Curious, have you ever done that? Generally, it doesn’t matter from a tax withholding perspective, as both your normal wages and supplemental wages are taxed by their own respective ways. Whether they are paid together in one check or separate, it doesn’t matter as those wages are already categorized. I have never seen a software compute tax withholding from a total $ perspective regardless of type of wages. Ie- a check for $1000 is withheld at 15%, but anything other $2500 is withheld at 25%, regardless of what comprised of those $s (such as straight time, OT, bonuses, etc). Doesn’t mean there aren’t payroll software/manual entries to do so, but I’m assuming they’re fairly rare.

Hey! I’m actually going to release an updated video of this whole topic because I have better recording equipment now. Also, a couple of others presented different ‘flat’ style taxes that I’d like to discuss. Would love to talk about yours as well, but a questions if you don’t mind: - i know you didn’t lay out the whole tax calculations, but how is it a negative income tax? The only argument i can see right now is that the $50k example is the same concept as the current 37% marginal tax rate we have. Anyone making more than the $50k example, or making any additional $ in the 37% bracket is effectively in a flat tax, as there is no higher tax bracket at that point. Truth be told, i do think if society wants the ultra rich to ‘pay their fair share,’ then a wealth tax such as taxing unrealized capital gains is inevitable, because at that level of wealth, there very well may not be much ‘income’ to actually tax. Slightly off topic, but I do also think that social security wage limit will be increased one day so that higher earners pay more into SS. Not sure when I’ll get around to doing this video’s remake, as I’m still using a laptop not capable of video editing. So that’s why I’m just focusing on Shorts for now. But would love to discuss your proposal more! Thanks.

It’s funny you say that, because I was nervous to name the video this. I had a feeling that I would be called out by someone who didn’t watch the whole thing, lol.

I guess you didn’t watch this video then. I literally talked about the 2 prior tax brackets (10 and 12%), and how this new salary is entering the 22% bracket. The effective tax rate is the actual tax rate you pay. So if you’re making $ in the 22% bracket, then the effective rate would increase as you make more… because the amount being taxed at 22% is increasing as you make more (again, you already paid everything the in the 10 and 12% bracket). So please, can you watch this video again and tell me where I didnt support your comment? Or is your comment garbage?

@treytaurmancpa, my bad you're right. My initial comment is garbage, I missed the 10/12% comment, I was focused on the pop up of numbers on the side of the video and I should have paid more attention.

@@BlackDeafall good! It’s tricky to get meaningful info in these 60 second limits. So was hoping I didn’t come off saying something incorrect. Thanks!

Examples are relative, out here in the rural areas, then your math is more reasonable. My large city downtown clients? Much more $s per mile (much shorter trips though, more sales turnover.) If you net any $s from this contractual work, you may not pay any federal taxes assuming your other income and standard/itemized deductions, but you’d still be subject to SE taxes since that’s calculated outside of any standard/itemized deductions

Growing up we had a couple play slot machines in our house, and even back then we were able to set the payout odds. That was in the 90s, so the tech to be able to set odds and future payouts I’m sure are much more advance. I learned to never play electronic games that flash pretty lights in your face. Dealer dealt poker and blackjack only for me.

@@treytaurmancpa If you hit jack pot then they will tax you and make your life miserable. I play table games because they can't tax me.

Like, the more you make, the higher your specific flat tax would be? How would that be any different than our current progressive system?

@@treytaurmancpa reorganizing the amount would be the best start.

You got it!

We could say the roads would just crumple, but in all honesty, if everyone one of us were to file exempt and essentially halt that money going to the IRS for the year, the question would be if the government would bail them out or float them until we all had to pay our taxes plus penalties. At that point, the IRS would arguably be more funded and stronger. Yikes.

You’re still climbing up your marginal tax rate either way, although 2 different jobs would speed up that process. So yea you could be making more with 2 different jobs rather than OT with one. But without more info, your situation is probably just anecdotal.

Then we’d have to differentiate income vs wealth, and somehow group them into a labor market where a hypothetical max wage could be effective.

Good points! I’m tackling this from strictly a tax/math perspective, as my education isn’t in politics. This video certainly needs a re-release with better lighting and audio. And even talking with other tax pros and a couple Econ professors since I posted this, I still believe a true flat tax has its flaws that many people oversee. I don’t have the magic % tax rate, but when both the poor and rich pay that same %, the poor are disproportionately hurt. I have a Short that talks about disposable/discretionary income, that somewhat covers this. So that just leaves the question, what truly is the most fair tax for all, while also meeting needed government spends? I may be dead before that is ever figured out.

I see your point, but in theory you’re still getting that ‘1 day early’ benefit once. And that’s when you take advantage of that new benefit for the first time. Because now that you are paid on Thursday (normally Friday), you’re still on a 14 day cycle after that. Since you’re still on a 14 day cycle even when moving to Thursday, that means you still can blow through your money in 14 days just like everyone else, whether they have that day early benefit for not. The continuous benefit would be that you move to a 13 day pay cycle instead of a 14, forever. So your payday moves to Thursday, then to Wednesday 2 weeks later, followed by a Tuesday in 2 weeks and so forth. Which would be a payroll processing nightmare, lol

Hey! I may not be following your question… in theory, the cheapest way to pay down your tax is just to withhold exactly what is needed throughout the year (no underpayment penalties, and no opportunity costs with refunds). If you want to get real crazy and bold, you can forgo withholding for investment use. So if you’re hit with the underpayment penalties come tax time, but you used that extra paycheck $$ to turn an investment return of something greater (those you’re netting the difference). I can’t remember if it was this video or another short where I talk about that, but it’s a risky where you probably won’t get a tax person to advise it, but some crypto bro might.

Good question! I would see if the HsA you’re contributing to through your employer allows outside contributions. I have had an HSA before that didn’t allow anything but payroll deduction, whereas I had another HSA one time that was through my bank, so contributing to it was as simple as logging into an app and transferring. If the account you have does allow outside contributions, I don’t see the benefit in having a completely seperate hsa account. But if not, then yea, we about opening a second one that can be contributed with post tax dollars (but check to see if they have any fees!) If I understand your question right, both contribution types are valuable, it’s just when the tax benefit is. For your payroll deductions, that is pretax, so you’re getting the benefit on payday as that $ isn’t taxed. If you put post tax $s in, then the benefit comes at the time of when you do your tax return, as you should be taking the deduction on Schedule 1. Be aware! The annual limit is in total, not per hsa account. So if you max out one, opening a new hsa account doesn’t allow you to contribute that year without penalty. Hope this helps!

@treytaurmancpa Yeah. The thing is I didn't even recall signing up for the work HSA and had cash to place so figured I would just go ahead and max out the HSA contribution now and not wait or stagger the contributions. What started this was I had multiple HSA's I was just trying to consolidate (with the exception of my current HSA). That kinda led me down this road. I did find out that I can potentially change my elected HSA contribution (like bumping it up to what it needs to be per pay period to max out) but it just read weird in the fine print. Almost like I wasn't allowed to change the HSA contribution but I believe I can. For the old HSAs I was putting it in a new Fidelity HSA account consolidated and didn't fully understand all the implications and wanted to max the contribution out (unfortunately... I kind of let this awesome contribution go underfunded over several years and wanted to max out right away to the limit).

Thanks for the tip! I need to look at someone using both that lav and using the speakers separately. Literally the only reason I don’t use that lav anymore is when I plug it into my phone, it only pics up my voice, when I replay the audio to make sure I didn’t stutter, I have to unplug. (Plug in to speak, unplug to listen). It was getting old, lol.

@@treytaurmancpa Have you tried using those wired splitters? Ones that splits speakers and mics into 2 separate input and outputs. You'll still need to plug a speaker in though, so that's a downside.

So I had a Bluetooth split/combo that I used in one of my first actual videos (not these shorts), and I hated it. The audio in those first videos are horrendous, and when I finally learn and get a good audio process down, I just gotta delete them and completely remake them.

This is a GOOD question, hoping I can shine some light on it, even though I don’t have your returns in front of me. I’m assuming you’re using some software, are you able to see what the return looked like prior to the gambling info was entered in? (Not just the refund amount, I’m talking the whole return), and compare it to what the return is after you entered it in? A couple of thoughts: - just because you have $100k in gambling income, and $100k in losses (the limit) that doesn’t necessarily net out the final tax result - I’m assuming your software auto selects Itemizing as that would be the more beneficial route (you’re taking a $100k deduction there alone, make sure to capture any State and Local Taxes and mortgage interest you have since you’re itemizing) - your standard deduction would be $x before inputting the gambling loss, but when you itemize, that doesn’t necessarily mean that your itemized deductions are x+$100k, - I just created a dummy return in my software, where the standard deduction was $27.7k (Married filing jointly in 2023), but when I just added $100k in gambling income and $100k losses, the itemized deductions went to $104k (again, probably not what yours will say, as I’m using a current clients record, so they may have a little something adding in there), but that difference was about $80k. So the difference between not inputting the gambling info, came out to $100k in income, and $80k in additional deductions, meaning I had $20k in extra taxable income.

It’s confusing intentionally because the IRS is trying to create yet another overly complicated tax situation and force people to somehow have a database itemizing thousands oh slot spins and blackjack hands. Which they know no one can do so even if you lose money for the year somehow a win loss statement isnt sufficient even though they have no issue using that number for your wins. It’s b.s plain and simple

Just by looking at your comment, I would lean to HoH, because the major items needed for HoH is to be unmarried, and is supporting a qualified dependent. Also, for HoH, it’s also maintaining the majority cost of the house itself (ie, rent, utilities, groceries, etc) so any roommates who are staying with her and the kiddos also has to be taken into consideration. The IRS has a helpful link that may help her more: but at the end of the day, if she qualifies for HoH, take it, as it’s ‘better’ than filing as Single. www.irs.gov/help/ita/what-is-my-filing-status

Good idea! Really helps when your payroll changes are immediate when you make those changes. I worked for a place years ago where if you wanted your Withholdings changed, it seemed to take a couple months for whatever reason.

Glad to hear that!

Of course, you’ll generally want to claim whatever is the most accurate for your situation.

Good point, but that brings up a couple more things. People tend to ignore that higher earners have phase outs, so the deductions/credits that rich people experience are lower/nonexistent, compared to the rest of the population. Then comes loopholes… I see a lot of ‘loopholes’ that really aren’t, as they are explicitly listed in the tax code. There have even been a few people have showed me that are being presented as ‘a rich person benefit,’ when in reality, the majority of low/middle income taxpayers are the ones who benefit. I’m all for simplifying the tax code (makes my job easier, and will shift focus in work), but the reality is the tax code is complex for a reason, and someone, somewhere, will lose with ‘simplifying.’

line 4C is ‘extra withholding,’ so any number on that line will be an additional amount taken out of your paycheck (and set aside to go against any tax liability), meaning you’ll be taking less home.

Then a new problem arises. They only have the exact amount of income that is reported to them via W2s and 1099s. But when you get a 1099, that may not be exactly what is actually needing to be taxed. Many people take the standard deduction because it’s more encompassing, it was doubled awhile back (set to expire, but probably will be reinstated to the current levels), and sadly, many people take a standard without knowing they were better off itemizing. Back to my main point that yea, they could send us all a bill for many basic returns (where filing is already generally free), but many that have adjustments/changes from the prior year- those bills will be wrong.

@@treytaurmancpa I think, for the majority of Americans, a bill or refund would work fine. Those other cases are far less common exceptions and shouldn't be used to justify a system for several hundred million people to file taxes with excessive legwork and confusion. Itemization is a fantastic way to get audited and if you lack the proof of your claims, it's an uphill battle. I've been there a few times. Besides, the easiest method would be to simply send a bill or refund and if you believe it to be in error, then file your taxes like normal.

Possibly, if I’m understanding your comment, you made a contribution to your HSA, but it was with post tax dollars (not the normal contribution way, which is payroll deducted and thus, pre tax). If made with post tax dollars, you may be able to take a deduction on schedule 1, line13. It’s not an itemized deduction, so you can still take it, even if you took the standard deduction

Good question, basically everything gambling related is netted against each other at a high level. It would be different if you are considered a professional gambler, where your winnings and losses would net and you could take the net loss as a hit (plus additional expenses like travel if you had to show up at certain casinos). For casual gamblers, your total gross winnings are reported as income, but your losses would be an itemized deduction… but capped at your winnings amount, so that $20k net loss doesn’t offset any other income

Wait, what?

You can do that, buuuut, you’ll more than likely owe MORE than what you otherwise would have paid. For example, let’s say your tax liability is $5200 (or $100 a week), but rather than withhold any of it, you decide to just pay it all at once. Once April comes around, that $5200 balance will now be closer to something like 5.5k, due to underpayment penalties.

@@treytaurmancpa ugh. The government don't pay penalties at the end of the year when the owe me .. Thank you for the confirmation

Yea, definitely an insult to injury there. That’s why we usually stress not to have ‘huge’ refunds, because that’s money you could have had throughout the year, and they didn’t pay interest on it when they pay it back to you.

I’m reeeeal late answering this Q, sorry, tax season deadlines looming :) My guess is that you’re not a professional gambler, as I never heard of a professional slot player (there may be, I just am not familiar with them). Your winnings would just be reporting on your 1040, just like any other income, but your losses are only available for schedule a (assuming you are not a professional, professional gamblers would be schedule C) Non professional loss is limited to the of your winnings, but the big thing is just confirming that filing a schedule A is better than just taking the standard deduction. Good luck!

Great question, Assuming that they filed exempt but truly we’re going to have a liability, then yes, underpayment penalties are real depending on what the liability amount was. Likewise, if they filed exempt AND are not liable for income tax during the year, then they got the good ending by not having any penalties.

I wasn’t. I got most of my money that I worked for right away. Every pay period. Felt a bit guilty. Isn’t it odd that I would feel that way when I’m the one working my bum off? I decided that if I owed anything I could care less. I need my money now. Nothing occurred. They didn’t come for me. They probably saw my check and felt pity.

I know someone who has done it and didn't get penalized.

​@Tyndalic how much did u pay at the end of the year? Like did u ended up paying more from what they take?

I'm still understanding all this. Ny friend just mentioned that he files exempt and never pays federal taxes. He says it's "pending," but he still pays state.