The maximum amount of earnings subject to the 6.2% Social Security payroll tax climbed to a record $132,900 in 2019.

In other words, those lucky enough to have jobs and earn $132,900 or more will have to pay $8,240 a year in Social Security tax. This tax would be fine if Social Security was fully funded, but at the current rate, retired citizens will only get about 70% of the expected payout by 2040.

But of course, you can’t forget about Medicare, which is 1.45% of all income earned. And Medicare doesn’t have an income cap. So the reality is that a $132,900 a year laborer will have to pay $8,240 in Social Security tax plus $1,927 in Medicare tax for a total of $10,167 in 2019. That total taxation number is likely to go up in 2020 and beyond.

If you are “unlucky” enough to be your own boss, you’ve got to pay the 6.2% Social Security tax + 1.45% Medicare tax times two (employer plus employee)! In other words, a self-employed individual making $132,900 will now have to pay over $20,300 a year in Social Security + Medicare tax.

And the great irony is, good luck trying to collect unemployment benefits if your business goes bust.

Out of the estimated 173 million workers who will pay Social Security taxes in 2019, about 12 million (7%) will be paying more. But as I’ve shown you before, anybody who makes between $100,000 – $200,000 and lives in a large city is considered middle class. Therefore, we can conclude the middle class is getting punched in the face even harder.

Don’t forget, there’s also the 0.9% Additional Medicare Tax on employees that went into effect in 2013. If you make more than the below thresholds, you’ve got to pony up 2.35% in Medicare taxes (1.45% standard + 0.9% additional).

The semi good news is if you’re self-employed, the employer Medicare rate stops at 1.45% and is exempt from the additional 0.9% even if you make more than these thresholds. The bad news is these income amounts aren’t being adjusted for inflation, so more and more people are getting subject to the additional 0.9% every year.

• $250,000 for married taxpayers who file jointly.
• $125,000 for married taxpayers who file separately.
• $200,000 for single and all other taxpayers.

John F. Kennedy once said, “Ask not what your country can do for you, ask what you can do for your country.”

I took his message to heart when I came to America as a teenager. As soon as I started my first job out of college, I was proud to pay taxes to help our country thrive.

Starting around age 26, I began paying more than $100,000 in Federal and State income taxes a year. I distinctly remember coming home after a 14-hour day exhausted and finally analyzing my pay stub.

25 percent of my pay went to Federal taxes. 6 percent went to State taxes. 7.65% went to FICA taxes. After contributing to my 401(k), more than half my gross paycheck was gone.

It’s one thing to pay taxes when you’ve got a pleasant job with relatively comfortable hours. It’s another thing to pay lots of taxes when you’re often miserable at work. The desire to be so patriotic like JFK said declines.

Making W2 income is the most inefficient way to earn money. High taxes is why some CEOs gladly accept a $1 salary in exchange for earning stock grants that are taxed at long-term capital gains tax rates.

Let’s look at my three favorite ways to earn money and pay less taxes.

I used to despise property taxes because the city would raise them even when property prices were collapsing during the financial crisis. It was/and still is up to property owners to fill out a complicated form, find comparable homes that have dropped in price within a certain radius, make sure the comparable sales fit within a certain timeframe, and pay a $60 fee to do so with no guarantee you’ll win!

If you didn’t spend time contesting your property taxes, the city would gleefully raise them despite the obvious declines. The city counts on meek or ignorant people to fill their coffers and pay themselves handsome salaries. It’s just like how members of Congress continued to get paid even when they shut down the government in 2013. Can you imagine losing your job in the recession and having to pay higher property taxes while knowing your neighbor sold his house for 20% less than the city’s assessment?

I fought my property taxes in 2009, 2010, 2011, and 2012 and won for a particular property I bought in the beginning of 2005. I had to fight since the value of my stock and real estate holdings were getting hit and I no longer had a job in 2012. Since 2013, I’ve let the city tax me back to my normal purchase price plus a ~2% a year catch up increase because the economy has thankfully recovered. I don’t mind paying my fair share so long as it’s just.

After paying ~$350,000 in property taxes since 2003, I’ve finally accepted the reality that it’s up to those of us who saved like crazy and took the risk of owning property to pay for our community’s infrastructure, education, public transportation, service men and women, and other public works. We must pay for those who cannot or will not.

What I’ve also realized is that after much debate, my fellow renters absolutely believe they are paying their fair share of property taxes, even if they aren’t cutting a separate check to the city twice a year. With this thought in mind, I now believe it’s logical behavior for renters to keep on voting for increased government spending because they all want better and are willing to pay for it through higher rents.

For the past several years I’ve filed a tax extension. A tax extension allows taxpayers to file for a six-month extension if they need more time to prepare their tax returns.

The neat thing is that you can obtain an extension for any reason, so long as you submit Form 4868 electronically or on paper by the April filing deadline.

By filing a tax extension, you’ll also avoid failure-to-file penalties, which can add up to 25% of the tax due. That said, you must still pay your estimated taxes if you owe anything by the April deadline, despite getting an extension.

So why the heck would anybody file an extension? Here are the main reasons.