[sjdb77]

I'm in a mini-retirement right now and living in SF. It was surprising to learn that below like $50k you basically pay 0 in income tax in California. As a single person I can very comfortably live off $40k/year in investment income and pay no taxes right now.

[paxys]

Unless you get very lucky with housing living off $40k/year is pretty difficult in San Francisco. Even if you manage I would definitely not call it comfortable.

[sjdb77]

I pay $2k in rent, so $24k. That leaves $1300/month for everything else. I'm easily below that most months. (No car, no drinking, cook during the week)

I don't find SF to be any more expensive than any other "big" city outside of housing cost, especially when you factor in not needing a car to get around.

[jhall1468]

How much of that $1300/month goes to dental and medical insurance? Because with no family to support, I don't see how you aren't paying close to half that in insurance.

[sjdb77]

I only just left my job this year. I chose not to get health insurance for rest of year because it's just for myself and I don't use it. (yes, slightly risky but in good health and don't plan to stay funemployed forever)

But if I did, there's the premium tax credit, which caps premiums to some % of your annual income. For a single person, 322% above the federal poverty line is $40k with a 9.56% cap, so you'd pay no more than $318 in premiums a month and whatever you pay extra (say $182 for a $500 premium) becomes a tax credit.

[NotSammyHagar]

It's dangerous not to have insurance in the us of course. You are one step away from being devastated because of someone hitting you in a cross walk or suddenly getting a real health issue. My property tax and house payments together are more than 4k a month in the seattle area. That high cost seems less "expensive" than my salary and house appreciation. I just calculated my house has grown 7% a year over 15 years based on estimated price and what houses sell for around me. So it's working out. But it's amazing to look at my salary compared to my costs.

echo "1.07^15" | bc -l

[arebop]

Just Obamacare will cost you $20k.

Of course, on $40k/year I suppose one would be taking subsidies or medicaid instead of paying full freight. But, then I guess it could be said you can make it in SF on $0/year...

[sjdb77]

No, for a single person a gold plan for Kaiser is $500/month, so $6k a year, but yes if I have $40k in investment income then I'd qualify for a premium tax credit, in this case my premium is capped to $318/month with the rest as a tax credit.

[arebop]

When I check at coveredca.com, I see the cheapest plan by estimated total cost [kaiser bronze] is $18069/year. Perhaps you're younger, or assuming that you will not actually have to use any medical services or products?

[bradlys]

> very comfortably

> (No car, no drinking, cook during the week)

We have very different views of "very comfortably" living.

For reference, the amount you have remaining every month after paying rent is close to what I end up averaging on vacation! And I definitely don't think I live a very comfortable lifestyle. (My vacations aren't even that nice - we rent budget cars, fly max economy flights, almost always stay in the bottom 25% of AirBNBs in cost, and almost always eat at $-$$ restaurants) Compared to most Americans - clearly, I spend more on vacation. Compared to my SF Bay Area peers - I spend nothing.

[PopeDotNinja]

I was living in San Francisco on an after tax income of $500/week for most of 2010-2011. Prices are a bit higher now, but I think I could scrape by on that amount if I had to. I wouldn't want to though.

[sjdb77]

Yeah...I realize I'm in a privileged position but just pointing out that if you're in a position to F.I.R.E. that taxes in California are actually low to nil for <$50k/yr despite its reputation as a "high tax state."

[uwuhn]

>It was surprising to learn that below like $50k you basically pay 0 in income tax in California.

Not if you're a contractor without a full-time employer. In college I did freelance work, and I lost nearly 30% to taxes despite making less than $5k a year from my work. Having your social security responsibility doubled is brutal.

[skybrian]

The original post was talking about income tax. There are plenty of other taxes on making money by working.

But, if you're living solely off investments you don't pay those. I was surprised to see that capital gains tax is zero below a certain income. It seems rather unfair, since you can choose when to sell.

[sjdb77]

Yeah...seems to incentivize day trading.

[icedchai]

Not really. It's only zero on long term capital gains if total income is below a certain threshold.

[sjdb77]

Isn't short term cap gains taxed like earned income, which below $50k a year is 0 in CA? For federal if you make <$52k (w/ standard deduction) you only pay like a 11% tax rate.

[beefalo]

No it has it's own tax bracket and there is no 0% bracket

[sjdb77]

I'm not familiar with how freelancing income is different than other forms of income...isn't that just a regular 1099? Are you saying you didn't receive a tax refund during tax season?

[anonuser123456]

1099 income you pay full amount of payroll tax. W2 your employer kicks in 1/2.

[icedchai]

You need tax deductions: expenses, SEP IRA contributions, home office space, utilities, etc.. You'll get that 1099 income down real quick.

[mrfredward]

With W2 employment, you and your employer split the payroll tax responsibility. When you're self-employed, you pay both halves.

If you adjust your rates accordingly, it's a wash for everyone involved (this is one of many reasons the 1099 price per hour should be around twice the W2 price per hour).

None of this has anything to do with CA income tax.

[diminoten]

You lost that because you didn't file for a tax return correctly...