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Posted by wbertram on February 17, 2008, 5:15 pm
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TomYoung wrote:
>> Phil wrote:
>>> I want to keep myself in the 15% tax bracket. I converted part of an IRA
>>> to a Roth and can recharacterize part of that back to keep myself in the
>>> 15% tax bracket. I figure by changing the amount that I enter from the
>>> 1099 I will know how much to recharacterize. But I can't figure out
>>> where turbo tax tells me my marginal tax rate.
>> Marginal rate is given in Tools|History.
>>
>> You can also look at the Tax Rate Table in the IRS 1040 Publication.
>> Either a paper copy or download fromwww.irs.gov
>
> Actually, what you see in Tools|History is the marginal rate you'd pay
> in the tax bracket that encompasses your taxable income, but it may
> not be your real marginal rate, depending on the composition of your
> income, phase-out of deductions and credits, etc. (The U.S. tax code
> is so complex and has so many phase-outs, claw-backs and general
> "gotcha's" that there's really no way to look up your marginal rate
> with any authority.)
>
> What I always do to determine this number is to override a tax return
> line item normally subject to tax bracket rates (e.g., wages) by
> increasing the number that was in my "as filed" tax return by $100,
> then seeing how much more taxes I'd pay compared to my "as filed"
> taxes. When I'm finished with this exercise and go to exit Turbo Tax
> I answer "no" to the "do you want to save this file" question. You
> can see how much "room" you have in a tax bracket by increasing some
> regular income line item by $100, $200, $300 and so on until the
> marginal rate changes.
>
> Tom Young
Tom,
That is what I do also. Shame that the tax code is so screwed up that
there is no simple answer to a simple question. Worse yet, the tax code
changes mid-year, or even post-year, as the AMT did this year, so that
it is next to impossible to do realistic tax planning.
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