@billyandwilla wrote:
My wife and I will gross in the neighborhood of $478,000 in 2021. This is SIGNIFICANTLY more than ever before due to taking money out of my 457(b) for a home remodel.
What gets subtracted from our gross? (Property taxes, charitable contributions, child care, etc...)
And is that number our "adjusted gross income"?
If not, then what is my "agi"?
Is our tax bracket determined by our agi?
Somewhere in the past, I was told that if one is "waaay" short on income tax via normal withholdings, there is a large penalty in addition to taxes due.
In addition to the 20% mandatory withholding, we're only taking out "normal" withholdings on our regular paychecks. Is there anything else we can do to mitigate how much we owe come tax time?
Is there indeed a penalty if I come up "waaay" short?
Simplified, either the standard $25,100 deduction is subtracted or you itemized deductions if higher is subtracted from, your AGI which is the total of all taxable income. That becomes your taxable income that determines your tax bracket.
Guessing that you will be in the 35% tax bracket then you probably should have more withheld, (or pay estimated tax) to avoid an underpayment penalty if you end up owing $1000 more in tax.
You might want to use TurboTax TaxCastor to get an estimate of your tax liability.
https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
