The 2006 tax brackets state the following:
Tax is 25% on the income between $30,650 and $74,200; plus $4,220.00 Tax is 28% on the income between $74,200 and $154,800; plus $15,107.50 Questions:
Thanks!!!
The tax on $30,650 is $4220 plus 25% of any amount over the $30,650. This adds up to $15107.50 at $74,200 taxable, at which point each dollar is taxed at 28%.
We have a graduated tax system. When you reach a level over which there would be no tax on your income, income above that level is taxed at a higher rate. When you reach the next level, the income within that new level is taxed at a higher rate. Your income is taxed at rates established AFTER deductions for your exemptions and deductions. There are also credits which can reduce your taxes. There is what is called an Alternative Minimum Tax which can impact on what you pay (depending on your income, exemptions, and deductions). Here are the 2006 Tax Rate Schedules:
First, that isn't exactly what it says. What it says is if your taxable income is between $30,650 and $74,200 then your tax is $4,220 + 25% of the excess over $30,650.
No. More like $15,107.
No. More like $15,108.
No, it doesn't mean that. You are misreading the instructions for calculating the tax. You applied the percentage to the entire amount of income, instead of to only the amount by which the income exceeds the low end of the bracket. Your wording, "the income between . . .," may be confusing you. The more usual wording, as follows, might be clearer. For example: "If taxable income is over $30,650 but not over $74,200, the tax is $4,220 plus 25% of the amount over $30,650." So for income of $74,199, you first subtract $30,650 from the total income of $74,199, which leaves $43,549. Then take
25% of $43,549, which is $10,887.25. Finally add $4,220, giving a tax of $15,107.25. Putting it in a formula, it's: 4220 + (25% x (74199 - 30650)) = $15,107.25Similarly, for income of $74,201 the calculation is:
15107.50 + (28% x (74201 - 74200) = $15,107.78Bob Sandler
No.
No.
Where do you get those numbers from? Show your calculations.
Seth
No, tax is approx. $15,107 (Tax Table amount is slightly different, and will be used if taxable income is 2. Does this mean if I make $74,201 that I will have to pay
No, tax is approx. $15,108.
Read the instruction CAREFULLY.
snipped-for-privacy@wongfaye.com posted:
No. If you read it properly, it says you should calculate
25% of your income in excess of $30,650 and _add_ the result to the $4220 tax due on the initial $30,650. (25% X $43,549 = $10,887 + $4220 = $15,107.)Here again, you use the same formula, but since the total has moved to the "next bracket" and happens to be _effectively_ the same as the minimum number in that bracket (28% of $1 is 28 cents), which would make your tax due $15,107.78 -- which turns out to be the same result, because of rounding -- or $15,108. Bill
Here's the complete list for single filers that you pulled from. It's easier to see the progression if you start from the bottom (which would mean the top in this case).
10% on income between $0 and $7,550 15% on the income between $7,551 and $30,650; /plus/ $755.00 25% on the income between $30,651 and $74,200; /plus/ $4,220.00 28% on the income between $74,201 and $154,800; /plus/ $15,107.50 33% on the income between $154,801 and $336,550; /plus/ $37,675.50 35% on the income over $336,551; /plus/ $97,653.00Look at the 15% bracket. The $755 added is because you maxed out on the 10% bracket at $7,550. You owe 10% of the first $7,550 and 15% of the amount over that up to $30,650, and so on. So for income of $12,550, you'd owe 10% of $7,550 plus
15% of $5,000, or $755 + $750 = $1,505.-- Blake Krass snipped-for-privacy@email.com
No. Based on the data you provided the tax on $74,199 is: $4220.00 + .25 * ($74199 - $30,650) = $15,107.25
No. Based on the data you provided the tax on $74,201 is: $15,107.50 + .28 * ($74,201 - $74,200) = $15,107.78.
For the additional $2 in income you will owe an additional $0.53 in taxes, which, by the way, turns out to be 26.5% of the additional $2.
-- Vic Roberts Replace xxx with vdr in e-mail address.
No.
If the income is $74,199, first you subtract $30,650, then multiply by 25%:
74199 - 30650 = 43549 x .25 = 10887.2510887.25 + 4220 = 15107.25
No.
If the income is $74,201, first you subtract $74,200, then multiply by 28%:
74201 - 74200 = 1 x .28 = .2815107.5 + .28 = 15107.78
-- D.F. Manno | snipped-for-privacy@mail.com Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. Winston Churchill
It means that if you have $79,199 in taxable income that you pay: $4220 + .25*($74199 - $30650) = $4220 + .25 * $43549 = $4220 + $10887 = $15107
It means that if you have $74201 in taxable income that you pay: $15107 + 0.28*($74201 - $74200) = $15107 + 0.28 * $1 = $15107 + $0 [$0.28 rounds down to $0)] = $15107
-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us
No. For two reasons.
1) The tax rate applies to "taxable income" rather than "gross income", so there are the effects of (for federal taxes) personal exemptions and either standard or itemized deductions. 2) The tax rate only applies to the amounts inside the brackets. But let's assume that your example of $74,199 is taxable income and apply the table rules as follows: 74,199 is in the 25% bracket. Compute 25% of the amount (74,199 - 30,650 = 43,549). 25% of 43,549 = $10,887 Add the additional 4,220 to get a total of $15,107.You subtract the lower bound because the 25% rate only applies to income those amounts. The additional amount that you add is the tax for the income that is less than the bottom of the taxable income range. The problem in your calculation was not subtracting the bottom of the range. An easy check, and the reason I knew immediately that your answer was too high is that the top of the previous bracket in the table should be very close to the amount that gets added in the next bracket up. I therefore expected a result close to $15,107.50
No. The answer is actually $15,107.78
NO
If you make $74,199, the income between $30,650 and $74,200 is $43,550. 25% of 43,550 is $10,887.50 plus $4,220 equals $15,107.50. If you make $74,201, the income between $74,200 and $154,800 is $1. 28% of $1 is $0.28 plus $15,107.50 is $15,107.78. Dennis
No. This is for *taxable* income. Taxable income is after you deduct either your itemized deductions or your standard deduction for the status (single or Married filing jointly, etc.) plus your deductions for your exemptions and dependents (how many people you claim). Missy Doyle
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