BigLaw SA: how much is taxed

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TFALAWL
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BigLaw SA: how much is taxed

Postby TFALAWL » Sun Dec 21, 2014 4:36 pm

So how much of the. 31,000 do we get take home + how much is the income tax return. Thanks!

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BVest
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Re: BigLaw SA: how much is taxed

Postby BVest » Sun Dec 21, 2014 4:40 pm

TFALAWL wrote:So how much of the. 31,000 do we get take home + how much is the income tax return. Thanks!


Depends on how many exemptions you claim on your W-4 and whether your firm will apply the partial year method when you request them to.

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Desert Fox
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Re: BigLaw SA: how much is taxed

Postby Desert Fox » Sun Dec 21, 2014 5:20 pm

TFALAWL wrote:So how much of the. 31,000 do we get take home + how much is the income tax return. Thanks!


Just do a 1040EZ with 31k.

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Re: BigLaw SA: how much is taxed

Postby Anonymous User » Sun Dec 21, 2014 6:01 pm

I claimed 28 allowances when I was an SA and had about a $500 federal refund in the end. People who claim no exemptions will get about $7000 back, I believe. At $31k for the year, you pay effectively zero income tax, so better to claim a ton of allowances and keep most of it up front.

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hoos89
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Re: BigLaw SA: how much is taxed

Postby hoos89 » Sun Dec 21, 2014 6:07 pm

Assuming you aren't on a full scholly, won't standard deduction + tuition credit get you pretty much all of your federal income tax back? Related question: can you get them to not take out federal income tax, or to take out very little federal income tax so that you don't have to wait for a refund?

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BVest
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Re: BigLaw SA: how much is taxed

Postby BVest » Sun Dec 21, 2014 6:58 pm

hoos89 wrote:Assuming you aren't on a full scholly, won't standard deduction + tuition credit get you pretty much all of your federal income tax back? Related question: can you get them to not take out federal income tax, or to take out very little federal income tax so that you don't have to wait for a refund?


One way:
Anonymous User wrote:I claimed 28 allowances when I was an SA


Another:
BVest wrote:whether your firm will apply the partial year method when you request them to.


You can also specify an amount to withhold, but I think this only works if you specify more than would otherwise be withheld. TCR are the two above.

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hoos89
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Re: BigLaw SA: how much is taxed

Postby hoos89 » Sun Dec 21, 2014 7:13 pm

Can you really just claim 28 allowances?

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Re: BigLaw SA: how much is taxed

Postby Anonymous User » Sun Dec 21, 2014 7:17 pm

hoos89 wrote:Can you really just claim 28 allowances?

Pretty sure, yeah. I plan to claim however many it takes to get my refund as close to zero as possible.

Well, actually, related question. When do bar stipends and salary advances happen? That might affect my calculus.

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hoos89
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Re: BigLaw SA: how much is taxed

Postby hoos89 » Sun Dec 21, 2014 7:22 pm

Anonymous User wrote:
hoos89 wrote:Can you really just claim 28 allowances?

Pretty sure, yeah. I plan to claim however many it takes to get my refund as close to zero as possible.

Well, actually, related question. When do bar stipends and salary advances happen? That might affect my calculus.


Pretty sure those would be in different tax years as SA income.

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Re: BigLaw SA: how much is taxed

Postby Anonymous User » Sun Dec 21, 2014 7:24 pm

Anonymous User wrote:I claimed 28 allowances when I was an SA and had about a $500 federal refund in the end. People who claim no exemptions will get about $7000 back, I believe. At $31k for the year, you pay effectively zero income tax, so better to claim a ton of allowances and keep most of it up front.


Do all firms typically allow you to take 28ish allowances, or does it vary? Ideally, I'd like to take 28 and have the money up front since I plan on buying a car at the end of the summer, and would like to finance as little as possible. Also, how did you decide on 28; did you just use a paycheck calculator?

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Re: BigLaw SA: how much is taxed

Postby Anonymous User » Sun Dec 21, 2014 7:25 pm

hoos89 wrote:
Anonymous User wrote:
hoos89 wrote:Can you really just claim 28 allowances?

Pretty sure, yeah. I plan to claim however many it takes to get my refund as close to zero as possible.

Well, actually, related question. When do bar stipends and salary advances happen? That might affect my calculus.


Pretty sure those would be in different tax years as SA income.

Thinking more about budgeting for 3LOL, actually. They'll definitely be in a different taxable year, but do you get them while still in school, after graduation, etc?

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fats provolone
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Re: BigLaw SA: how much is taxed

Postby fats provolone » Sun Dec 21, 2014 7:25 pm

what do you mean "allow" you? just use the irs allowance calculator and claim whatever it gives you

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hoos89
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Re: BigLaw SA: how much is taxed

Postby hoos89 » Sun Dec 21, 2014 8:03 pm

fats provolone wrote:what do you mean "allow" you? just use the irs allowance calculator and claim whatever it gives you


Problem with that is you'll end up with a huge refund.

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Re: BigLaw SA: how much is taxed

Postby fats provolone » Sun Dec 21, 2014 8:04 pm

hoos89 wrote:
fats provolone wrote:what do you mean "allow" you? just use the irs allowance calculator and claim whatever it gives you


Problem with that is you'll end up with a huge refund.

? it should tell you like 31 allowances or w/e

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hoos89
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Re: BigLaw SA: how much is taxed

Postby hoos89 » Sun Dec 21, 2014 8:10 pm

What calculator are you talking about?

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fats provolone
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Re: BigLaw SA: how much is taxed

Postby fats provolone » Sun Dec 21, 2014 8:10 pm

hoos89 wrote:What calculator are you talking about?

http://www.irs.gov/Individuals/IRS-With ... Calculator

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Re: BigLaw SA: how much is taxed

Postby Anonymous User » Sun Dec 21, 2014 8:19 pm

fats provolone wrote:
hoos89 wrote:What calculator are you talking about?

http://www.irs.gov/Individuals/IRS-With ... Calculator


I know I'm financially illiterate, but mine is basically just telling me my tax liability for the summer ($3,270). It's not saying anything about allowances...?

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Re: BigLaw SA: how much is taxed

Postby sinfiery » Sun Dec 21, 2014 9:31 pm

When working for a firm, can you choose your own tax year or do you have to do it annually, or does it start the day you start full time employment?


Otherwise, could you file the 1 year period from Jan2015-Jan2016 then (hopefully) when you start working, file from Jan2016-2017 @ sub160k to abuse the progressive rate bullshit (can configure better dates to hit 87k in year @ 25% bracket for first year)




my tax class told me you can pick your annual year but i literally believe nothing LS teaches me

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TFALAWL
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Re: BigLaw SA: how much is taxed

Postby TFALAWL » Thu Dec 25, 2014 2:36 am

sinfiery wrote:When working for a firm, can you choose your own tax year or do you have to do it annually, or does it start the day you start full time employment?


Otherwise, could you file the 1 year period from Jan2015-Jan2016 then (hopefully) when you start working, file from Jan2016-2017 @ sub160k to abuse the progressive rate bullshit (can configure better dates to hit 87k in year @ 25% bracket for first year)




my tax class told me you can pick your annual year but i literally believe nothing LS teaches me

Bump. I would like to know the answer to this.

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BVest
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Re: BigLaw SA: how much is taxed

Postby BVest » Thu Dec 25, 2014 6:30 am

sinfiery wrote:When working for a firm, can you choose your own tax year or do you have to do it annually, or does it start the day you start full time employment?

Otherwise, could you file the 1 year period from Jan2015-Jan2016 then (hopefully) when you start working, file from Jan2016-2017 @ sub160k to abuse the progressive rate bullshit (can configure better dates to hit 87k in year @ 25% bracket for first year)

my tax class told me you can pick your annual year but i literally believe nothing LS teaches me


This is not advice (My advice to anyone who can't file EZ -- which includes everyone working in biglaw -- is get an accountant to do your taxes. The cost varies by how complex your situation is, but it generally around two- to three-hundred dollars for someone with just a paycheck and basic deductions, retirement account, and securities investments).

Your tax year is almost certainly already a calendar year assuming you have ever filed a 1040 or 1040-EZ in your life. If you have not, you can generally choose your own tax year by filing a return for the year you wish. It does not start on the start date of your first job. But unless you have a very good reason for having something other than a calendar year as your individual taxable year, your life will be a lot easier on the calendar year. There are a number of requirements for an individual deviating from the calendar year (these requirements also apply to entities, but they tend to be the things that entities do anyway, like keeping detailed books). One reason someone might do this would be if their income was always based right around the new year, but was variable whether it came during December or January each year. But until you're worth so much that you're hiring the tax and financial advisors to the rich and famous, or until your regular tax accountant says something sua sponte, take it on faith that you probably don't have any such reason.

Now, assuming that you have filed a 1040 or 1040-EZ ever in your life, you can change your taxable year, but to do so, you have to (1) request the IRS's permission to change your year, and (2) file a return for a partial year. E.g., if you were on calendar year through 2013 and you get permission to change to July-June taxable year starting in 2014, you would have filed your 2013 return by April 15, 2014, then a partial year return for January-June 2014 that would have been due sometime around mid-October of 2014. Then, in October 2015, you would file your first full-year return for your new taxable year (covering July 2014 to June 2015).

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Re: BigLaw SA: how much is taxed

Postby Anonymous User » Thu Dec 25, 2014 11:47 am

Anonymous User wrote:
Anonymous User wrote:I claimed 28 allowances when I was an SA and had about a $500 federal refund in the end. People who claim no exemptions will get about $7000 back, I believe. At $31k for the year, you pay effectively zero income tax, so better to claim a ton of allowances and keep most of it up front.


Do all firms typically allow you to take 28ish allowances, or does it vary? Ideally, I'd like to take 28 and have the money up front since I plan on buying a car at the end of the summer, and would like to finance as little as possible. Also, how did you decide on 28; did you just use a paycheck calculator?


Original anon: I've never heard of a firm refusing to allow you to take more allowances. However, most firms will not do partial-year accounting just for you/the few SAs who request, so that's typically not an option.

The IRS's paycheck calculator will tell you to claim 31 allowances, IIRC, but I claimed a few less for the reassurance that I wouldn't be under-withholding.

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Re: BigLaw SA: how much is taxed

Postby Anonymous User » Thu Dec 25, 2014 1:52 pm

I'm not sure if I trust myself to not blow all of my money if I take ~30 allowances...waiting for a fat tax return might be in my best interest and force me to save some.

Decisions...

NotMyRealName09
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Re: BigLaw SA: how much is taxed

Postby NotMyRealName09 » Thu Dec 25, 2014 2:21 pm

Anonymous User wrote:I'm not sure if I trust myself to not blow all of my money if I take ~30 allowances...waiting for a fat tax return might be in my best interest and force me to save some.

Decisions...


Fats is right, its dumb to not take the proper allowances and wait for a fat refund. You could just set some money aside and invest it in something short term and illiquid to earn some interest.

I laid out several years ago how one can precisely calculate exactly how many allowances to take using certain IRS tables and simple calculations. Search for it if you want, it's the way to go.

The calculator may be best now though - does it take into account that you're earning it all over just a few pay periods in the summer? It used underestimate back in the day because it assumed you were going to work until end of the year, not end of summer.
Last edited by NotMyRealName09 on Thu Dec 25, 2014 2:24 pm, edited 1 time in total.

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hoos89
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Re: BigLaw SA: how much is taxed

Postby hoos89 » Thu Dec 25, 2014 2:22 pm

Do you really want to give the government an interest free loan? Especially when you have a guaranteed return available to you in the form of paying off your debt.

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fats provolone
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Re: BigLaw SA: how much is taxed

Postby fats provolone » Thu Dec 25, 2014 2:23 pm

i believe you input start and end date.




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