Question about salaries and taxes.. I need your help?

Question

I am currently an accounting major and plan on getting my bachelors. If I get an entry level job right out of college making about 35k a year (avg is 35-45k) and I consider taxes it doesn't even seem like enough to live on. We discussed taxes in class today and the professor said we can expect at least 40% of our salary to go towards taxes...

35,000 x .40 = $14000

$14000/12=$1166.66

Considering the price of rent in my area... its pretty depressing

rent , car payment, and student loans ... CAN YOU SAY BROKE ?!

am I getting something wrong?!

oohhh and I'm located in the Ny area.

the guy that says math isn't my forte clearly doesn't see I'm computing the taxes...

Heres everything broken down...

SS 6.2%
MED1.45%
F/WH 28%
NYS/WH 8.00%
if in nyc metro area an additional 4.00%

oh and I was being generous when I said 40% the professor actually said 47.65% ... hah

Answer 1

1. If you get job in 2007, you may not have any federal tax and state tax. You will have social security tax of 6.2% and medicare tax of 1.45%. So total taxes will be less than 10% since for Single personal the federal deduction is $8,750.

2. If you make 35k in 2008. Your social secuirty and medicare taxes will be $2677. Federal tax will be about $3500. Then state tax will be less than $2,000. So your total taxes will be less than 25%..

Answer 2

Check your calculation - you calculated your tax at 40%, not what you'd have left over.

The professor is exaggerating about the 40% - but between federal income taxes and social security and medicare, the feds will take a little over 20%, and then there will be state and local taxes, so it'll probably be around 30%. If you are talking about NYC, then you're right, $35K won't be much to live on. In some parts of the country it would be OK to live on, although certainly not a lot. But if you do a good job, you won't stay at $35K forever.

Good luck.

Answer 3

Are you getting something wrong? I'd say! And then some! I read your Q and I think to myself, "This is our new Accounting majors?"

First off, how do you come up with 40% for taxes?? I'd raise the BS flag with your "professor" and ask him to justify that number! I make double what you are looking at and pay FAR less than 40% in taxes.

Secondly, even if it was 40% for taxes, your net would be $1,750 per month. Your $1,166 is the tax, not your net. If your math is that bad, maybe accounting isn't your forte.

Here's the truth for a NYC resident. Single taxpayer claiming 1 withholding allowance.

Monthly Gross Pay: $2,916.67
Federal Withholding: $330.75
Social Security: $180.83
Medicare: $42.29
New York: $121.18
NY SDI: $2.60
City Tax: $74.33

Net Pay: $2,164.69

I realize that $2164.69 isn't a king's ransom especially in NYC but it is survivable. And if you're in the City, you don't need a car. Maybe you WANT one, but you certanly don't NEED one.

Answer 4

40k a year breaks down to about $1666 per check assuming that like most you get paid twice a month. Assume that your single, claiming 0. You will likely get a take home check of about $1200 or so every two weeks = $2400 a month. Not a fortune, but not a pitance either. Why you need a car in New York?