Expect 1/x of you salary to go to taxes.
May 7, 2010 11:50 AM Subscribe
Please fill in the following advice: "Expect 1/x of your salary to go to taxes."
I've heard varying numbers, and I'm sure the actual amount varies by circumstances... but what estimate (if any) do you rely on?
More about me: I'm heading into Ph.D. program with a funding package combining fellowships and teaching duties. I'd like to figure out how much of that money I'll actually be receiving after taxes, and my school's financial aid site wasn't much help. Any recommendations for a reasonable online calculator tool would also be appreciated.
I've heard varying numbers, and I'm sure the actual amount varies by circumstances... but what estimate (if any) do you rely on?
More about me: I'm heading into Ph.D. program with a funding package combining fellowships and teaching duties. I'd like to figure out how much of that money I'll actually be receiving after taxes, and my school's financial aid site wasn't much help. Any recommendations for a reasonable online calculator tool would also be appreciated.
Purely anecdotal, but roughly 27% of my yearly salary went away to taxes last year.
posted by nitsuj at 11:53 AM on May 7, 2010
posted by nitsuj at 11:53 AM on May 7, 2010
Different countries have different tax rates.
You can find estimates by Googling for "tax calculator [country]"
Here's one for Canada
"paycheque calculator" is also a useful phrase.
posted by ODiV at 11:54 AM on May 7, 2010
You can find estimates by Googling for "tax calculator [country]"
Here's one for Canada
"paycheque calculator" is also a useful phrase.
posted by ODiV at 11:54 AM on May 7, 2010
Use this site. People tend to add 5% for state income taxes. The total effective rate is, of course, lower than the marginal rate, but this is how people operate; high-income people assume they're going to be taxed at 40%, even though the effective rate may be more like 25%.
IANYL, this is not tax advice.
posted by Admiral Haddock at 11:55 AM on May 7, 2010 [2 favorites]
IANYL, this is not tax advice.
posted by Admiral Haddock at 11:55 AM on May 7, 2010 [2 favorites]
Yes, I should say I assumed you are a U.S. person.
posted by Admiral Haddock at 11:55 AM on May 7, 2010
posted by Admiral Haddock at 11:55 AM on May 7, 2010
I always figure around 1/3, which has always given me a decent cushion, but I am not a "high earner" by american tax standards.
posted by shownomercy at 11:57 AM on May 7, 2010 [1 favorite]
posted by shownomercy at 11:57 AM on May 7, 2010 [1 favorite]
In the US, and I pretty much plan on 1/3 of my salary going to taxes, but I am in a higher tax bracket than a typical grad student.
posted by cabingirl at 12:00 PM on May 7, 2010
posted by cabingirl at 12:00 PM on May 7, 2010
Not only do you not say what country you're in, but states matter, too. Some don't have any income tax, others do. And how much money you make determines your tax rate.
The best thing to do is to fill out a 1040-EZ form, with the amount of money you expect to make as the primary entry. After taking appropriate deductions and all, you can look up the tax tables (information on where to do this will be on the form in all likelihood) and - barring unforseen changes - you'll be very close to figuring it out exactly.
posted by Dee Xtrovert at 12:00 PM on May 7, 2010
The best thing to do is to fill out a 1040-EZ form, with the amount of money you expect to make as the primary entry. After taking appropriate deductions and all, you can look up the tax tables (information on where to do this will be on the form in all likelihood) and - barring unforseen changes - you'll be very close to figuring it out exactly.
posted by Dee Xtrovert at 12:00 PM on May 7, 2010
Oh, and if you are receiving a fellowship there is a good chance that taxes won't be taken out, and that you should be paying quarterly estimated taxes instead. You should find out more when you start school, because you'll likely have some kind of orientation where you fill out your employment paperwork.
posted by cabingirl at 12:03 PM on May 7, 2010
posted by cabingirl at 12:03 PM on May 7, 2010
I assume what you really mean is "What proportion of my total income will my take-home income be?"
It's not really possible to answer this directly. We don't know whether your school has other deductions, like health care or union dues or parking fees or any of a host of other possible deductions.
You can probably get a much better answer by simply asking current graduate students in your new department.
posted by ROU_Xenophobe at 12:50 PM on May 7, 2010
It's not really possible to answer this directly. We don't know whether your school has other deductions, like health care or union dues or parking fees or any of a host of other possible deductions.
You can probably get a much better answer by simply asking current graduate students in your new department.
posted by ROU_Xenophobe at 12:50 PM on May 7, 2010
Anecdotally - I'm current a PhD student on fellowship/teaching assistantship, and about 12% of each paycheck disappears to the Feds, with additional rather paltry deductions for city/county/state. But, when tax season rolls around, all sorts of money comes back from the feds and a decent amount from the state.
In my case, my assistantship is pretty much my only income of note, and it's above the poverty line by...not a lot.
posted by Rallon at 12:51 PM on May 7, 2010
In my case, my assistantship is pretty much my only income of note, and it's above the poverty line by...not a lot.
posted by Rallon at 12:51 PM on May 7, 2010
As a grad student in the US things get really difficult to guess. For example, certain graduate student stipends are not subject to income tax in certain states, or to FICA taxes. (Apparently what taxes you pay can depend on whether you're taking classes that term, whether you're teaching, whether you're required to teach in order to get your degree, and so on.)
You may find that nobody at the payroll office is willing to tell you what the rules are, because they're afraid that you'll misunderstand. The best thing to do is probably to ask a current student in the program. But really, you won't know what your take-home pay will be until you get your first paycheck.
posted by madcaptenor at 1:01 PM on May 7, 2010
You may find that nobody at the payroll office is willing to tell you what the rules are, because they're afraid that you'll misunderstand. The best thing to do is probably to ask a current student in the program. But really, you won't know what your take-home pay will be until you get your first paycheck.
posted by madcaptenor at 1:01 PM on May 7, 2010
Depends on country. Within the US, it depends on state (some states don't have income tax for most residents). Within states, it depends on the locality (NYC has an additional tax on top of federal and state).
As a freelancer in NYC, I set aside 30% (about 1/3) for taxes, which included an additional self-employment tax.
posted by peanut_mcgillicuty at 1:23 PM on May 7, 2010
As a freelancer in NYC, I set aside 30% (about 1/3) for taxes, which included an additional self-employment tax.
posted by peanut_mcgillicuty at 1:23 PM on May 7, 2010
This is a question where a rule of thumb is going to be just as much work for a less accurate number. A few minutes of googling for the correct tax rates will get you a fairly accurate number. If you really want a rule of thumb, yeah, about a third.
1- Fed Income Taxes. There are publications that have the withholding tables for almost every type of pay scheme. But basically, it's 10-30%.
2- Social Security is ~13%. (You pay half, your employer pays half.)
3- Medicare is ~2%.
4- State is whatever it is.
6550 is right that if you add up all of your tax burdons, maybe it ends up being about a half. But not on your paycheck. You'd have to add in all the sales taxes and property taxes and car taxes and gas taxes and all that.
In the US.
posted by gjc at 2:03 PM on May 7, 2010
1- Fed Income Taxes. There are publications that have the withholding tables for almost every type of pay scheme. But basically, it's 10-30%.
2- Social Security is ~13%. (You pay half, your employer pays half.)
3- Medicare is ~2%.
4- State is whatever it is.
6550 is right that if you add up all of your tax burdons, maybe it ends up being about a half. But not on your paycheck. You'd have to add in all the sales taxes and property taxes and car taxes and gas taxes and all that.
In the US.
posted by gjc at 2:03 PM on May 7, 2010
My estimate is about 1/4. That would be wildly inaccurate if I were childless and in in grad school, so I can't see how my answer (or anyone else's who's working a full time "real" job) is of any use to you, unless you have the juiciest funding package in the history of funding packages.
Back when I *was* in grad school, it was never very much--10-12%, with most of that being FICA. Even less with certain types of funding (e.g., no FICA withholding on fellowships, IIRC, though that is somewhat offset by the fact that I similarly recall that fellowship money doesn't count towards the EIC). I'm thrilled and delighted to be paying nearly 3x that amount in taxes now. Earning so little that your tax burden is negative is cold comfort.
posted by drlith at 2:07 PM on May 7, 2010
Back when I *was* in grad school, it was never very much--10-12%, with most of that being FICA. Even less with certain types of funding (e.g., no FICA withholding on fellowships, IIRC, though that is somewhat offset by the fact that I similarly recall that fellowship money doesn't count towards the EIC). I'm thrilled and delighted to be paying nearly 3x that amount in taxes now. Earning so little that your tax burden is negative is cold comfort.
posted by drlith at 2:07 PM on May 7, 2010
Back when I was employed, once my paycheck was tapped for various federal and state taxes, and money was removed for 401K contributions, health insurance and employee stock purchase program, I brought home a smidge less than 50% of my gross paycheck.
posted by browse at 2:37 PM on May 7, 2010
posted by browse at 2:37 PM on May 7, 2010
Grad school rules are weird.
Students taking a full credit load do not have to pay FICA.
External fellowship income is sometimes treated as contract income, and may not have any deductions done for you at all, and you'll have to save up to pay the tax bill.
On my state taxes, there is supposedly a rule that assistantship tuition waivers are taxed as income -- but I have never actually paid this, and neither has anyone I know (it would be so much money that the assistantship wouldn't even be worth taking!). It definitely isn't reported on my W-2.
There are some Federal credits for education which you may or may not be allowed to take.
So it's really hard to know ahead of time. Fortunately, you'll be earning so little you're very unlikely to get audited. :)
posted by miyabo at 5:04 PM on May 7, 2010
Students taking a full credit load do not have to pay FICA.
External fellowship income is sometimes treated as contract income, and may not have any deductions done for you at all, and you'll have to save up to pay the tax bill.
On my state taxes, there is supposedly a rule that assistantship tuition waivers are taxed as income -- but I have never actually paid this, and neither has anyone I know (it would be so much money that the assistantship wouldn't even be worth taking!). It definitely isn't reported on my W-2.
There are some Federal credits for education which you may or may not be allowed to take.
So it's really hard to know ahead of time. Fortunately, you'll be earning so little you're very unlikely to get audited. :)
posted by miyabo at 5:04 PM on May 7, 2010
There are some Federal credits for education which you may or may not be allowed to take.
My reading of the rules (I'm not a taxologist, just a grad student in a similar funding situation) is that you can't take these credits unless you're the one who actually paid the tuition.
posted by madcaptenor at 5:31 AM on May 8, 2010
My reading of the rules (I'm not a taxologist, just a grad student in a similar funding situation) is that you can't take these credits unless you're the one who actually paid the tuition.
posted by madcaptenor at 5:31 AM on May 8, 2010
If I was in Washington state still, I'd have about 1/4 of my check going to taxes. I'm in Oregon, though, so 30 percent is going to taxes. I also have health insurance, life insurance and retirement plan contributions automatically deducted from my paycheck, so a total of 40 percent -- 2/5 -- is gone before I see any of the money.
posted by croutonsupafreak at 5:26 PM on May 8, 2010
posted by croutonsupafreak at 5:26 PM on May 8, 2010
This online calculator works pretty well in the U.S.
posted by croutonsupafreak at 5:28 PM on May 8, 2010
posted by croutonsupafreak at 5:28 PM on May 8, 2010
This thread is closed to new comments.
posted by Think_Long at 11:52 AM on May 7, 2010