I’m a 35 year old woman in New York City, making over half a million dollars in finance and pay way too much in taxes

The Salary Reddit group contains many posts from people who talk about their salary increases over the years. However, taxes recently came up in a post from a 35-year-old female in New York. She works in finance and earns more than $500k per year. 

However, she doesn’t get to walk away with $500k. She has to pay roughly $167k in federal income, Social Security, and Medicare taxes. That doesn’t even include state income taxes which are higher in New York City than most areas.

The post contains valuable lessons, and there are ways that the Redditor can reduce their tax bill. These are some of the lessons you can use along your financial journey.

Be Grateful for Earning a High Income

Commenters definitely expressed that taxes are excessive, but they also took a “the glass is half full” approach. One commenter mentioned that they previously couldn’t afford gas and now have high taxes like the 35-year-old New Yorker.

One of the top comments perfectly summed it up. It’s better to make more money and pay a lot of taxes than it is to earn less and pay less taxes. Granted, it’s still good to look for ways to reduce your taxable income with tax deductions and tax credits. The more you can reduce your tax bill, the easier it is to achieve long-term goals.

Buy Real Estate to Get Many Tax Benefits

Real estate is one of the best assets for minimizing your taxes, and it can be a great opportunity for the Redditor. She earns enough to make at least one down payment per year. Buying one rental property per year can help her avoid taxes thanks to cost segregation.

Cost segregation allows you to write off a property’s entire value in the first year. If she makes a $200k down payment to get a $1 million rental property, she can use cost segregation to depreciate $1 million from the property. This depreciation can go against her W-2 income, allowing her to show a paper loss of roughly $500k instead of reporting that much as gross income.

You’ll have to contend with monthly mortgage payments, but finding a tenant can result in positive cash flow. The Redditor can repeat this process every year, and the extra equity each property accumulates makes it even easier to pull this off each year.

Don’t Be Afraid to Advocate for Yourself

While the original post highlighted high taxes, the Redditor also took time to provide valuable advice for people in the comments. She was supportive of many people and graciously answered many people’s questions.

In one of her replies, she explained that you have to advocate for yourself to command a high salary. You also have to work your way up and not be afraid of starting from the bottom. Many people want instant gratification and quick success, but the New Yorker in this post worked hard for many years before reaching this level. 

She also mentioned you have to learn how to play the game and take the initiative. If you care, you have the potential to out earn your peers and reach your financial goals sooner.

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