- Status
alkemyst
No Lifer
- Feb 13, 2001
- 83,769
- 19
- 81
HCE laws only affect the employer matches and not the contribution those employees can make. However, it's not a lot to begin with. Most will start maxing their 401ks and IRAs around $70k or so if they have a spouse of like salary or about $125-150k combined income.
- Oct 28, 1999
- 62,484
- 8,345
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No it's not. It's the contribution amounts. She can't put in the full 16.5k. Other coworkers of her's have put in over $13,000 and they have had checks cut back. Others have put in the full match and had checks for over $4,000 cut back they had to account for. The match accounts for part of the overall contribution, but how much they elect makes a difference.
alkemyst
No Lifer
- Feb 13, 2001
- 83,769
- 19
- 81
That's the company 401K then...she can still contribute up to her limit. She should open her own.
Lumathix
Golden Member
- Mar 16, 2004
- 1,686
- 0
- 46
Tweak155
Lifer
- Sep 23, 2003
- 11,449
- 264
- 126
Even with a similar income (after deductions), I won't owe anywhere near $30k due to paying out of my w2 income (which it sounds like you have...). I'll be shocked if I owe more than $3k, and wouldn't be surprised if it worked out in my favor if I can find some extra deductions.
qliveur
Diamond Member
- Mar 25, 2007
- 4,090
- 74
- 91
gorcorps
aka Brandon
- Jul 18, 2004
- 30,741
- 456
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So what? Why are so many people afraid to be audited? The gov is checking your math... as long as you did it right I don't understand what the problem is.
Regardless if you did it right or not, it's still a hassle. Some people would just prefer to avoid the hassle and would not take borderline write-offs as the cost of avoiding having to deal with it. Others would prefer to deduct everything and prepare for the potential hassle. To each their own. I like to call avoiding borderline write-offs as the "Hassle-off Tax."
Dr. Zaus
Lifer
- Oct 16, 2008
- 11,764
- 347
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"We'd like you to come in and talk about your tax return"
"Happy to, just give me a letter of immunity; otherwise i'm pleading the fifth"
This works a little under 50% of the time because that's about how many cases of Audit are actually just the IRS fishing. If they have something then they won't ask you to come down, they will tell you you are legally required to show up.
"We require that you come down here"
"are you legally compelling me?"
"Yes, you are legally required to come here"
This is where you take your big-bag of receipts, documents, letters, expense reports and everything else down and lay it on the table.
When they see this they will realize that you've got your shit together and that getting money from you is going to be a headache.
"We think you owe an extra 10k"
"I don't owe any more, these are my documents."
"If we find an error we'll charge you penalties and interest much greater than the 10k"
"Everything is in order, I have no doubt"
: they look at the entire year worth of grocery receipts et al.:
"How about 2k and we make this go away"
at which point you pay the 2k and you get them to go away.
This is how you deal with the IRS; You may think there are laws, procedures, practices, rules etc. But the truth is that they are thugs with guns that get to re-interpret the rules: everything is ambiguous and everyone is subject to being screwed by these guys.
But they have to document screwing you; so know the rules, know that there's a guy on the other end of the table who doesn't want to go through a bag full of receipts and then negotiate.
Regardless if you did it right or not, it's still a hassle. Some people would just prefer to avoid the hassle and would not take borderline write-offs as the cost of avoiding having to deal with it. Others would prefer to deduct everything and prepare for the potential hassle. To each their own. I like to call avoiding borderline write-offs as the "Hassle-off Tax."
I LOL'ed
I deduct home office space and a portion of my utilities, which are huge red flags. Those savings are too huge to walk away from so I just make sure everything else is airtight. But that's about as crazy as I get.
I haven't even started doing my taxes yet, but last year, on $9,000 of gross income, I got a return of $26 from the government. Yeah, I'm a poor student at the bottom of the barrel.
Dr. Zaus
Lifer
- Oct 16, 2008
- 11,764
- 347
- 126
It made me realize the social and legal frameworks that help me to earn over 130k. Society has a cost and I sure do benefit a lot from it.
DominionSeraph
Diamond Member
- Jul 22, 2009
- 8,386
- 32
- 91
And how is increasing federal spending by splurging on the military and decreasing the taxes on those who earn $1 million+ going to help those who earn $66-$250k?
Dr. Zaus
Lifer
- Oct 16, 2008
- 11,764
- 347
- 126
This is a very reasonable point.
That said, making 150 means that you pay the highest percentage of your income as taxes. This progressive leading to regressive tax system is unfair and should be turned into a progressive leading to flat tax.
Thanks for paying your taxes. I don't make no money, but I get more and more liberal the better educated I become.
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