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The Sunday Best (1/14/2017)

The Sunday Best

The Sunday Best
The Sunday Best is a collection of articles I’ve curated for your reading pleasure.

Expect most of the writing to be from recent weeks and consistent with the themes presented on this website: investing & taxes, financial independence, early retirement, and physician issues.

 

Presenting, this week’s Sunday Best:

 

The OB Doctor Mom, who shared this guest post on the finances of retiring from medicine at 37 with us, asks a related question. Is it Ethical to Retire Early From a Career in Medicine? 

 

Dr. Mo retired from his Urgent Care Career at about the same age, and has moved on to do other things, including meaningful work. (Yes, you can retire from something and still do work).

  • Financial Independence and Early Retirement
  • Free Time in Retirement

 

The Financial Samurai would describe Dr. Mo’s position as one of “Budget Financial Independence.” What are his criteria and how does one level up? The Three Levels of Financial Independence: Because Money is Only Part of the Equation.

 

Dr. Luis Alcosta reached financial independence in a most non-traditional way. From working as a physician for $4 a month to retiring 15 years after an American residency. He shared his story on The White Coat Investor. My Journey: A Wealth of Opportunity.

 

Let’s keep rockin’ that FI theme. Channeling Pink Floyd, CHGO FIRE, one of ChooseFI‘s new writers introduces himself in Comfortably Numb (And How I Woke Up To Financial Independence).

 

The Happy Philosopher threw out all his old Floyd tapes. And Van Halen’s 1984 if memory serves me right. This year he’s embarking on another minimalism challenge or two.

 

Minimalism is catching on like wildfire! Oh, sorry Dads, Dollars, and Debts. I didn’t see you there. Awkward… So, what’s the plan now that all your stuff burned up in the Tubbs fire? Buying nothing?!? Buying nothing for 1 year – That’s the plan.

 

If what the cardiologist and radiologist above are doing appeals to you in any way, be sure to check out our blogging friend Cait Flanders‘ new book, The Year of Less: How I Stopped Shopping, Gave Away My Belongings, and Discovered Life Is Worth More Than Anything You Can Buy in a Store.

 

A surgical resident is in a car wreck. He’s mostly OK, but his hand is not. The physical and mental recovery from the perspective of his wife Catherine Alford. When Your Husband Gets Into a Major Car Accident.

 

 

Nearly a year ago, The Motley Fool gave us 5 Top Stocks to Buy in 2017: Under Armour, T-Mobile, Dave & Busters, Diamondback Energy, and Core Labs. The Biglaw Investor sees just how well those recommendations worked out. Don’t Be an Investing Clown.

 

A $20,000 Gift from the Government

 

“I’m from the government, and I’m here to help.” Oh, really…

Yes, really! I figured I’d come out at least $10,000 ahead based on the Tax Cuts and Jobs Act next year, but according to the Tax Policy Center’s Calculator, which is the best I’ve seen so far, I can expect to pay $20,000 less in federal income tax in 2018 than I would have under the old system.

 

TCJA physicians

 

The variables I entered are:

  • Married, filing jointly
  • Both under 65
  • Not in College
  • 2 dependents under 12
  • Wage and Salary: $250,000
  • Taxable interest: $1,000
  • Dividends: $25,000
  • Employer-Paid Health Insurance: $15,000
  • Business Income (from this site): $60,000
  • State Income Tax: $18,000
  • Property Taxes: $8,000

 

The detailed breakdown looks like this:

 

 

Under the previous tax code, I paid the AMT every year. In 2018, that would have cost me nearly $7,000.

Under the previous tax code, I never saw a child tax credit. In 2018, my two boys are worth $4,000 (on the 1040, that is).

Under the previous tax code, taxable income of about $300,000 would have put us in the 33% marginal tax bracket as a couple. Now, we’re in the 24% bracket.

All of that adds up to about $20,000 in savings.

 



 

Curious as to how you’ll fare in 2018? Visit the Tax Policy Center’s Comparison Calculator, and report your results in the comments below!

 

Have a prosperous week!

-Physician on FIRE

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29 thoughts on “The Sunday Best (1/14/2017)”

    • That was an incredible finish! I just wish the Falcons had won on Saturday, so the Vikings could have the home field again this coming weekend.

      Skol!
      -PoF

      Reply
      • Home field for the Super Bowl should be quite enough. Don’t be greedy (and don’t fear Nick Foles).

        I would favor the Pats by 4 on neutral field, but call it a toss-up in your dome.

        Reply
  1. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  2. Got to love them tax savings! I should do the calculations too… but haven’t done so yet b/c I haven’t figured out how much to pay myself.

    What do you think is the ideal income for 2018 in terms of taxes and happiness? I’m thinking $150,000 – $200,000 per person.

    Thanks for the mention!

    Sam

    Reply
    • An ideal income? That’s a tough one, but I do like that 24% tax bracket all the way up to $315,000 of taxable income for a married couple filing jointly. A couple could earn $350,000 to $400,000 and after the standard deduction and maxing out retirement accounts, find themselves at the top of that bracket. So I guess we agree. Of course, earning twice that for the same amount of work is something I would not argue against.

      Cheers!
      -PoF

      Reply
      • Actually the top of the 24% bracket is 341k when you take the 24k deduction into account. Once you blow by 22% AMT can become an issue

        Reply
  3. Impressive, I’m about 10-15k ahead. But the calculator doesn’t seem to include any 401k type contributions. Do you just reduce the wages/salary for this?

    Reply
  4. Sigh. Putting those numbers in a Canadian tax calculator for my province comes up with $139K tax for an average marginal rate of ~42%. Our top bracket was raised to 54% kicking in at $220K a couple of years ago. If I were to account for USD:CAD exchange, it would be even more depressing. We are going in different directions on tax for sure. I am a bit jealous, but we do get universal healthcare in exchange which is good.

    Reply
    • I guess you get what you pay for. Personally, I’d rather keep the $60,000 in my pocket and pay for the health care of my choosing. I’m sure you’d do the same given the option, eh?

      Reply
      • Totally, I would love to target where that money goes. I do believe in providing a strong safety net for the vulnerable who need it, but our government is my least favourite charity. They remind me of one of those charities where most of the donations go to promoting for more donations to grow the infrastructure of the charity rather than to the intended beneficiaries. Bunch of hosers, eh.

        Reply
  5. Thanks for the shout PoF!

    Are you going to join me on my no buying experiment? There are a few bloggers that have joined it, should be a fun little project 🙂

    That tax calculator is pretty interesting. When I put in my numbers my regular income tax after credits was nearly the same (and actually would have resulted in a higher tax if I didn’t have kids!!). This is due largely to inability to itemize now that SALT deductions are so limited. Comparing our numbers is a really good example of how this tax bill differential impacts high-income earners due to this one provision.

    I still come out ahead though, although not 20k ahead. It seems all of my tax savings will be due to not getting hit by the AMT this year.

    Reply
  6. I’m a little confused about the math on the tax estimation — for the taxable income calculate (post tax law) you start with 335,197, and subtract a standard deduction of 24,000 — shouldn’t that result in taxable income of 311,197 — not 299,197 as it currently states in the chart?

    Your blog is one of my favorites. Thanks!

    Reply
    • Good catch — it’s not spelled out in the calculator’s results, but the additional $12,000 that isn’t taxable comes from the pass-thru deduction of 20% of the $60,000 in business income. This is a new deduction, and it deserves its own line in the calculation.

      Best,
      -PoF

      Reply
    • Yes, and quite a bit more than I expected. Getting out of the AMT, the new (to me) child tax credit, the pass-through deduction, and the new 24% bracket extending as far as it does all work in my favor.

      Cheers!
      -PoF

      Reply
    • It seems to work reasonably well. I haven’t done an in-depth dive, but others have recommended it to me as the best one they’ve found, too.

      I hope it gives you agreeable numbers.

      Cheers!
      -PoF

      Reply
  7. Thanks for the mention POF…. Things I already did not buy this week- a level (luckily my phone has one) and a measuring tape (string works pretty well). You have some great articles here…looking forward to some relaxing reading.

    Reply
    • You’re very welcome, Triple-D. I can’t imagine using a phone to replace a level, but I suppose it would suffice for hanging a picture or something. I wouldn’t trust it for framing a wall — that’s what the 6-foot level is for.

      Cheers!
      -PoF

      Reply
  8. That tax caculator is pretty spiffy. Gonna save a bunch next year, too. Great time to get my first full year under an attendings pay check!

    My wife would agree with all the minimalism!! I could probably afford to be more minimalistic in my life too, including the clothes. Maybe should follow in the happy philosophers shoes.

    Thanks for the posts!

    Reply
  9. I think I’m going to jump on that buy nothing plan for the year too. But wow, I’m impressed Dads, Dollars, Debts is game!

    Reply

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