Major income jump from $13k to $120k - tax implications and planning?

That's quite the income jump, congratulations! Here's what you should know: With the significant increase in income, you'll likely move into a higher tax bracket. However, remember that our tax system is progressive, meaning only the income in each bracket gets taxed at that bracket's rate. At $120k combined with your spouse (assuming they work too), you could be in the 22% or 24% bracket depending on your spouse's income. Having two jobs complicates withholding calculations. The W-4 from each employer doesn't "know" about the other job, so you might be underwithholding. Consider using the IRS Tax Withholding Estimator online to check if you're having enough withheld from both jobs combined. As for the house question - buying a home isn't the tax advantage it once was. With the standard deduction at $27,700 for married filing jointly in 2023, you'd need significant mortgage interest and other itemized deductions to exceed that threshold. Buy a home if it makes sense financially overall, not just for tax reasons.

Had a similar situation last year when I jumped from 30k to about 90k. I was totally stressed about figuring everything out until I found this AI tax assistant at https://taxr.ai that was incredibly helpful. You upload your documents (pay stubs, last year's return, etc.) and it analyzes everything to give you personalized advice. The cool thing is it flagged that I was severely underwithholding at my new job and calculated exactly how much additional I needed to withhold each paycheck to avoid a surprise tax bill. It also ran projections showing how much I'd owe with different scenarios (buying a house, contributing different amounts to retirement, etc). Really helped me visualize my options.

Just wanted to follow up about the https://taxr.ai tool mentioned earlier. I was skeptical but decided to try it since I'm also dealing with a big income jump this year. It was surprisingly comprehensive! I uploaded my pay stubs and last year's return, and it immediately flagged that I was heading toward a $4,200 tax bill next April. The tool showed exactly how my new income pushed me into higher brackets and calculated that I needed an additional $350 withheld monthly to break even. It also ran some retirement contribution scenarios showing that if I maxed out my 401k, I'd save about $5,300 in taxes. Already adjusted my withholding and increased my 401k percentage based on those recommendations. Wish I'd known about this months ago!

If you're trying to reach the IRS to ask about your specific situation (which I highly recommend with such a big income change), good luck getting through on their phone lines. I spent WEEKS trying to get clarification on something similar. I finally used https://claimyr.com and got through to an IRS agent in under 20 minutes after waiting for hours on multiple days. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c. Basically the service calls the IRS and navigates all the phone menus and wait times, then calls you once they have an agent on the line. Was honestly worth it to get clear answers directly from an IRS representative about how to handle my withholdings with multiple jobs. The agent walked me through filling out a new W-4 that accounted for all my income sources.

I have to admit I was wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway because I was desperate to talk to someone at the IRS about estimated tax payments with my new consulting income. Called the IRS myself three different days and never got through (waited over 2 hours each time before giving up). Used the Claimyr service yesterday afternoon, and they called me back in 45 minutes with an IRS representative on the line! The agent cleared up all my questions about handling income from multiple sources and helped me calculate the right estimated tax payments. Just wanted to come back and say it actually works as advertised. Definitely using it again next time I need to talk to the IRS.

Don't overlook retirement accounts as a tax strategy! With your income jump, this is a huge opportunity. Maxing out a 401k ($22,500 for 2023) would reduce your taxable income significantly. If your employers offer a Roth 401k option, that might be worth considering too given your age and income trajectory. Also look into an HSA if you have a high-deductible health plan. It's triple tax-advantaged - goes in pre-tax, grows tax-free, and comes out tax-free for medical expenses. You can contribute up to $3,850 (individual) or $7,750 (family) for 2023. These strategies will likely save you more in taxes than home ownership in the current environment, plus you're building wealth rather than just reducing your tax bill.

Make sure you're thinking about estimated taxes too! With such a big income jump, your withholding might not cover everything, especially with two jobs. If you end up owing more than $1,000 when you file, you could face underpayment penalties. You can avoid this by either: 1) Withholding at least 90% of what you'll owe for the current year, or 2) Withholding at least 100% of what you owed last year (110% if your AGI was over $150,000). The second option is probably easier for you since your income last year was much lower. Just make sure your total withholding exceeds your 2022 tax liability and you should avoid penalties!

Congratulations on the huge income jump! That's an incredible achievement. A few additional thoughts to consider: Since you mentioned you're married as of June, make sure you update your filing status considerations. If your spouse also works, you'll want to coordinate your withholdings together to avoid surprises. The "married filing jointly" vs "married filing separately" decision could impact your overall tax strategy. Also, with $40k in student loans, don't forget about the student loan interest deduction! You can deduct up to $2,500 in student loan interest paid during the year, which phases out at higher incomes but you should still qualify at $120k combined income. One more thing - consider setting up automatic transfers to a separate savings account specifically for taxes. Even if you get your withholding perfect, it's good practice to have a tax buffer fund. Maybe start with $200-300 per month until you get a better handle on your actual tax liability. Better to be prepared than scramble to find money at tax time! The tools others mentioned (TaxR.ai for planning, Claimyr for IRS contact) sound helpful, but also consider meeting with a CPA for your first year with this income level. They can help you set up systems and strategies that will serve you well going forward.