#What is the Tax Rate for Bonuses

[strawberryblondebutch]

Let's talk contract incentives

Or, how the Pittsburgh Pirates burned bridges over $200k

This is Ryan John "Rowdy" Tellez. Up until yesterday, he was a member of the Pittsburgh Pirates of Major League Baseball. Two days ago, the team designated him for assignment. When no other team wanted to pick him up, he was released from his contract.

The decision baffled fans, analysts, and other front office staff. Tellez was by no means a star -- his 91 OPS+ was slightly below average (OPS+ is normalized to 100), but his advanced analytics showed he was still playable. More importantly, there were only six games left in the regular season, and the Pirates had already been eliminated from playoff contention. They had nothing to play for, and Tellez would have been a free agent at the end of the year anyway.

Then Ethan Hullihen found something interesting.

Tellez, prior to his release, had 421 plate appearances on the season for the Pirates. At 425, he would receive a bonus -- if he came to the plate four more times in those remaining six games, he gets $200k. Rather than shell out for him, the Pirates simply said goodbye and good luck. Well...

So... what exactly are contract incentives?

For starters, they're about the one thing players and teams can agree on. Teams like them because, unlike your base salary, incentives don't count against the salary cap or luxury tax. It's a way of stashing money under the table -- sure, officially you might be making $3 million, and as far as the league is concerned, that's what you're making. But if you hit the marks we both expect you to, here's a little something on the top. Players like them because it's a way to bet on yourself. Extra money for being good at your job! Who doesn't want that!

Common incentives are:

Awards. Most Valuable Player. Cy Young Award. Defensive Player of the Year. Most Improved. Rookie of the Year. These awards don't come with any money of their own... not from the league. But if you win one, your team will give you a little walkin' around money for it. Some contracts also offer a smaller bonus if you finish in second or third place for these awards.

"Counting" stats. MLB has mostly phased these out, but other sports still have them. Unlike "rate" stats like points per game, these are exactly what they sound like. NFL players trigger incentives on numbers of touchdowns or receiving yards. An NHL player who hits a certain goal threshold will get a payout. Occasionally you see rate stats get incentives, but this requires more math and is less fun for the player involved.

Just showing up. Did you spend X number of minutes on the ice or on the court? Did you come up to the plate X number of times or pitch X number of innings? Hell yeah, brother. These incentives are often (but not always) reserved for bench players and players that are often injured. In the former case, hitting those appearance milestones means you played your way into regular time and are rewarded for that. In the latter, it's the team's way of saying, "Look. You're great when you're healthy. Prove you can be healthy."

This last point is important in Tellez's case, because he was signed as the Pirates' starting first baseman. If you play a 162-game season and receive a minimum of three plate appearances per game, that's 486 PAs right there. Now, that's an oversimplification of how many PAs Tellez could expect to have: he might miss games, he might come to the plate more than three times in a game. But a 425-PA incentive for a guy you expect to start? That's low. When the Phillies signed Aaron Nola to a seven-year extension last November, they explicitly did not include any incentives for innings pitched. Why? Because Nola is expected to pitch 200 innings a year. That's automatic money. All his bonuses are for awards.

Now, as I said earlier, Tellez isn't exactly a star. He probably won't make any of those awards. (Notably, "DS MVP" is an award that doesn't actually exist, but it's a standard player incentive in case MLB decides to start offering that as an award). But he probably expected to have 475 plate appearances. That's an extra $400k.

Instead, the Pirates decided to save themselves $200k. Which, in baseball terms? That's pocket change. Minimum salary is $700k a season. Bob Nutting, the owner of the Pirates and the guy who would be signing that bonus check, is worth $1.1 billion.

This is a different case than when the Chicago Cubs released Hector Neris earlier in the year, for a few reasons.

The Cubs released Neris on August 20, when they were still competing for a Wild Card spot... and with enough time for another team (in this case the Houston Astros) to sign him.

While Tellez was only a below-average player, Neris was effectively unplayable at the time of his release. For a reliever, you want a WHIP (walks plus hits per innings pitched) below 1 -- in layman's terms, "less than one baserunner per outing." Neris was sitting at a 1.5 WHIP, and the eye test said that he was untrustworthy in high leverage situations.

Unlike Tellez, who would be a free agent anyway, once Neris reached his innings threshold, he got a vesting option: another year on his contract and another $9 million. That's significantly more money and a lost roster spot for a guy you can't trust in the clutch.

Now, I'm not blinded by loyalty to a team I like. How the Cubs went about the release was wrong. They did it quietly and appeared to blindside Neris with the decision. But from a business perspective, you have one team deciding to cut their losses on an employee they no longer trust. The other team is emptying out the tip jar just before closing.

So, why does this story matter? Because people are seeing it. Players are seeing it, and you bet their agents are. The Pirates need a new first baseman in 2025. Let's say, for the sake of it, Garrett Cooper is exploring his options and the Pirates come calling. Cooper's agent has a real incentive (see what I did there?) to say, "I can't be sure you won't be screwing my client out of $200k, so go ahead and add that to his base salary or we're taking our talents elsewhere." Players who have the decision between another team and the Pirates will take the team that doesn't have this newfound reputation for screwing over their role players.

Pittsburgh has not, in recent history, been an attractive free agency destination. They're a cheap team with no clear path to competing. They draft well, and then those players hit free agency and go to greener pastures. Now? Now they're screwed. All because Bob Nutting didn't want to cut off some scraps.

[exitrowiron]

Rich People Getting Richer (Part 2 of ?)

Take my word for it when I say that Rich People don't give a shit about whatever is the current 'outrage' occupying the attention the Joe Sixpack and Mrs. Soccer Mom. No, they don't care about the imaginary threats of drag queens, wokeness, trans people, pronouns, using the gender correct bathroom, etc. Their kids go to good public schools or private schools that don't ban books and if Buffy gets pregnant you can bet they'll find a way to obtain an abortion. These are all useful distractions to keep the masses from protesting what I'm about to explain to you.

In Part 1 we established that the Federal Income Tax brackets are Progressive; rich people have higher marginal and effective tax rates.

But these tax rates only apply to Ordinary Income. What's that you ask? Ordinary Income is wages, salaries, tips, bonuses etc.; the kind of income earned by ordinary people in their job. Ordinary income also includes interest earnings (like from a savings account or CD) and dividends (profit sharing that companies give their shareholders).

But there is another source of income enjoyed by rich people - Capital Gains. A Capital Gain results when you sell an asset for more than it's purchase price. Other than your home, what is the most common capital asset? STOCKS! Selling a stock for more than it's purchase price results in a Capital Gain. If you owned the stock for more than a year, it is considered a Long Term Capital Gain; less than a year and it is a Short Term Capital Gain.

The tax rate on Long Term Capital Gains is MUCH lower than the rates on Comparable Ordinary Income:

Let's use an example of two couples, each with a taxable income of $150K and each filing jointly. The Kramers are a working couple and all $150K of their earnings is Ordinary Income. The Kramers will pay $24,234 in taxes for an effective tax rate of 16.1%. The Seinfelds are trust fund kids. They earned $25K as butterfly shepherds and the remaining $125K comes from capital gains. The Seinfelds will pay $12,586 in taxes for an effective tax rate of 8.4%.

That's not the end of the good news for the Seinfelds though. They bought more stocks with the $11,648 they 'saved' in taxes and that helped them generate even more capital gains next year which were taxed at a lower rate and so they kept getting farther ahead of the Kramers at an accelerating rate.

This is obviously an exaggerated example, but you get the idea. The lower tax rate on capital gains is a huge advantage and the people who generate capital gains are (white) people who already have enough wealth to invest in assets like stocks. And the wealthier you get, Capital Gains income becomes a larger and larger share of our total income. For the Super Rich (ex. Elon Musk), Capital Gains can easily far exceed Ordinary Income.

But Mike, the Kramers (and many Americans with modest incomes) own stock too in their 401K! Yes, but 401Ks are already tax advantaged; that's not a reason for lower capital gains taxes.

Every year the Democrats propose increasing the capital gains tax and every year lobbyists and rich political donors go ape shit and the Republicans vote it down. They argue that this would lower investment, slow the growth of the stock market and the economy, etc. I doubt that. Are rich people going to start putting their money under their mattress? Are they really going to change citizenship to a low tax country? Probably no on both of those, but rich people have been known to hide money overseas and that risk should be accompanied by increased IRS audit resources (another initiative voted down by Republicans).

If you're ever going to write a letter to your Congressperson - you should write supporting parity of taxes on long term capital gains and ordinary income.

(Yes, I am aware of Net Investment Income Tax, which imposes an additional 3.8% tax on investment income, including your capital gains on high earning individuals. This additional tax still doesn't close the gap.)

[eaglesnick]

“Asking for what you need is proof of self-worth.” Amanda Goetz

I know it’s a truism, or put more bluntly, “bloody obvious", that what people do to us - how they treat us - is indicative of how much we are valued by them, but when it comes to the actions and behaviour of political parties and large corporations we English tend to pretend otherwise. We turn a blind eye to the actions of political parties and corporations that are insulting, offensive and often life-threatening, actions that if inflicted on us by an individual we would find totally unacceptable.

In her excellent piece, “In the Spite House”, by A.L. Kennedy, written for “A Point of View" (BBC RADIO 4), she discusses the “unfriendly”, “unpopular” and "personally offensive" policies of government and powerful business entities. Although not purposely designed to target any of us individually, certain policies never the less have a profound effect on us personally.

When decisions made in government allow the mainly foreign-owned water companies to discharge excrement into our waterways and onto our beaches it "feels" personal because when you or your child end up squelching through raw sewage, it IS personal.

It is personal when train stations are redesigned for more and more machines, that we have to operate, with not a single rail employee in sight. Policies like these are” unfriendly, even dangerous” and are a sign that we, the paying customer are being "ignored.”

Kennedy reminds us that as individuals, although we may not currently need a care home, a hospital bed, a police station or an affordable home, when we do, we REALLY do. The building of schools and hospitals with short-life concrete (RAAC), and the subsequent refusal of our Prime Minister when Chancellor to authorise sufficient funding for repairs, tells us how we, the personal users of public services are valued.

What does cramming people into tower blocks fitted with inflammable cladding    tell us about how corporations and politicians regard the worth of vulnerable tenants? What does the massive increase in UK child poverty tell us about the government’s attitude towards children? Why are wages deliberately kept low in the UK? Are working people not worth a decent living wage? Why does the UK have the lowest pension rates in Europe? Having worked hard all their lives do old people not deserve a decent income? Obviously not!

Political and economic decisions are not made in a vacuum. They don’t just appear. Individuals design them, individual approve them, individuals enforce them, and they affect us at an individual level.

It is time we took the policy decisions of politicians and corporations personally. The property developer who cuts safety corners to make a few extra pounds in profit is being personally selfish. The wealthy politicians who vote against a wealth tax are being personally selfish. The rich individuals who use private health care are being personally selfish. The wealthy families who use tax exempt private schools for their children are being personally selfish. The CEO’s of corporations who pollute our environment, who hoard building land, who over-charge for their products, who pay themselves millions in bonuses, are being personally selfish.

Isn’t it time we too began to take things a little more personally?

[alex-guerin]

Further proof that corporate America doesn't give 2 shits (not even a single shit, lbr) about their employees.

I work for a multi-billion dollar hardware company in their warehouse. I've been there a year. My year anniversary I got a whopping 25cent raise.

They have what is called "PIP" which stands for Performance Incentive Payment, means the better and faster you work, the more money you make, but it has to be a 100% or higher in order to get that money. And actually, in order to see any major difference on your check, it needs to be an average of 120% for the week.

This is easy for some groups in the warehouse to hit, in others it's damn near impossible.

The kid who does breakdown with me and I generally run right around/slightly over 100% every week. We've gotten very good at working together and getting shit done cuz we both really need the money so we've been determined to earn as much incentive as we can.

Sunday, he and I ran a 240% for the day. Monday, 120%. Tuesday, 120%. Wednesday they conveniently forgot to tell me until I came in ready to breakdown that I would be on a forklift all day cuz one of our regular drivers scheduled the day off, so coworker baaaarely made 100% for the day and I doubt I hit 100% on my forklift cuz I was pissed off and there was nothing for me to do. It was pointless for me to be on a forklift. Today, I came in, coworker and I were excited to end out the week together, totally ready to kick ass and make a hella awesome paycheck for this week. We get told we aren't going to be working together today. That he would be working with the kid they put him with yesterday while I was on forklift and that I would be getting someone else to work with.

They've never had two breakdown teams on a Thursday. Except for a little while when it'd be one team of two and the 3rd person worked on her own for the day. But that girl quit and since then, we've done just fine with it being just me and him on Thursdays.

I talked to a few people and told them what was going on, people who had been there for a while, and those people all looked at me and said, "Know why they're separating you two? Cuz you were doing too good, they had to figure out someway to keep you two from making any decent rate for the rest of the week so they won't have to pay you as much incentive. They do it to everyone who runs well over 100% everyday. There's at least one day a week were your numbers will tank for no reason, and it's enough to knock your weekly average down so they don't have to pay you as much."

And then, to add insult to injury, our warehouse big dog called a meeting at the start of shift to congratulate us all on another awesome year, it was another record breaking year for the company and it was all thanks to us. So as a thank you, the company was going to give us all a one time $200 bonus! ...but it's taxed so it's probably only gonna be about $100 by the time we get it, but HEY! Merry Christmas guys!

Other warehouses in the area are giving their crews $500+ bonuses, we're getting the pocket change they saved by cheating their employees out of their hard earned incentive pay. While the big dogs and corporate workers are probably getting bonuses that are bigger than what most of us make in a week (the Big big dog probably a bonus that is bigger than most of us make in a YEAR).

So, someone please tell me why a multi-billion dollar company has employees that are still living in poverty and those people are the ones doing the back breaking jobs, pushing themselves physically to their limits and beyond just for a few extra bucks a paycheck so they don't have to wonder if they're buying groceries this week or putting gas in their car? How? We had a record breaking year, but most of us can't pay our bills. If we had such a great year, give us a raise.

[vbartilucci]

You know what?

We almost had that a few decades ago.

At one point the top marginal tax rate was 90%.

And to “keep the government from getting their money”, rich people and companies would SPEND the money. 

They give raises and bonuses, they’d improve or buy new factories, they’d invest the money in their companies in other ways.

And instead of the money just pooling at the top, it moved around. And the economy prospered.

So...maybe 100% is a bit excessive, but it’s not like we’ve never done something close.

Source

Interesting to call this “confiscating” when it’s just making the rich pay their fair share, especially considering all the stolen wealth from the bottom 99% and historic tax evasion.

[amarisbella21]

What You Should Know About the Medicare Tax?

The Medicare tax is an essential component of the U.S. healthcare system, primarily funding the Medicare program, which provides health insurance for individuals aged 65 and older and certain younger people with disabilities. Understanding the Medicare tax, how it works, and its implications for your finances is crucial for every worker and retiree. Here’s what you should know.

What Is the Medicare Tax?

The Medicare tax, officially known as the Hospital Insurance (HI) tax, is a payroll tax that funds Medicare Part A, which covers hospital insurance. This tax is applied to both employees and employers, contributing to the overall financing of Medicare services. Unlike some taxes that have a cap, the Medicare tax does not have an income limit, meaning that all covered wages are subject to the tax.

How Much Is the Medicare Tax?

As of 2024, the Medicare tax rate is set at 1.45% of an employee’s gross earnings. Employers match this contribution, making the total Medicare tax rate 2.9% for employees. For self-employed individuals, the tax rate is higher—2.9% on their net earnings, as they are responsible for both the employee and employer portions.

In addition to the standard rate, a 0.9% Additional Medicare Tax applies to high-income earners. This additional tax kicks in for individuals earning over $200,000 and for married couples filing jointly with incomes over $250,000. It's important to note that this additional tax is only withheld from employee wages, not from employer contributions.

Who Pays the Medicare Tax?

Both employees and employers contribute to the Medicare tax. Self-employed individuals must pay the full 2.9% tax rate themselves since they do not have an employer to share the burden. The tax is withheld from paychecks for employees, making it a regular expense for most working individuals.

How Is the Medicare Tax Collected?

The Medicare tax is collected through payroll deductions. Employers are responsible for withholding the correct amount from employee wages and remitting it to the Internal Revenue Service (IRS). For self-employed individuals, the Medicare tax is calculated when filing annual tax returns and is paid through estimated tax payments throughout the year.

Why Is the Medicare Tax Important?

The Medicare tax is crucial for funding Medicare Part A, which helps cover hospital stays, skilled nursing facility care, hospice, and some home health care. This funding ensures that eligible beneficiaries have access to essential healthcare services, which can be a significant financial burden without insurance coverage.

Implications for High Earners

For high-income earners, the Additional Medicare Tax can increase tax liabilities significantly. It is important for these individuals to plan their finances accordingly. Since this tax is assessed based on wages, it’s particularly relevant for those who may receive bonuses or commissions, which can push their earnings above the threshold.

How the Medicare Tax Affects Benefits

It’s essential to understand that while you pay the Medicare tax, it does not directly correlate to your Medicare benefits. Eligibility for Medicare is generally based on age and work history, specifically, having paid Medicare taxes for at least 10 years (or 40 quarters). The amount you pay into the system influences the amount of coverage you receive but not necessarily the quality of care.

Final Thoughts

Understanding the Medicare tax is vital for managing your finances and preparing for retirement. As you work and pay into the system, you are contributing to a safety net that will provide health coverage in your later years. Keep abreast of your earnings, tax implications, and eligibility for benefits, as this knowledge can help you navigate your financial future with confidence. If you have questions or concerns about your Medicare tax contributions or eligibility, consider consulting a financial advisor or tax professional for personalized guidance.

[financialeducationsip]

FD vs Life Insurance - Choosing the Right Financial Tool for Your Future

When it comes to building a secure financial future, selecting the right tools is crucial. Two widely considered options are Fixed Deposits (FD) and Life Insurance. Both offer distinct advantages and serve different purposes, but understanding their differences can help you pick the one that best aligns with your financial goals. In this guide, we’ll explore the key aspects of FD and Life Insurance, making your decision easier.

What is a Fixed Deposit (FD)?

A Fixed Deposit, commonly known as FD, is a financial instrument offered by banks and financial institutions. Here’s a closer look at its workings:

Guaranteed Returns: In an FD, you invest a fixed sum for a predetermined tenure. The bank pays interest on this amount at a fixed rate, ensuring that your returns are predictable.

No Market Risk: FDs are immune to market fluctuations, which makes them a safe investment option. You know exactly what you’ll earn at the end of the tenure.

What is Life Insurance?

Life Insurance is primarily a financial protection tool for your loved ones in case of your untimely death. It provides a payout (known as a death benefit) to your beneficiaries. Additionally, some types of Life Insurance serve as investment tools:

Term Insurance: Pure protection plan without an investment component.

Whole Life Insurance: Coverage for the policyholder’s entire life with a savings component.

Unit Linked Insurance Plans (ULIP): Investment-linked insurance, providing both protection and investment returns.

FD vs Life Insurance: Purpose

When comparing FD and Life Insurance, the primary difference lies in their purpose:

FD: Ideal for people looking for short- to medium-term savings, guaranteed returns, and low risk.

Life Insurance: Best for individuals seeking long-term financial protection for their families, often combined with investment goals.

Risk and Return Comparison

FDs offer low-risk and fixed returns, appealing to conservative investors.

Life Insurance has a varied risk level depending on the type. Term Insurance is low-risk, whereas ULIPs carry market-related risks.

Investment Horizon

Your investment timeline matters:

FDs: Suitable for short- to medium-term goals. Most FDs have tenures between 6 months and 10 years.

Life Insurance: Ideal for long-term commitments, particularly for those aiming for life cover with additional maturity benefits after a long tenure.

Liquidity

Liquidity refers to how easily you can access your funds when needed:

FD: Premature withdrawals are possible but may incur a penalty.

Life Insurance: Usually requires a lock-in period. Some policies allow partial withdrawals but only after a few years.

Tax Implications

FD: Interest earned is taxable. However, tax-saving FDs with a 5-year lock-in qualify for deductions under Section 80C of the Income Tax Act.

Life Insurance: Premiums qualify for tax deductions under Section 80C, and the payout (both maturity and death benefit) may also be tax-free under certain conditions.

Maturity Benefits

FDs offer a lump sum at maturity with pre-decided interest. Life Insurance, depending on the type, may provide maturity benefits, such as bonuses or accumulated funds, especially in ULIPs and endowment plans.

Premium and Investment Requirements

FD: Flexible investment amount, depending on your preference and bank requirements.

Life Insurance: Requires regular premium payments, which could be monthly, quarterly, or annually, based on the policy.

Loan Facilities

Both FD and Life Insurance policies offer loan facilities:

FD: You can take a loan against your FD, usually up to 90% of the deposit amount.

Life Insurance: Loans are available after the policy acquires a surrender value (for whole life or endowment policies).

Flexibility

FDs are typically more flexible, allowing easier early withdrawals (with penalty). Life Insurance policies often have a lock-in period and limited flexibility.

FD vs Life Insurance: Safety and Security

FD: Highly secure, especially if held in reputable banks, covered under DICGC insurance up to a certain limit.

Life Insurance: Also secure, as insurance companies are regulated by the IRDAI, ensuring strict oversight.

Inflation Protection

FD: Often falls short against inflation, as fixed interest rates may not keep up with rising costs.

Life Insurance: ULIPs and other investment-linked policies can offer returns that may outpace inflation, though they carry market risk.

Conclusion: Choosing the Right Option

The choice between FD and Life Insurance depends on your goals. If you’re looking for a safe place to grow savings for short-term needs, an FD is a solid choice. However, if your goal is long-term security with the added benefit of protecting your family, Life Insurance could be more suitable. Understanding your priorities will help you decide which financial tool to choose.

FAQs

1. Is an FD safer than Life Insurance?Yes, FDs are generally safer as they offer guaranteed returns with no market risk, whereas Life Insurance, especially ULIPs, can be influenced by market fluctuations.

2. Can I have both FD and Life Insurance?Absolutely! Many people use FDs for short-term goals while investing in Life Insurance for long-term protection.

3. Which option provides better returns?FDs provide fixed returns, while Life Insurance (particularly ULIPs) offers the potential for higher returns linked to the market, though with some risk.

4. Are there tax benefits for both FD and Life Insurance?Yes. Tax-saving FDs and Life Insurance premiums qualify for deductions under Section 80C, but terms vary, especially for FDs.

5. Which is more flexible, FD or Life Insurance?FDs offer more flexibility, especially in terms of early withdrawals. Life Insurance policies generally come with a lock-in period.

[gorizont-biz]

What can be done to fight inflation, monopolies and financialization of the world economy?

Restructuring the world economy in the face of financialization and its consequences is a challenge. Today, the situation is not as dramatic as it was during the Great Depression, but only because governments are supporting demand through huge budget expenditures and unprecedented increases in the money supply. For example, the Bank of England has set the lowest interest rate in its history since 1644.

In 2008, central banks, avoiding the collapse of the banking system, expanded deposit insurance and rescued many financial companies, managing, albeit barely, to keep the economy from collapsing.

There are views that the established free market system is fundamentally sound. According to these views, all that is needed to remedy the situation is minor reforms, increased transparency and additional regulatory measures, such as restrictions on payments to top managers of financial organizations.

The importance of limiting payments to top managers

As part of the fight against financialization, restrictions on payments to financial executives are proposed to remove incentives that encourage short-term risk-taking and profit maximization at the expense of long-term stability. High bonuses and compensation are often tied to current financial performance, which motivates top managers to make risky decisions for the sake of short-term gains. By limiting payouts, such incentives can be reduced and managers' attention can be directed toward sustainable company development, long-term investment, and real economic efficiency rather than temporary financial successes.

However, the fundamental theoretical and empirical preconditions that underlie a free market economy are highly approximative and ambiguous. Nothing less than a total revision of the principles on which free economies and societies are built is needed.

Possible solutions to the problems

One of the key points to emphasize is a re-conceptualization of the free market. While the profit motive remains a powerful and effective driver of market economies, it is important to realize that unlimited freedom to this incentive is not always the best way to maximize efficiency. The experience of the last thirty years has amply confirmed this several times over.

The market is an extremely effective tool for coordinating the complex economic activities of a multitude of participants, but no more than that - it is a mechanism, a machine. And like any machine, it needs competent management and regulation. Just as a car can pose a threat if driven by a drunk driver, or save lives by bringing a patient to the hospital, the market can be both a source of prosperity and a cause of destruction. And just as an automobile can be improved with better brakes, a more powerful engine, and fuel efficiency, the market can be improved under the free market concept.

There are many models of capitalism, and the free market is only one of them, far from perfect. The last three decades have shown that, contrary to the promises of its proponents, it slows economic growth, increases social inequality, and leads to more frequent and larger financial crises.

There is no perfect model

The Anglo-Saxon model of capitalism differs markedly from the Scandinavian model, which in turn has its own peculiarities compared to the German or French models, not to mention the Japanese model. For example, there are countries for which the level of inequality seen in the US is unacceptable. Alternative models can reduce income stratification among the population by introducing different versions of the “welfare state”. Sweden, for example, uses high progressive income taxes, while Japan is known for its restrictions on excess profits and large stores. It is not easy to choose between these approaches, although the Swedish model is often considered more successful than the Japanese model. At the same time, one should not blindly follow capitalist dogma and ignore its negative aspects.

Proven recipes for combating problems

Reforming the economy in the face of the negative effects of financialization requires the application of proven recipes that have already yielded results in the past. One such recipe is to rebalance the financial and real sectors of the economy. Joseph Stiglitz, the renowned Nobel Prize-winning economist, suggests introducing measures that would limit the too rapid transfer of financial resources between sectors. This can be achieved through increased taxation of short-term financial transactions, known as the Tobin tax. This tax was proposed by James Tobin and aims to reduce speculative transactions, thereby returning priority to long-term investment in production.

Another effective method is to increase control over lending activities and reduce the concentration of financial risk in large financial institutions. Economist Paul Krugman, also a Nobel laureate, notes that one of the key factors in the 2008 crisis was lax regulation of the mortgage market and complex derivatives that concentrated risk. Krugman proposes stricter capital requirements for banks and the separation of commercial and investment banking (a return to the principles of the Glass-Steagall Act). This would avoid systemic risks and make the banking system more resilient to crises.

It is also important to return to policies that incentivize reinvestment of profits in production rather than in speculative market operations. Economist Mariana Matsukato suggests measures to support innovation and the real sector through public investment in science, infrastructure and technology. This will ensure long-term growth by strengthening the economy and reducing the impact of financial speculation. Mazzucato also insists that CEOs should be held more accountable for long-term results, which can be achieved by linking their remuneration to the sustainability of the company rather than short-term financial success.

In general, the world economy is not doomed, the main thing is to decide in principle on transformation and gradual transition to a more hybrid model of capitalism with a partially planned one, which has worked well in Scandinavian and East Asian countries.

[the2amrevolution]

Public school funding does not pay for extracurriculars. Public school funding does not pay for sports outside of classes open to all students. Public school funding does not pay for any equipment used solely by an extracurricular sports team. Public school funding does not pay for any coaching bonuses beyond the additional salary for increased student contact hours which all extracurricular sponsors should receive. Public school funding does not pay for football programs, and no amount of being angry that a sport is popular is going to make that not true.

Public school funding comes mainly from property taxes. If you live in a county where most people rent rather than own their home, the people voting on what the property tax rate and school funding should be are going to be mostly the landlords whose best interest is to keep property taxes low to maximize their profits. The landlords and land owners are probably on the county committees and boards. Their kids and grandkids go to private school, so the funding of the public schools doesn't matter.

Many states have legislation that says that the state is supposed to make up for up to a certain percentage (85% in GA last I knew) of a school's operating costs if the local government can't fund it. However, the state government is run by the same people who don't want to pay taxes, or who want to be able to brag about how much money they saved the state, so they also can't or find ways out of providing public school funding.

Funding for extracurricular activities including sports teams comes directly from parents of students, local sponsors, the coaching staff, alumni, and other mostly local community sources. The football team got those new lockers because they were donated by an alumnus. They got that new stadium because the construction company that built it is owned by an alumnus and he has it in the contract that his company logo will be displayed and included in any news about the construction. The head coach got that new pick-up because the booster club paid for most of it since they like the guy and got it discounted by a local dealership in exchange for advertising.

Athletic funding is one big pot, not divided by sport. The big sport at a school also pays for a lot of the smaller sports, or at least pays for enough that students don't have massive participation fees that would keep them from even being able to have a team.

The funds in the athletic department do not in any way impact any other extracurricular. They do not impact the school's ability to pay a home economics teacher a fair salary and to have necessary supplies for the class. They have fuck all to do with the cafeteria food or the maintenance budgets.

Blaming sports for problems caused by capitalism because you weren't popular in high school is ignorant and sad.

[sunnysharmaseo]

Essential Tips for Buying a Car This Dhanteras

Dhanteras is a good time to buy a car. But it is always wise to balance the excitement with proper consideration to make the right decision while buying a car. From identifying your needs to choosing the right car insurance, each step is crucial. Below are essential tips to help you make an informed and beneficial purchase this Dhanteras.

1. Identify Your Needs

The first step in buying a car is understanding what suits your lifestyle and daily needs.

Assess Requirements: Determine the type of vehicle that best matches your routine. Do you need a compact hatchback, a comfortable sedan, or a spacious SUV? Consider factors like passenger capacity, cargo space, and features such as navigation systems or automatic transmission.

Safety and Resale Value: Prioritize safety by reviewing crash-test ratings. It's also good to consider the resale value of your chosen model. Cars with a reputation for reliability tend to hold their value better over time.

2. Set a Budget

Setting a clear budget can help avoid overspending and prepare you for additional costs.

Fixed Budget: Establish a budget that includes not just the vehicle's price but also expenses like taxes, registration, and maintenance. Don’t forget to factor in car insurance, which is mandatory and can be an additional cost.

Financing Options: If you're considering a loan, research banks that offer flexible terms and low-interest rates. Some lenders may even provide up to 100% financing during festive seasons like Dhanteras, making it easier to afford your dream car.

3. Compare Offers

Festive seasons often come with special promotions, so take time to compare various deals.

Discounts and Promotions: Many dealerships offer attractive discounts, exchange bonuses, or free accessories during Dhanteras. Compare deals from multiple brands to get the best value.

Online Price Comparison: Before stepping into a showroom, use online platforms to compare prices. This can save time and help you negotiate better with dealers.

4. Check Warranty and Maintenance

Cars are long-term investments, so understanding maintenance costs and warranty coverage is important.

Warranty Verification: Always read the fine print on warranties. A good warranty can protect you from unexpected repair costs in the initial months of ownership.

Maintenance Costs: Choose cars that are known for low maintenance and good fuel efficiency to keep long-term costs manageable. Reliable brands often come with lower service costs.

5. Take Test Drives

Never finalize a car without taking it for a test drive.

Experience the Vehicle: A test drive allows you to evaluate the car’s comfort, handling, and overall performance. It’s essential to ensure the vehicle feels right before making a purchase.

6. Avoid Impulse Purchases

Buying a car is a significant investment, so it’s important to research and avoid hasty decisions.

Research Thoroughly: Don’t be swayed by showroom promotions or pressure to close a deal quickly. Take your time to gather all the information on different models, financing options, and car insurance.

7. Choose the Right Fuel Type

When buying a car, the type of fuel can impact long-term running costs.

Fuel Efficiency: Decide between petrol, diesel, or electric cars based on your driving needs. Electric vehicles are becoming increasingly popular due to lower running costs and environmental benefits.

8. Buy Car Insurance

Purchasing car insurance is an essential part of buying a car, and doing it online is quick and convenient.

Comprehensive Car Insurance: Opt for comprehensive car insurance to cover damage to your car as well as third-party liabilities. Buying car insurance online offers the advantage of comparing policies from various providers, like SBI General Insurance, which provides reliable coverage and competitive pricing.

Buy Car Insurance Online: It’s easy to buy car insurance online, and you can often find discounts or special offers. With SBI General Insurance, you can enjoy a seamless online process.

Conclusion

By being thorough and patient, you can enjoy the perfect car that meets your needs while driving off with a great deal this festive season. Don't forget to safeguard your investment with comprehensive coverage from SBI General Insurance, ensuring peace of mind as you hit the road in your new car.

[elspethmckenzie01]

How a Payroll Management System Can Boost Your Recruitment Agency's Efficiency

In today's fast-paced and competitive job market, recruitment agencies are continuously seeking ways to enhance their operational efficiency. One of the most effective tools at their disposal is a payroll management system. By automating payroll processes, agencies can not only streamline their operations but also free up valuable time and resources to focus on what truly matters—finding the right candidates for their clients. In this article, we will explore the various ways in which a payroll management system can significantly boost the efficiency of a recruitment agency.

Understanding Payroll Management Systems

Before diving into the benefits, it's essential to understand what a payroll management system entails. Essentially, it is a software application designed to manage and streamline all aspects of payroll processing. This includes calculating employee wages, withholding taxes, processing direct deposits, and generating reports. With advancements in technology, these systems have evolved to incorporate features such as employee self-service portals, compliance tracking, and integration with other HR functions. This comprehensive approach not only simplifies payroll but also enhances overall business operations.

Streamlined Recruitment Processes

One of the primary advantages of implementing a payroll management system is the streamlining of recruitment processes. When agencies use traditional methods, managing payroll can be a cumbersome task, often leading to delays and errors. By automating payroll functions, recruitment agencies can ensure that all payroll-related tasks are handled efficiently and accurately. This means that recruiters can spend less time on administrative duties and more time engaging with potential candidates.

For instance, when a new recruit is hired, their payroll information can be seamlessly integrated into the system. This eliminates the need for manual data entry and minimizes the risk of errors, which can lead to discrepancies in pay or tax issues. Additionally, payroll management systems can automatically calculate overtime, bonuses, and deductions, ensuring that employees are paid accurately and on time. As a result, agencies can maintain a positive relationship with their talent pool, fostering loyalty and trust.

Enhanced Compliance and Risk Management

Compliance with labor laws and regulations is critical for recruitment agencies. Failure to adhere to these regulations can lead to costly fines and legal issues. A robust payroll management system helps agencies stay compliant by automating the tracking of hours worked, overtime, and tax withholdings. Furthermore, many systems come equipped with built-in compliance features that automatically update to reflect changes in labor laws.

For example, when a new tax regulation is implemented, the payroll system will adjust calculations accordingly, ensuring that the agency remains compliant without the need for manual intervention. This not only mitigates the risk of penalties but also provides peace of mind to agency owners and managers. By leveraging such technology, agencies like ZeelSolutions can focus on their core business functions without the constant worry of compliance issues.

Improved Data Management and Reporting

In the recruitment industry, data is king. Having access to accurate and timely data can significantly impact decision-making processes. A payroll management system centralizes employee data, allowing for easy access and analysis. This is particularly beneficial for recruitment agencies that need to track various metrics, such as employee turnover rates and payroll expenses.

Moreover, these systems often come with reporting features that enable agencies to generate customized reports on demand. For instance, agency managers can analyze payroll costs per department or track the performance of recruitment campaigns based on compensation structures. This level of insight allows agencies to make informed decisions, ultimately leading to better recruitment strategies and improved overall performance.

Increased Employee Satisfaction

Employee satisfaction is paramount in any business, especially in recruitment agencies that rely heavily on the talent they source and manage. A payroll management system can significantly enhance employee satisfaction through timely and accurate payroll processing. When employees receive their paychecks on time, without errors, it fosters a sense of trust and reliability.

Additionally, many payroll systems include self-service portals that allow employees to access their payroll information at any time. This transparency empowers employees and reduces the need for them to approach HR for basic inquiries. For recruitment agencies, this means that HR personnel can focus on more strategic tasks rather than being bogged down by payroll-related questions. As a result, this leads to a more productive work environment where employees feel valued and respected.

Cost-Effectiveness and Resource Allocation

Implementing a payroll management system can prove to be a cost-effective solution for recruitment agencies. While there may be an initial investment in the software, the long-term savings it provides can significantly outweigh the costs. By automating payroll processes, agencies can reduce the amount of time spent on manual calculations and administrative tasks. This, in turn, allows staff to allocate their time to more value-added activities, such as candidate sourcing and client relationship management.

Moreover, a payroll management system minimizes the risk of costly errors that can occur with manual payroll processing. For instance, miscalculating employee wages or tax withholdings can lead to financial repercussions and damage the agency’s reputation. By investing in technology that enhances payroll accuracy, agencies like ZeelSolutions can avoid these pitfalls and maintain a healthy bottom line.

Scalability for Future Growth

As recruitment agencies grow, so do their payroll needs. A payroll management system is designed to scale with the business, accommodating an increasing number of employees without the need for significant changes to the existing system. This scalability is particularly beneficial for agencies that anticipate growth through expansion or new client acquisitions.

With a robust payroll management system in place, agencies can confidently take on new projects and clients without worrying about the complexities of payroll processing. The system can easily adapt to changes in workforce size and structure, ensuring that payroll remains efficient and accurate as the business evolves.

Conclusion

In conclusion, a payroll management system represents a transformative opportunity for recruitment agencies looking to boost their efficiency. By streamlining recruitment processes, enhancing compliance, improving data management, increasing employee satisfaction, and providing cost-effective solutions, these systems empower agencies to focus on their core mission—connecting top talent with exceptional clients. As the recruitment landscape continues to evolve, agencies like ZeelSolutions must leverage technology to stay ahead of the competition and drive sustainable growth. By embracing a payroll management system, recruitment agencies can not only enhance their operational efficiency but also position themselves as leaders in the industry.

[cherryblossomshadow]

What do liberals think about trickle-down economics?

PRam Osmu (MBA, Rice University, Economy and Strategy):

I can tell you what I think about Trickle Down Economics. Like any economic theory, it either works or doesn't depending on circumstances. There are a few instances in which Trickle Down Economics (which from now on I shall call Supply Side Economics, or SSE) work. I will give you three examples where it could work, at the end of this post. But it is patently clear those are circumstances the United States is not in. Therefore, SSE does nor work here. I'll explain why with a thought experiment:

Imagine there are 3 large car tire manufacturers in the US. They pretty much cover the market.

A Republican president and a republican senate decided on that SSE policy, and give a huge tax break to large corporations. They argue that this will create the incentive to make more goods, to expand their plants which will lead to employing more people, etc. Richess will trickle down.

The CEO of one of the auto tire plants calls an executive meeting. He wants to do what is right and invest so that he can indeed help the economy. He tells this plan to his executives and gets the following response:

The sales manager argues: “Sir, sales of tires were 1,000,000 tires this past 12 months. We have a 30% market share. Why do you think we don't sell 1.5 million? Do you think it is because we don't have funds? We are currently enjoying the lowest interest rates ever. Any bank would be happy to loan us the money.

The reason why we don't sell more tires is because there isn't demand for more tires. Period.

“If you order a plant expansion we will do it. But we will not be able to sell those additional half million tires. Not at a profit or without stating a price war”

Therefore, what do this CEO decides to do?

The same thing others are doing. They take the tax break funds and buy back their own stock. The less stock in the public, the higher the stock price goes. Stock price is how the executives performance is measured, because their true boss is Wall Street, so they get big bonuses and raises. Nothing really trickles down.

Now imagine a different idea coming from the white house.

The deficit this president will incur in tax breaks he either gives them to the middle class, which now have, say $4, 000 in extra income , or uses the funds to build and repair infrastructure, which makes a lot of contractors hire a bunch of people.

In both instances, the middle class will be able to afford a few more things, for instance, a set of 4 tires for the family car.

All of a sudden, the big auto tire firm sees an increase in demand, they talk to their bankers, obtain a line of credit to expand the plant, which generates construction jobs and a few extra employees.

Corollary: if you want the economy to grow, you must provide better conditions of living to consumers.

Remember: They will end up giving their money to the rich anyways. To Ford, General Motors, GoodYear, Nike, Reebok, Dell computer, HP, Cinemark, Olive Garden, Walmart, Amazon, Budweiser, Samsung, Apple, Microsoft, etc.

.

In a nutshell, this is the thing that gets stupidly overlooked:

Do you want the economy to flourish?

Make sure the middle and lower class make a decent living and have disposable income to become true consumers

Do you want the rich to get even richer but in a fair way, not by handing them money?

Make sure the middle and lower class make a decent living and have disposable income to become true consumers

Do you want true democratic capitalism to work the way its supposed to?

Make sure the middle and lower class make a decent living and have disposable income to become true consumers

.

Now, do you think Republicans in congress don't know this?

Of course they do! And that is corruption.

Corruption, because republicans are sworn to give as much money as possible to their donors. That is the sad truth.

.

Oh, this edit is two days later. I said I'd give examples of those rare conditions in which Trickle Down Economics work:

1). Very High Taxes to the top: A situation where the top 5% are being taxed at an extremely high rate, like 90%. Taxes so high that usiness owners prefer to move elsewhere, or shutter their plants and invest in the stock market, real estate or abroad. In such cases the economy can be improved by providing incentives to the very rich, like lowering their taxes . This is what is called “being to the right of the Laffer Curve”, after an analysis performed by economist Arthur Laffer, on how government tax revenue changes according to how much it taxes people.

United States is definitely NOT in this scenario

.

2. Thrifty Consumers: A situation in which consumer do have plenty of disposable income but choose not to spend it. This could be caused by a few reasons:

> Cultural: Mature societies, older demographics that are just not in spending sprees. Japan and Switzerland come to mind.

> Historical: Perhaps a recent war, or bad recession, the reminder of huge unemployment make people cautious about their spending

> Financial: High interest rates make saving a preferable proposition, or currency devaluation may cause people to keep money abroad in a stronger denomination.

Neither of those scenarios apply to the United States.

.

3. Lack of good local options: A situation where people have a healthy, large disposable income, but prefer to buy imports, not liking (or not finding) equivalent locally made alternatives: BMWs better than Ladas. Nikon or Leica better than Kodak or Polaroid.

This applies more to developing countries with a weak local production, where government can incentive local industry with soft loans, or duties and quotas on imports to help the local 1%ers develop better and more appealing local products, if a tax break is given to them

United States is definitely NOT in this scenario either.

.

So there you go. You give to the rich and what you are actually doing is corrupting the best socio-political system ever created. A healthy democratic capitalism.

The rich, themselves, should realize this, but they salivate at the prospect of free handouts, in a greedy and myopic view of the economy and the country.

[cazort]

So I'm highly critical of wealth inequality, but the scenario described here doesn't even create wealth or boost the stock market on paper. Yeah, maybe there will be a short-term surge if the company is big enough to have an IPO and get included in a stock index, but when the company goes under, all its gains will be erased.

In some cases, overpaid CEO's make off with lots of money from fat salaries and bonuses, even when the company folds. In other cases, they don't. The investors, whether ultra-rich individuals, or a bunch of smaller ones who pooled their money, lose all their investment.

Startups that fail are NOT what is wrong with our economy and NOT the cause of growing wealth inequality. Startups that fail are an inherent part of any market economy, even a healthy one. They are part of experimentation, competition, innovation.

So what ARE the problems? I won't exhaustively cover them, but here are some things that I think are:

Companies that get investments and create a real product or service, but do so by subsidizing it using investment capital until they put competition out of business, only to then jack up prices and/or tank the quality of the product or service, when they dominate the market. (Examples: Amazon putting brick-and-mortar retailers out of business, Uber & Lyft putting cabs out of business, Netflix being awesome while it burns through investment capital until it falls apart leading to the hellscape of countless mediocre streaming services we see nowadays, etc.)

Companies that do the same thing but actually buy up their competitors and shut them down or integrate them into their own products (Google, Facebook/Meta like how they bought Instagram and many other competing social networks, etc.)

Tax policy that allows wealth to concentrate in the hands of people who already have it, very easily, while heavily taxing working people. Examples: 15.3% FICA tax on all wages, salaries, and self-employment tax up to about $100,000 but no tax above that level and no tax on passive income like investments. Lower rate on capital gains than on general income. No tax at all on unrealized capital gains, thus ultra-rich people can get money to spend by borrowing against those unrealized gains.

Weak or un-enforced anti-trust laws so that companies can get away with anti-competitive behavior with few or no consequences.

Weak or un-enforced laws on CEO compensation of companies that go under, so that companies can pay CEO's obscene salaries, bonuses, and severance pay even when the company performs poorly, often screwing over the company's customers, lower-paid employees, and shareholders alike, so the executives often keep their wealth even if the company goes bankrupt and even if they are directly responsible for it going bankrupt. (This is easily solved by treating all salary amounts over a certain threshold, $100K seems reasonable, but you could probably even get a lot of gains setting it higher, as ineligible for the usual protections against lawsuits or claims involving the person's duties at the company.)

A lot of these problems would be relatively easy to change, simply by changing certain laws or the tax code.

Modern economy is when stock market is constantly creating new wealth out of thin air but we don't have enough money to feed children in schools.

[stubcreator]

Step-by-Step Guide to Using a Free Paystub Maker

Managing finances effectively is crucial whether you are an employer, employee, or self-employed. One essential financial document that everyone needs is a pay stub. A pay stub provides a detailed breakdown of an employee’s earnings and deductions for a specific pay period. While traditionally offered by employers, there are instances where you might need to create one yourself. This is where a free paystub maker comes in handy.

This guide will walk you through using a free paystub maker step-by-step, ensuring your financial records are accurate and professional.

What is a pay stub?

Before diving into the step-by-step process, let’s understand what a pay stub is. A pay stub, also known as a paycheck stub, is a document that outlines an employee’s earnings and deductions over a specific period. It includes details like gross wages, net pay, taxes, insurance deductions, and other withholdings. Paystubs are essential for both employers and employees as they provide proof of income, help track earnings, and are often required for tax filings, loan applications, and other financial transactions.

Why Use a Free Paystub Maker?

A free paystub maker simplifies the process of creating a professional-looking paystub without the need for expensive software or accounting services.

Here are some key benefits:

Cost-Effective: As the name suggests, a free paystub maker doesn’t require any investment, making it a budget-friendly option.

User-Friendly: Most free paystub makers are designed with ease of use in mind, requiring minimal technical skills.

Time-Saving: Creating a paystub manually can be time-consuming. A free paystub maker streamlines the process, allowing you to generate a paystub in minutes.

Accuracy: These tools are programmed to handle calculations, ensuring accurate results and reducing the risk of errors.

Now, let’s dive into the step-by-step process of using a free paystub maker.

Step 1: Choose the Right Free Paystub Maker

The first step in creating a paystub is selecting the right free paystub maker. There are several online tools available, each with unique features and user interfaces.

When choosing a paystub maker, consider the following factors:

Ease of Use: The tool should have a user-friendly interface that is easy to navigate, even for those with limited technical skills.

Customization Options: Look for a tool that allows customization, such as adding a company logo, choosing different templates, and inputting specific details.

Security: Ensure the tool you select is secure and respects your privacy, especially when inputting sensitive financial information.

Reviews and Ratings: Check user reviews and ratings to gauge the tool’s reliability and effectiveness.

After evaluating these factors, select a paystub maker that meets your needs.

Step 2: Gather Necessary Information

Before you start creating a pay stub, gather all the necessary information. Having this information ready will make the process smoother and quicker.

Here’s what you typically need:

Employer Information: Company name, address, and contact details.

Employee Information: Employee’s full name, address, Social Security number, and employee ID (if applicable).

Income Details: Gross wages, hourly rate, hours worked, overtime, bonuses, and commissions.

Deductions: Federal and state taxes, Social Security, Medicare, insurance premiums, retirement contributions, and any other deductions.

Pay Period: Start and end dates of the pay period and the pay date.

Step 3: Input the Data into the Paystub Maker

Once you have gathered all the necessary information, it’s time to input it into the free paystub maker.

Here’s how you can do it:

Access the Paystub Maker: Open the website of your chosen paystub maker.

Select a Template: Most paystub makers offer various templates. Choose one that suits your needs. Some templates are designed for specific industries, while others are more general.

Enter Employer Details: Fill in the company name, address, and contact details.

Enter Employee Details: Input the employee’s full name, address, and Social Security number.

Add Income Information: Enter the gross wages, hourly rate, and hours worked. Include any overtime, bonuses, or commissions if applicable.

Input Deductions: Enter all necessary deductions, including federal and state taxes, Social Security, Medicare, insurance premiums, retirement contributions, and any other specific deductions.

Set Pay Period: Indicate the start and end dates of the pay period and the actual pay date.

Review and Verify: Before finalizing, review all the information for accuracy. Ensure that all numbers are correct and that there are no spelling errors.

Step 4: Generate and Download the Paystub

After inputting all the necessary information, the next step is to generate the pay stub. Most free paystub makers have a “Generate” or “Create Paystub” button. Click this button, and the tool will automatically calculate the totals and deductions, generating a professional-looking pay stub.

Once generated, you will have the option to preview the pay stub. Please review it carefully to ensure all information is accurate and presented correctly. If everything looks good, you can download the pay stub in your preferred format, typically PDF or Excel.

Step 5: Print or Share the Paystub

After downloading the paystub, you can either print it or share it digitally, depending on your needs. If you are an employer, you can provide the paystub to your employees either as a printed document or via email. If you are self-employed or need the paystub for personal records, you can store it digitally or print it out for your files.

Step 6: Keep Records for Future Reference

It’s essential to keep a record of all pay stubs for future reference. Paystubs serve as proof of income and are often required for tax filings, loan applications, and other financial transactions. Make sure to store them securely, either digitally or in a physical filing system.

Tips for Using a Free Paystub Maker Effectively

Double-Check All Information: Accuracy is critical when creating a pay stub. Double-check all information to avoid errors.

Keep Up-to-Date with Tax Laws: Tax laws and regulations can change, affecting deductions and net pay. Ensure you are up-to-date with current tax laws.

Use a Secure Internet Connection: When inputting sensitive information, always use a secure Internet connection to protect your data.

Conclusion

Using a free paystub maker is a convenient, cost-effective solution for creating professional paystubs. By following this step-by-step guide, you can quickly generate accurate and professional paystubs in just a few minutes. Whether you are an employer, employee, or self-employed, maintaining accurate financial records is essential for your financial well-being. A paystub maker is a valuable tool that helps you achieve this with ease and accuracy. Start using a free paystub maker today and take control of your financial records!

[jessicanomics]

As we welcome Q4 and you’re wondering how many pumpkin spiced lattes are too many to buy this season, I invite you to do the math on your taxes to give yourself a gut check on whether you’re in a refund or balance-due position with the IRS. Considering that bank interest rates are still 4.5% even after the September 2024 rate cut, this is no time to be prepaying the IRS if it’s unnecessary. That’s just too spooky!

At a high-level, the math is simple, “What do I owe for the year less what have I paid already?”, but the additional steps to reach ‘taxable income’ is where things get a bit trickier.

As of October, the year is in a lot of ways fully baked in terms of estimated compensation. Generally, companies pay bonuses and give raises at the beginning of the year, so at this point most salaried folks can estimate their total annual taxable income with some reasonable assurance.

Steps to Estimate Your Tax Position:

Step 1: Download your most recent paystub

Step 2: Calculate Year-to-Date (YTD) Taxable Income by subtracting pre-tax benefits from Gross Pay:

Gross Pay YTD (Includes salary, commission, bonus, imputed pay. Does not include non-taxable reimbursements)

-  401k deductions YTD

-  Medical, Dental, Vision deductions YTD

-  FSA/HSA deductions YTD

= YTD Taxable Income

Step 3: Calculate Remaining Pay Periods Taxable Income (same as Step 2, just for current pay period)

Taxable Income of most recent pay period (single pay-period)

x  # of remaining pay periods in year

= Taxable Income of Remaining Pay periods

(Most companies pay twice a month, but double check if you’re paid every two weeks or monthly to understand how many pay periods are remaining in the year)

Step 4: Calculate Estimated Annual Taxable Income

YTD Taxable Income

+ Taxable Income of the Remaining Pay periods

= Estimated Annual Taxable Income

Step 5: Use an Online Tax Calculator* and Input your Estimated Annual Taxable Income to find out your Federal Income Tax liability

Federal Income Tax amount from the calculator

- Federal Income Tax withholding on your YTD paystub

= Amount of Federal Income Tax you owe before year-end

(When looking at your paystub, ignore withholdings for Social Security and Medicare, those are not included in income tax calculations. Federal Income Tax is totally separate from social taxes.)

Step 6: Estimate Federal Income Tax you will pay in the remaining pay periods

Federal Income Tax withheld each pay period (from paystub)

x # remaining pay periods in the year

= Amount of Federal Income Tax you WILL pay in via payroll by year-end

If what you owe (Step 5) is less than what you will pay in (Step 6), you might be getting a refund.

If what you owe is more than what you will pay in, prepare for a balance due.

Side Hustles/Multiple Income Sources

Depending on if you’re a math/excel person or not, you could expand this exercise and add in your side hustle taxable income, bank interest, and dividends. Having multiple sources of income makes this tax exercise very important.

Remember that unless you have edited your company payroll settings to increase your tax withholding, your W-2 job is only withholding tax as if you only had that one job. If you have a side hustle, it’s a good idea to increase your W-4 form withholding taxes so that you can pay in more tax via payroll to cover the additional tax owed as a result of side hustles.

The advanced money-hack strategy is to pay in ONLY the required estimated tax and never overpay the IRS via withholdings (so the IRS owes you a refund). That means you just gave Uncle Sam an interest-free loan when you could be making interest on your own money. Interest rates on HYSA (high-yield savings accounts) are at 4.5% even after the September 2024 federal rate cut.

If all of this scares you more than a haunted house, then reach out to your CPA to do the math for you. These are of course estimates, but doing a Q4 tax check-in will help to relieve year-end anxiety around tax planning and give you a better idea of potential payments or refunds.

Notes

i) For simplicity, the equations above are only for Federal Income Tax estimates. Repeat this exercise with State Income Tax Calculators and paystub information to estimate your state liability.

ii) The IRS has an underpayment penalty safe harbor (no penalties) if you pay in at least:

90% of the current year liability OR

100% of the previous year liability (110% of previous year if you make more than $150k)

iii) The true money-hack strategy would be to stick to the minimum amounts to avoid penalties so you can maximize the cash in your HYSA. It’s important to always have cash set aside for taxes, but Uncle Sam doesn’t need to be holding your cash and making your interest if it’s not yet technically due. 

iv) This exercise assumes your paycheck will not change over Q4 (ex: you don’t change 401k withholdings or get a large year-end bonus). It’s also a good time to review your YTD 401k contributions and decide if you’d like to change it by year end. The 2024 401k employee deferral is $23k.

Glossary:

Payroll Withholding - ‘withholding’ refers to a tax amount being subtracted from your paycheck.

Payroll Deduction - ‘deduction’ refers to a benefit amount being subtracted from your paycheck (Health Insurance, Life Insurance, Transit funds).

Taxable Income - All income (salaries, bonuses, commissions, other imputed items like gift cards from your employer) less pre-tax deductions (401k, medical insurance, FSA or HSA health plan, Parking/Transit deductions). 

Imputed Income - These are things that your employer pays for you that the IRS sees as ‘taxable income’. Think of holiday gift card handouts, paying for gym memberships on your behalf, additional life/disability insurance.

This is not tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.