this into a first world problem.

[Reggie]

Just for the record, my wife and I are nearing the top tax bracket. We hate paying a lot of taxes, but the money we do keep really give us more options than someone making the average household income. So be greatful and stop making this into a first world problem.

If your household taxable income is nearing $400k, why do you have debt? Our household income is under 300k. We are NOT rich!!! Your family is making a lot more than we are.

[KTP]

I really don't understand what you 2 percenters are crying about but the U.S tax system pretty much caters to the rich and really screws the poor.

It caters to those who can game the system, both rich and poor. The middle class bend over.

Buffett pays a significantly lower tax rate than most of us who earn $200,000 to $300,000.

But I have figured out how to game the system so I am pretty happy now. No more tears.