OK, I have to vent....

[Petie1104]

Please, noone take offense, but I REALLY need to vent....

DH has been active duty military for 20 years, and we are now in the civilian world.  He found a job that pays him over $10,000 more a year, BUT we are bringing home less a month.  We are claiming 5 dependants, whereas in the military he claimed 2.  But, we forgot to account for state income taxes, then you add in the federal (which went up ALOT because of the tax bracket thing), and social security taxes etc. Basically, his entire pay increase is being eaten up by taxes.  So we went from a job that paid less gross, to a job that pays less net.  What's worse, is that now that he has a civilian job, we have to pay for medical (admittedly, it's minimal, about $450 a year for all of us), dental, and vision.  So even though his pay supposedly went up, we see less of it AND we have more expenses. 

Ok I just had to vent, this wasn't at ALL what I expected to see in his first paycheck. I still have a year left of school before I can get a job, and then I wonder, will our taxes just go up again leaving us in the same situation we're in now?  I mean is it worth it for me to get a job if every time we work to increase our income it just gets taken away?  I'm just frustrated and I really don't understand this whole thing. 

[Teensy]

Ugh.  That would be frustrating.

Hopefully you are misunderstanding some part of the equation and when you file tax returns you will not end up owing as much as you think and will get a nice refund.  I'll cross my fingers for you!

[happysmileylady]

Although our situation was different I do totally understand.  My DH went from a job where he was on commission, but his average gross was less per payperiod than he grosses now.  But, he's netting less because of insurance.  Previously, we paid about $100 every two weeks.  Now, we pay $175 every WEEK.  And this year, DH got a pay raise and the insurance went down, but the net increase in pay will only be like $20 a week.  It's so frustrating.

[texmati]

I'm sorry. I don't know anything at all about how pay works in the millitary. It is very very possible that with all of the benefits included (and every well deserved), your DH's previous job was worth more than his civillian job. 

I just watned to clairify a bit about the way the income taxes work. your tax bracket determines your marginal tax rate on income. So, if someone says 'I'm in the 25% tax bracket, they are only paying 25% on each additional dollar they make over a certain amount. Basically, if you are only looking at the taxes, you can't *cost* your family more money in taxes than you would have made by not working.

For example, these are the tax brackets for 2010. If your job pushes your income from the 15 to 25 percent tax bracket; you'd only pay 25 on the amount that you were over-- not on your entire income.

Married Filing Jointly 2010 Tax Brackets
Taxable Income:	Income Tax:
$0-$16,750	10% of the amount over $0
$16,750-$68,000	$1,675 plus 15% of the amount over $16,750
$68,000-$137,300	$9,362.50 plus 25% of the amount over $68,000
$137,300-$209,250	$26,687.50 plus 28% of the amount over $137,300
$209,250-$373,650	$46,833.50 plus 33% of the amount over $209,250
$373,650+	$101,085.50 plus 35% of the amount over $373,650

Social security and medicade there is not much you can do about that I know of. You can lower your over all income tax by doing retirement contributions etc.

I'm sorry-- it must be so frustrating to feel that you will be getting ahead, and see that its not so.

[Petie1104]

Yup, I see it now.  We were in the $16750-68000 bracket and now we're in the $68000-$137300 bracket.  So we moved up. 

I took a look at dh's LES and I'm hoping that his next one will be bigger.  I don't know if they take out his TSP every pay period or once a month, so I have my fingers crossed.  I told him I'm Ok because we are actually getting two paychecks for the next two months because he's on terminal leave.  So we are going to use that to pay off all of our little stupid debts.  That will help out alot.  We also just moved from AL where our mortgage for a 4 bedroom house on 1 1/2 acres was $600 a month.  Now our rent for a 4 bedroom on a cul-de-sac is $1200.  We also have an extra bill here because heat, air, stove, and water heater are all gas.  We didn't have gas where we were.  So I think I'm just getting scared because I'm not used to the increase in cost of living, plus the paycheck being lower than I expected. 

[VisionaryMom]

Awesome explanation of marginal tax brackets, Texmati! I often hear people say that that they make more but have less from taxes, and that's not true. Going from military to civilian, though, I can see how it's true. I personally dislike when people gripe about military pay because if you look at studies that show numbers, that income goes much farther because of the perks of the military, which I think is really what you're finding out. (I'm not opposing those perks, just pointing out that it's something that's usually lost in discussions of pay wrt military personnel).

Originally Posted by texmati 

Social security and medicade there is not much you can do about that I know of. You can lower your over all income tax by doing retirement contributions etc.

OP, on this, no you can't get out of SS and Medicare contributions, but you can learn to decrease your taxable income. I know lots of military folks just get everything back and have no tax liability, so now it's just a matter of learning how to keep receipts and deduct, deduct, deduct. Your educational expenses and childcare are most likely deductible and could help lower your tax burden tremendously.

We've always favored electric-only over gas heat in places where we've lived because I find that expense so variable. I know that Arizona has a reputation for pretty high energy costs, so I would guess that compared to Alabama, you're going to be in for a constant shock there. Now's the time to learn how to reduce energy savings even more. We've reduced ours by 2/3 over the past 18 months, and we were pretty conscious about it to begin.

[TiredX2]

Originally Posted by VisionaryMom 

Awesome explanation of marginal tax brackets, Texmati! I often hear people say that that they make more but have less from taxes, and that's not true. Going from military to civilian, though, I can see how it's true. I personally dislike when people gripe about military pay because if you look at studies that show numbers, that income goes much farther because of the perks of the military, which I think is really what you're finding out. (I'm not opposing those perks, just pointing out that it's something that's usually lost in discussions of pay wrt military personnel). 

ITA.  Leaving the military is often a horrible reality check for people.  In the military they have their salary, but they also have healthcare AND living allowances (housing, food and extra for extra dependents).  The thing about the "extras" is that they are never shown on a tax stub so you don't pay taxes for them.  They then get benefits based on their income (like WIC).  A military family can often live a lifestyle that would need $20-30K more in income for a non-military family.

[texmati]

Originally Posted by Petie1104 

Yup, I see it now.  We were in the $16750-68000 bracket and now we're in the $68000-$137300 bracket.  So we moved up. 

I took a look at dh's LES and I'm hoping that his next one will be bigger.  I don't know if they take out his TSP every pay period or once a month, so I have my fingers crossed.  I told him I'm Ok because we are actually getting two paychecks for the next two months because he's on terminal leave.  So we are going to use that to pay off all of our little stupid debts.  That will help out alot.  We also just moved from AL where our mortgage for a 4 bedroom house on 1 1/2 acres was $600 a month.  Now our rent for a 4 bedroom on a cul-de-sac is $1200.  We also have an extra bill here because heat, air, stove, and water heater are all gas.  We didn't have gas where we were.  So I think I'm just getting scared because I'm not used to the increase in cost of living, plus the paycheck being lower than I expected. 

I'm not exactly sure what LES and TSP are, but I wanted to let you know that you can always have him contact HR and have them figure out/explain what his paycheck will look like. It *is* complicated! DH and I were just trying to do the same with his paycheck for next year-- and realized when we were about to go to sleep that we had forgotten to take out medical :)

[Petie1104]

LES--Leave and Earnings Statement

TSP---Thrift Savings Plan (I guess it's like a retirement fund)

[texmati]

Originally Posted by Petie1104 

LES--Leave and Earnings Statement

TSP---Thrift Savings Plan (I guess it's like a retirement fund)

So this must be from his military paycheck not the civilian one, right?

[Petie1104]

Originally Posted by texmati 

Originally Posted by Petie1104 

LES--Leave and Earnings Statement

TSP---Thrift Savings Plan (I guess it's like a retirement fund)

So this must be from his military paycheck not the civilian one, right?

It's his civilian one.  He went from active duty to Department of Army Civilian.  Same type of LES is used for DAC and active duty.

[mattemma04]

Oh yes those taxes are so annoying.My mom was just telling me how she will be getting $400 in SS benefits now that she is 65,but they will take out $130 monthly to pay for medicare.She will still have to pay 20% of her med  bills.Kicker is she is already just paying 20%, because she is on the sliding scale with hospital/doctor bills.So the government giveth and the government taketh away,lol.

Talk to an accountant to see if there is any way you can retain more of the income,or get more of a refund each year.

[HeatherAtHome]

Nothing to add except WOW those tax brackets are huge! Here's one for Canada I found with a quick google search (I assume it's right).

[Ellien C]

Originally Posted by texmati 

Social security and medicade there is not much you can do about that I know of. You can lower your over all income tax by doing retirement contributions etc.

I'm sorry-- it must be so frustrating to feel that you will be getting ahead, and see that its not so.

Well, the one nice thing about SS is that it "only" comes out of the first $106,000. After that you don't pay it anymore. So there's some incentive to keep earning more money.

"For 2011, the maximum taxable earnings amount for Social Security is $106,800."

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/240/~/maximum-wage-contribution-and-the-amount-for-a-credit-in-2011

Totally sorry for the OP about the huge change in benefits. It IS a shock. But think of the freedom you will have. You can buy a house and live in it as long as you want. If your DH hates his job, he can up and QUIT - just like that. You can move wherever you want as many times as you want or NOT move at all! Also, not all states have income taxes in case that figures into things for you.
 

[Petie1104]

Originally Posted by Ellien C 

Originally Posted by texmati 

Social security and medicade there is not much you can do about that I know of. You can lower your over all income tax by doing retirement contributions etc.

I'm sorry-- it must be so frustrating to feel that you will be getting ahead, and see that its not so.

Well, the one nice thing about SS is that it "only" comes out of the first $106,000. After that you don't pay it anymore. So there's some incentive to keep earning more money.

"For 2011, the maximum taxable earnings amount for Social Security is $106,800."

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/240/~/maximum-wage-contribution-and-the-amount-for-a-credit-in-2011

Totally sorry for the OP about the huge change in benefits. It IS a shock. But think of the freedom you will have. You can buy a house and live in it as long as you want. If your DH hates his job, he can up and QUIT - just like that. You can move wherever you want as many times as you want or NOT move at all! Also, not all states have income taxes in case that figures into things for you.
 

DH is on contract to work here for 1 year.  But we are talking about next year starting to look for a job in TN or another state that has no income tax.  I used to live in TN which is the only reason I know about that one.  You are right, we can move where ever and when ever we want.  

[amyhulen]

Oh boy. I am suddenly dreading my husband wanting to retire from active duty someday. I will be the first to say that all of our "non taxed" income is pretty darn nice. And the healthcare (for spouses/dependents at least) cannot be beat.

[Petie1104]

Originally Posted by amyhulen 

Oh boy. I am suddenly dreading my husband wanting to retire from active duty someday. I will be the first to say that all of our "non taxed" income is pretty darn nice. And the healthcare (for spouses/dependents at least) cannot be beat.

Start planning EARLY!!  I wish we would have.  Unfortunately, we waited and ended up with stupid debt that we didn't need.  Plus no real savings to help with the move.  Even though the military ships your stuff, you don't get DLA, you CAN get an advance, but it is not simple, and you have to push for it.  You do get mileage but honestly, I just wish we would have planned better.

[llwr]

We went from civilian (both of us working) to military (him only) back to civilian (him only).  It really is amazing how they line up differently due to taxes and benefits.  However, I really do love the freedom of civilian.  I know it doesn't change your financial situation, but to me it's really a big deal not to have to deal with TDY, the possibility of deploymen,t and being told where to live, and when he's allowed to take vacation.  And I know the military health care is free, but I am so much happier with my health care now even if I do have to pay a little for it. 

[Norabella]

Originally Posted by Petie1104 

Originally Posted by Ellien C 

Originally Posted by texmati 

Social security and medicade there is not much you can do about that I know of. You can lower your over all income tax by doing retirement contributions etc.

I'm sorry-- it must be so frustrating to feel that you will be getting ahead, and see that its not so.

Well, the one nice thing about SS is that it "only" comes out of the first $106,000. After that you don't pay it anymore. So there's some incentive to keep earning more money.

"For 2011, the maximum taxable earnings amount for Social Security is $106,800."

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/240/~/maximum-wage-contribution-and-the-amount-for-a-credit-in-2011

Totally sorry for the OP about the huge change in benefits. It IS a shock. But think of the freedom you will have. You can buy a house and live in it as long as you want. If your DH hates his job, he can up and QUIT - just like that. You can move wherever you want as many times as you want or NOT move at all! Also, not all states have income taxes in case that figures into things for you.
 

DH is on contract to work here for 1 year.  But we are talking about next year starting to look for a job in TN or another state that has no income tax.  I used to live in TN which is the only reason I know about that one.  You are right, we can move where ever and when ever we want.  

I'm sure google could easily give a complete list, but I know Nevada and Alaska are two more states with no state income tax. And, AK pays a dividend (off of invested oil revenues) to every resident every year, usually between $500-1000/person (including kids).

[texmati]

texas also has no state income tax.