Questions for Current Big Law Associates Forum

[Anonymous User]

The first question is easy and stupid but I am curious because I come from a poor background and really don't know the answer
The 2nd question is subjective

1) In market places that start off at 160K, do you get money back on your tax return?......Just wondering since in NY, I hear ppl say --after taxes you end up with roughly 90-95k in actual cash... Wouldn't the amount be more after you get your tax return?

2) For corporate attorneys, can you tell me what practice group you are in and what you read to stay informed about what is going on in your practice group?...I know people say -- you will learn on the job but I want to get into the habit of ready something that may be connected to the corporate world...

Thanks in advance!!!

[Anonymous User]

I don't think your first question is stupid. I am also interested in the answer to the first question for Chicago associates, 160K. Thanks in advance!

[Anonymous User]

1. It depends (sorry not that helpful).
2. Rather not say practice area.

Generally recommend reading business news sites such as Dealbook, WSJ, financial times alphaville, etc.

For blogs just as some general recommendations I enjoy: the epicurean dealmaker, dealbreaker, abnormal returns (abnormal returns is link curation so can find others on there).

For M&A stuff there are a bunch of corporate governance blogs so you can get a feel for the different terms of art (especially all the different types of deal protections and what may or may not be permissible). Some general suggestions are: deal lawyers, M&A law prof, Dealbooks deal professor column, Harvard law school Forum on corporate governance and financial regulation.

If you have no business background these will provide, at least in general terms, the various things you will begin to hear and read in agreements etc., who various funds and their managers are, the state of the market, how deals and financial products are structured. These usually won't directly help, but I found knowing these types of things beforehand made life easier as I started (caveat - for M&A I almost guarantee will help).

*edit* should also add that most practice groups put out client alerts. Those can be useful especially if you are in a niche area. I read/skim ones from other firms on weekends when catching up on things. Other stuff I still read daily before I go into office and skim throughout day for updates.

[dingbat]

1) In market places that start off at 160K, do you get money back on your tax return?......Just wondering since in NY, I hear ppl say --after taxes you end up with roughly 90-95k in actual cash... Wouldn't the amount be more after you get your tax return?

I don't know why you think it would be more. For an individual, Federal tax bracket is 33%, State tax rate is 6.65% (barely) and City tax an additional 3.648% for a total tax rate of about 43.3% (note that you get to keep more than 56.7% of your income due to how tax brackets work, but that's a longer discussion)

As for your tax return, that's a form you provide the IRS. Whether you owe money or get a refund depends on a number of factors. When you start, you'll need to fill out a W4, which will let payroll estimate how much of your paycheck to withhold for taxes. If you fill this out incorrectly, you could end up owing money when your tax returns are due. Keep in mind that it is only an estimate (regardless of where you work or how much money you earn) and when you file your taxes you (or your accountant) calculates the actual amount of taxes that you should have paid. Then you either get a refund or need to make a payment for the difference.

When you calculate how much taxes you actually owe, there are a number of factors that affect this calculation. This includes interest paid on student loans (low cap), charitable deductions, mortgage deduction, and a whole host of other things that may or may not be applicable.

Note: not a biglaw associate, but I used to make a good chuck of cash.

[IAFG]

The first question is easy and stupid but I am curious because I come from a poor background and really don't know the answer
The 2nd question is subjective

1) In market places that start off at 160K, do you get money back on your tax return?......Just wondering since in NY, I hear ppl say --after taxes you end up with roughly 90-95k in actual cash... Wouldn't the amount be more after you get your tax return?

2) For corporate attorney's can you tell me what practice group you are in and what you read to stay informed about what is going on in your practice group...I know people say -- you will learn on the job but I want to get into the habit of ready something that may be connected to the corporate world...

Thanks in advance!!!

For 2), corp associates have told me to read NYT's dealbook. I would also pick up "Gods of War."

Both make corp practice sound way cooler than it is though.

[exitoptions]

For bankruptcy work we read WSJ, Deal Book, and Debtwire (which I think you can only get through subscription). Really the WSJ should have the bulk of what you need and they generally write good descriptions of transactions.

[AMCD]

For the tax question: You are, as other posters have stated, going to see your paycheck and potential for return based upon factors such as dependents, interest on mortgage, etc. Charitable deductions comes out to basically nothing. My husband makes about 225K. We get to write off all our mortgage interest and have three kids as dependents and he still takes a good hit each month. We then get to write off any travel, business expenses such as meals, entertainment, books, periodicals etc., childcare, a portion of my law school costs, and do end up getting about 40K back when we file. So, if you don't own property nor have dependents, then you are going to take a big hit and likely not get anything back--unless you go for the max deductions each month and look at it as a form of forced savings that you will have returned to you. You can talk to the payroll people and they will advise you how to have the max. or minimum withdrawn depending on the cost of living each month that you have to meet.

[dingbat]

For the tax question: You are, as other posters have stated, going to see your paycheck and potential for return based upon factors such as dependents, interest on mortgage, etc. Charitable deductions comes out to basically nothing. My husband makes about 225K. We get to write off all our mortgage interest and have three kids as dependents and he still takes a good hit each month. We then get to write off any travel, business expenses such as meals, entertainment, books, periodicals etc., childcare, a portion of my law school costs, and do end up getting about 40K back when we file. So, if you don't own property nor have dependents, then you are going to take a big hit and likely not get anything back--unless you go for the max deductions each month and look at it as a form of forced savings that you will have returned to you. You can talk to the payroll people and they will advise you how to have the max. or minimum withdrawn depending on the cost of living each month that you have to meet.

If you get $40k back when you file you should have your husband adjust his withholding. You should try and get that at least down to 4 digits. I mean, you're basically giving the government a free loan. Had you stuck it in a regular savings account instead, it'd have earned at least $100 bucks.

[IAFG]

For the tax question: You are, as other posters have stated, going to see your paycheck and potential for return based upon factors such as dependents, interest on mortgage, etc. Charitable deductions comes out to basically nothing. My husband makes about 225K. We get to write off all our mortgage interest and have three kids as dependents and he still takes a good hit each month. We then get to write off any travel, business expenses such as meals, entertainment, books, periodicals etc., childcare, a portion of my law school costs, and do end up getting about 40K back when we file. So, if you don't own property nor have dependents, then you are going to take a big hit and likely not get anything back--unless you go for the max deductions each month and look at it as a form of forced savings that you will have returned to you. You can talk to the payroll people and they will advise you how to have the max. or minimum withdrawn depending on the cost of living each month that you have to meet.

If you get $40k back when you file you should have your husband adjust his withholding. You should try and get that at least down to 4 digits. I mean, you're basically giving the government a free loan. Had you stuck it in a regular savings account instead, it'd have earned at least $100 bucks.

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

[kritiosboy]

For the tax question: You are, as other posters have stated, going to see your paycheck and potential for return based upon factors such as dependents, interest on mortgage, etc. Charitable deductions comes out to basically nothing. My husband makes about 225K. We get to write off all our mortgage interest and have three kids as dependents and he still takes a good hit each month. We then get to write off any travel, business expenses such as meals, entertainment, books, periodicals etc., childcare, a portion of my law school costs, and do end up getting about 40K back when we file. So, if you don't own property nor have dependents, then you are going to take a big hit and likely not get anything back--unless you go for the max deductions each month and look at it as a form of forced savings that you will have returned to you. You can talk to the payroll people and they will advise you how to have the max. or minimum withdrawn depending on the cost of living each month that you have to meet.

If you get $40k back when you file you should have your husband adjust his withholding. You should try and get that at least down to 4 digits. I mean, you're basically giving the government a free loan. Had you stuck it in a regular savings account instead, it'd have earned at least $100 bucks.

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

The S&P was up 12% this year.

[thesealocust]

Use a paycheck calculator.

For the average single person In NYC, without fussing with your withholding/exemptions/allowances/whatever you'll get roughly 60% of your pay in each check. At tax return time you'll probably get thousands back for a variety of reasons (chief amongst them the deductability of state and local income taxes).

401(k) contributions and tax-advantaged benefits such as health insurance can make it more complicated.

For the tax question: You are, as other posters have stated, going to see your paycheck and potential for return based upon factors such as dependents, interest on mortgage, etc. Charitable deductions comes out to basically nothing. My husband makes about 225K. We get to write off all our mortgage interest and have three kids as dependents and he still takes a good hit each month. We then get to write off any travel, business expenses such as meals, entertainment, books, periodicals etc., childcare, a portion of my law school costs, and do end up getting about 40K back when we file. So, if you don't own property nor have dependents, then you are going to take a big hit and likely not get anything back--unless you go for the max deductions each month and look at it as a form of forced savings that you will have returned to you. You can talk to the payroll people and they will advise you how to have the max. or minimum withdrawn depending on the cost of living each month that you have to meet.

If you get $40k back when you file you should have your husband adjust his withholding. You should try and get that at least down to 4 digits. I mean, you're basically giving the government a free loan. Had you stuck it in a regular savings account instead, it'd have earned at least $100 bucks.

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

The S&P was up 12% this year.

...interest rates are not the direction of the stock market over a certain period of time. Predictable interest rates (bonds and bank accounts) are at historical and hilarious lows. Investing in stocks have a high long-term expected value but doing so is completely unpredictable in terms of direction and timing.

[bdubs]

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

Repaying 7.8% federal loans from law school over the year rather than in March would save over $2,000 on a $40k refund. Then again anyone whose husband makes $225k/yr is probably not borrowing at 7.8% to attend law school.

[dingbat]

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

Repaying 7.8% federal loans from law school over the year rather than in March would save over $2,000 on a $40k refund. Then again anyone whose husband makes $225k/yr is probably not borrowing at 7.8% to attend law school.

What the everloving fuck are you talking about?

[bdubs]

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

Repaying 7.8% federal loans from law school over the year rather than in March would save over $2,000 on a $40k refund. Then again anyone whose husband makes $225k/yr is probably not borrowing at 7.8% to attend law school.

What the everloving fuck are you talking about?

Compound interest, bitch. Repaying loans is the best investment you can make in this market.

ETA: Interest rate should be 7.9% for grad plus.

[2014]

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

Repaying 7.8% federal loans from law school over the year rather than in March would save over $2,000 on a $40k refund. Then again anyone whose husband makes $225k/yr is probably not borrowing at 7.8% to attend law school.

What the everloving fuck are you talking about?

That 40k the government is holding, or that 40k that your savings account is earning .75% interest on is effectively degrading at 7.9% if you don't use it to pay down debt.

[dingbat]

That's assuming A. the existence of student loans (with hubby earning a quarter million dollars a year, I'm not so sure) and B. the tax refund would otherwise be used to pay down debt (also not a given)

[wiseowl]

I am completely unsurprised that this thread has devolved into an unhelpful shitstorm.

[dingbat]

I am completely unsurprised that this thread has devolved into an unhelpful shitstorm.

TLS...

[AMCD]

Yes, amusing how this came to be about my current household income! Where is the OP in all of this?!

[IAFG]

I am completely unsurprised that this thread has devolved into an unhelpful shitstorm.

I don't know why people complain about this when OP's question has been thoroughly answered.

[scc1986]

Can any current associates comment on the regions and/or large firms that would be better for family life. I have a wife and baby and am starting 1l at a top 14, hopefully.

[JamMasterJ]

Can any current associates comment on the regions and/or large firms that would be better for family life. I have a wife and baby and am starting 1l at a top 14, hopefully.

I'm a student, but the answer to your question is Chicago

[jstr00az]

For the tax question: You are, as other posters have stated, going to see your paycheck and potential for return based upon factors such as dependents, interest on mortgage, etc. Charitable deductions comes out to basically nothing. My husband makes about 225K. We get to write off all our mortgage interest and have three kids as dependents and he still takes a good hit each month. We then get to write off any travel, business expenses such as meals, entertainment, books, periodicals etc., childcare, a portion of my law school costs, and do end up getting about 40K back when we file. So, if you don't own property nor have dependents, then you are going to take a big hit and likely not get anything back--unless you go for the max deductions each month and look at it as a form of forced savings that you will have returned to you. You can talk to the payroll people and they will advise you how to have the max. or minimum withdrawn depending on the cost of living each month that you have to meet.

If you get $40k back when you file you should have your husband adjust his withholding. You should try and get that at least down to 4 digits. I mean, you're basically giving the government a free loan. Had you stuck it in a regular savings account instead, it'd have earned at least $100 bucks.

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

This discussion if how taxes work is perplexing (and idiotic), especially for a group of people who are supposed to be advising other people and companies about their affairs. I guess that's what you get for being in school straight through til you're 25 and never having to work at a real job prior to being an associate in BigLaw. The money you "get back" from the government at the end of the year represents the amount you over-paid to the government that you didn't need to pay. Obviously you don't want to owe the government a ton, not least of which because you may get hit with an underpayment penalty. But you certainly don't want to give the government an extra $40,000. And the interest you'd make on make on it is closer to $1,000 than $100 assuming an annualized return of 5 percent over 6 months.

[2014]

For the tax question: You are, as other posters have stated, going to see your paycheck and potential for return based upon factors such as dependents, interest on mortgage, etc. Charitable deductions comes out to basically nothing. My husband makes about 225K. We get to write off all our mortgage interest and have three kids as dependents and he still takes a good hit each month. We then get to write off any travel, business expenses such as meals, entertainment, books, periodicals etc., childcare, a portion of my law school costs, and do end up getting about 40K back when we file. So, if you don't own property nor have dependents, then you are going to take a big hit and likely not get anything back--unless you go for the max deductions each month and look at it as a form of forced savings that you will have returned to you. You can talk to the payroll people and they will advise you how to have the max. or minimum withdrawn depending on the cost of living each month that you have to meet.

If you get $40k back when you file you should have your husband adjust his withholding. You should try and get that at least down to 4 digits. I mean, you're basically giving the government a free loan. Had you stuck it in a regular savings account instead, it'd have earned at least $100 bucks.

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

This discussion if how taxes work is perplexing (and idiotic), especially for a group of people who are supposed to be advising other people and companies about their affairs. I guess that's what you get for being in school straight through til you're 25 and never having to work at a real job prior to being an associate in BigLaw. The money you "get back" from the government at the end of the year represents the amount you over-paid to the government that you didn't need to pay. Obviously you don't want to owe the government a ton, not least of which because you may get hit with an underpayment penalty. But you certainly don't want to give the government an extra $40,000. And the interest you'd make on make on it is closer to $1,000 than $100 assuming an annualized return of 5 percent over 6 months.

GL finding a savings account paying 5%, you aren't getting that rate without assuming some risk

[84651846190]

For the tax question: You are, as other posters have stated, going to see your paycheck and potential for return based upon factors such as dependents, interest on mortgage, etc. Charitable deductions comes out to basically nothing. My husband makes about 225K. We get to write off all our mortgage interest and have three kids as dependents and he still takes a good hit each month. We then get to write off any travel, business expenses such as meals, entertainment, books, periodicals etc., childcare, a portion of my law school costs, and do end up getting about 40K back when we file. So, if you don't own property nor have dependents, then you are going to take a big hit and likely not get anything back--unless you go for the max deductions each month and look at it as a form of forced savings that you will have returned to you. You can talk to the payroll people and they will advise you how to have the max. or minimum withdrawn depending on the cost of living each month that you have to meet.

If you get $40k back when you file you should have your husband adjust his withholding. You should try and get that at least down to 4 digits. I mean, you're basically giving the government a free loan. Had you stuck it in a regular savings account instead, it'd have earned at least $100 bucks.

Some people are better off being protected from themselves by having it out of reach and $100 is a small price to pay for it. If interest rates were higher it would matter more but really these days who cares either way.

This discussion if how taxes work is perplexing (and idiotic), especially for a group of people who are supposed to be advising other people and companies about their affairs. I guess that's what you get for being in school straight through til you're 25 and never having to work at a real job prior to being an associate in BigLaw. The money you "get back" from the government at the end of the year represents the amount you over-paid to the government that you didn't need to pay. Obviously you don't want to owe the government a ton, not least of which because you may get hit with an underpayment penalty. But you certainly don't want to give the government an extra $40,000. And the interest you'd make on make on it is closer to $1,000 than $100 assuming an annualized return of 5 percent over 6 months.

Show me any bank instrument that would pay me 5% interest.