life’s a beach…. unless…it isn’t… calculating federal & state taxes how much do you...

Life’s a Beach…

Unless…it isn’t…

Calculating Federal & State Taxes• How much do you make a year?—This is your gross

income Ex: $45,000• Divide it by 12 months—This is your gross monthly

income $3750• Multiply your gross monthly income by your federal tax

bracket, then subtract this amount from your gross monthly income.

$3750 * 25% = $937.50$3750- $937.50 = $2812.50• Multiply your gross monthly income by your state tax

bracket, then subtract this amount from your gross monthly income.

$3750 * 6% = $225.00$3750- $937.50 = $2812.50 (after Fed. Taxes) $2812.50 - $225.00 = $2587.50

Example…

Income: $100,000

Wages & bonus: $8333.33 per month

Fed income tax: 2083.33 per month

State income tax: 499.99 per month

Social security: 1274.99 per month

Income tax subtotal: $3858.31

Spendable income: $4475.02

Calculating Social Security

• Multiply your gross monthly income by Social Security and Medicare expenses, then subtract this amount from your gross monthly income.

$3750 * 15.3% = $573.75

$2587.50 (after Fed & State taxes have been

deducted) - $573.75 = $2013.75* Complete the same process for your spouse…

add them together and that is your NET monthly income (take home pay).

Property Taxes…• For the purposes of this exercise, everyone that

owns a home will calculate property taxes in the following way…(we will assume that the tax assessors are giving you a break!)

Purchase price of the home ex. $225,000

Multiple by estimated value 80%

$225,000 * 80% = $180,000

$180,000 (est. value) * 2% = $3,600 (this is the amount that you will pay for property taxes)

Homeowners & auto insuranceType I Type II Type III

Basis coverage---the min. amount the law requires

Moderate coverage—you will be provided for in the event that nothing major happens to you

Best coverage—Grandma’s nightgown—you are covered for EVERYTHING!!

1 % * value of car & house = insurance rates divide by 12 to get the monthly rate

2 % * value of car & house = insurance rates divide by 12 to get the monthly rate

3 % * value of car & house = insurance rates divide by 12 to get the monthly rate

Home repairs/HOA dues etc…

• This is optional…but if you don’t pay them forward you may, or may not suffer for it later…

• Calculate $200.00

Utilities—not an exact science

• Electric: Calculate 1% of your house purchase price to determine your electric rate

• Natural gas: Calculate 1% of your house purchase price to determine your electric rate

• Water/sewer: family of 4+ = $75.00 per mo family of 3 = $65.00

family of 2 = $55.00• Telephone: landline only (basic) $20.00• Telephone: 2 cell phones (basic) $85.00• Telephone: landline + 2 cell (basic) $100.00• Telephone: landline + 2 cell (deluxe) $200.00• Telephone: landline + 4 cell (deluxe) $300.00

Optional expenses

• Trash pickup: $13.50 per mo

• Internet expense: $30.00 per mo

FoodGroceries– Family of 4 (small kids) $350.00 per mo

• Diapers & formula (babies-2 years) add $150.00

– Family of 4+ (big kids/teens) $600.00 per mo– Family of 3 $300-350– Family of 2 $250.00Eating out– Lunch $200.00 (fast food for 2 adults)– Lunch $430.00 (sit down meals for 2 adults)– Lunch for school aged $30.00 per childSnacks– 1 coke + 1 snack per day for 4 individuals = $ 40.00

per week

What are you going to do about childcare?

• School aged kids (ages 6-11) ASP $6 per day per child

• Childcare (Basic) $250.00 per week

• Childcare (PrimRose) $500.00 per week

Medical Insurance

• Medical (no vision or dental)– Family $178.00

• Medical, vision, dental– Family $345.00

Gym membership (optional)

$32.00 per person

Transportation expenses

• Gas – $3.70 per gallon

• Oil– $13.00 per car per mo

• Auto expenses/maintenance– $50.00

• Tolls/bus/subway etc…– (If you live in Fla or work off of 400—you will need to pay for toll

roads)– $25.00 per month- (If you work in downtown Atlanta, or another major city, you will

need to pay for parking expenses)- $250.00 per month

Debt Payments…

• The luck…or unluck of the draw

Entertainment Expense

• The luck…or unluck of the draw

Pet expenses• Big dogs--$40.00 per dog per week (food)• Big dogs—$100 vet expense per dog per month• Little dogs--$10 per dog per week (food)• Little dogs--$50 per dog per month

(vet/grooming)• Rabbits, guinea pigs, hamsters, ferrets, random

farm animals $40.00 per month (food & bedding)• Cats--$10 per cat per week (food)• Cats--$50 per cat per month (vet)• Fish--$5 per month• Horse--$300.00 per month ($500.00 food +

board)

Clothing…

• You can expect to spend approximately $50 per person per month (min.) clothing expense—if you buy new from a department store.

• You can bargain shop/thrift shop/discount store/consignment sale/ebay etc…

Savings…

• You need to put aside 10% of your net income for a rainy day…

• You can choose to contribute to a 401K, college fund for your kids and an emergency fund– Emergency fund is estimated at putting aside

3-6 months of monthly income away in case of “Emergency”…

Miscellaneous expenses…

• Wal-Mart/Target/K-Mart/Best Buy…the STUFF of life…$50 per person per month

• Gifts/donations (church tithes 10%)– Optional expenses..up to you…remember

Carnegie “Those with great wealth have great responsibility”

• Grooming—hair/makeup etc– $15.00 per person per month