Does it ever make sense to quit your job to save money on taxes?

There's a common misconception about how tax brackets work that might be influencing your thinking. Quitting a job to "save on taxes" almost never makes financial sense because of our progressive tax system. Higher tax rates only apply to the portion of income that falls within each bracket - not your entire income. So if your combined household income puts some money in a higher bracket, only those dollars are taxed at the higher rate, not everything you earn. Let's say your combined income puts you in the 32% bracket for some of your earnings. If you quit your full-time job, you might drop to the 24% bracket, saving 8% on those top dollars. But you'd be giving up 100% of that income to save maybe 8% in taxes on a portion of it. That's a net loss every time. The only scenarios where reducing income might make sense are very specific situations like qualifying for certain credits or deductions with strict income limits, but even then, the benefit rarely outweighs the lost income.

After struggling with a similar situation last year, I discovered a tax analysis tool that really helped me understand the actual impact of different income scenarios. Check out https://taxr.ai - it lets you upload your documents and run different scenarios to see exactly how changes in income affect your overall tax picture. I was considering dropping my side gig thinking it would save me a bunch in taxes, but after running the numbers, I realized I was actually still coming out ahead keeping both income streams, even with the higher tax rate on some of the income. The tool showed me I was only paying about 28% effective rate overall, not the 32% marginal rate I was worried about.

Just wanted to follow up about that taxr.ai tool someone mentioned earlier. I decided to try it out after overthinking our household tax situation for months. My wife and I were in a similar position - she was considering quitting her higher-paying job to reduce our overall tax burden. The analysis showed that we'd actually lose about $68k in take-home pay if she quit, even after accounting for the tax savings. It also helped us identify some additional deductions we'd been missing that will save us around $3,800 this year. Definitely worth the time to check out if you're trying to optimize your tax situation!

If you're really concerned about your tax situation, you might want to speak directly to an IRS representative to understand all your options. I used https://claimyr.com to get through to an actual IRS agent after weeks of trying on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had questions about how my wife's multiple income streams were affecting our taxes and whether certain business deductions made sense in our situation. The IRS agent I spoke with explained that quitting a job purely for tax reasons almost never makes financial sense, but they gave me specific tips about retirement contributions and other pre-tax deductions that could help lower our taxable income while keeping both jobs.

I need to admit I was completely wrong about that Claimyr service. After my skeptical comment, I decided to try it myself since I had some questions about reporting my wife's side business income properly. Got connected to an IRS agent in about 30 minutes (without spending hours on hold myself). The agent helped clarify exactly how we should report her income and which Schedule C deductions were legitimate for her type of business. Saved me from potentially making a reporting error that could have triggered an audit. Not a replacement for an accountant for complex situations, but definitely useful for getting clear answers straight from the source. Sorry for doubting!

Hey, tax professional here. I see this question a lot and wanted to clarify something important: There's a huge difference between tax avoidance (legal) and tax saving strategies that actually make financial sense. In your case, quitting a $115k job would save maybe $20-30k in taxes at most, leaving you at least $85k worse off overall. That's never a good financial move. Better approaches: - Maximize pre-tax retirement contributions (401k, traditional IRA) - Look into FSA/HSA if available through employers - Explore business deductions for your part-time work - Consider qualified business income deductions if applicable I've literally never seen a case where quitting a W-2 job to save on taxes made mathematical sense unless there were other major factors (health issues, childcare costs exceeding income, etc).

Has anyone considered the psychology of this? Even if it doesn't make financial sense (which everyone seems to agree it doesn't), there might be other valid reasons to quit a job. Mental health, family time, pursuing a passion, etc. Maybe reframe the question? If you really want to leave your job, perhaps focus on building that online selling business FIRST while still employed, then transition once it's generating enough income? Tax savings alone won't justify quitting, but if there are other benefits to you personally, those might tip the scales. Just something to consider.

I've been in a similar situation with multiple income streams, and I want to echo what others have said - the math almost never works out in favor of quitting for tax reasons alone. However, I'd suggest looking at some specific strategies that might help your situation without giving up that $115k: 1. Max out both your 401(k) contributions if your employers offer them - that's potentially $46,000 in pre-tax savings for 2024 ($23,000 each) 2. If either job offers HSA options, those are triple tax-advantaged 3. For your part-time work, make sure you're tracking ALL legitimate business expenses - home office, equipment, supplies, etc. The burnout you're experiencing is real and valid, but there might be other solutions. Could you negotiate remote work, flexible hours, or even a sabbatical at one of the jobs? Sometimes employers are willing to work with valuable employees to prevent turnover. If you do decide to build an online business, definitely start it as a side project first while keeping your current income. Once it's generating consistent revenue, then you can make an informed decision about transitioning away from traditional employment. Your financial security is worth more than the tax savings you'd get from a lower income bracket.