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walkitoutLet's say you have a health care plan which triggers the 40% over the threshold by $1000. If I have understood things correctly, somebody is now on the hook for about $400 worth of taxes, plus a lost ability to deduct some amount of money as a business cost (I assume that, too, is an over the threshold thing, but I'm less certain of that).
I'm going to phony up some of the numbers to try to make this easy. Let's imagine instead that you received the $11000 (plus) as ordinary income. Between you and the employer, payroll taxes (SS + M) would have been paid to the tune of approximately 15% (half by you, half by the employer). That tax starts at dollar one, and at least the M part has no cap, altho if you are highly paid enough, the SS would be capped. But if you make that much money, nobody is going to sympathize with your But It's a Chevy Tax argument anyway, so you may depart from this conversation now.
That tax would have been $1650.
And we have not even entered into the possibility that you maybe owe some state, local or Federal income tax money on these dollars.
Someone needs to explain to me _why_ 40% over the threshhold is taxing higher than would have been taxed in a received-no-health-care-just-cash-direct-deposit scenario. I eagerly await enlightenment. (And for the record, I checked -- money paid towards health care premiums by employers or employees in an employer plan does not incur payroll tax, income tax, etc.)
I'm going to phony up some of the numbers to try to make this easy. Let's imagine instead that you received the $11000 (plus) as ordinary income. Between you and the employer, payroll taxes (SS + M) would have been paid to the tune of approximately 15% (half by you, half by the employer). That tax starts at dollar one, and at least the M part has no cap, altho if you are highly paid enough, the SS would be capped. But if you make that much money, nobody is going to sympathize with your But It's a Chevy Tax argument anyway, so you may depart from this conversation now.
That tax would have been $1650.
And we have not even entered into the possibility that you maybe owe some state, local or Federal income tax money on these dollars.
Someone needs to explain to me _why_ 40% over the threshhold is taxing higher than would have been taxed in a received-no-health-care-just-cash-direct-deposit scenario. I eagerly await enlightenment. (And for the record, I checked -- money paid towards health care premiums by employers or employees in an employer plan does not incur payroll tax, income tax, etc.)