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Posted by wangchieh on November 13, 2006, 8:09 pm
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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:
1. Does this mean if I make $74,199 that I will have to pay
$22,769 in taxes?
2. Does this mean if I make $74,201 that I will have to pay
$35,883 in taxes?
Sorry for my ignorance. I appreciate any answers I can get.
Thanks!!!
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Posted by joetaxpayer on November 14, 2006, 8:28 pm
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wangchieh@wongfaye.com wrote:
> 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:
>
> 1. Does this mean if I make $74,199 that I will have to pay
> $22,769 in taxes?
>
> 2. Does this mean if I make $74,201 that I will have to pay
> $35,883 in taxes?
>
> Sorry for my ignorance. I appreciate any answers I can get.
>
> 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%.
http://www.fairmark.com/refrence/2006reference.htm
provides a nice chart showing this.
JOE
JoeTaxpayer.com
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by John H. Fisher on November 14, 2006, 8:28 pm
Please log in for more thread options wangchieh@wongfaye.com wrote:
> 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:
>
> 1. Does this mean if I make $74,199 that I will have to pay
> $22,769 in taxes?
>
> 2. Does this mean if I make $74,201 that I will have to pay
> $35,883 in taxes?
>
> Sorry for my ignorance. I appreciate any answers I can get.
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:
http://www.irs.gov/formspubs/article/0,,id=150856,00.html
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Bill Brown on November 14, 2006, 8:28 pm
Please log in for more thread options wangchieh@wongfaye.com wrote:
> 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
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.
> Questions:
>
> 1. Does this mean if I make $74,199 that I will have to pay
> $22,769 in taxes?
No. More like $15,107.
> 2. Does this mean if I make $74,201 that I will have to pay
> $35,883 in taxes?
No. More like $15,108.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Bob Sandler on November 14, 2006, 8:47 pm
Please log in for more thread options > 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:
>
> 1. Does this mean if I make $74,199 that I will have to pay
> $22,769 in taxes?
>
> 2. Does this mean if I make $74,201 that I will have to pay
> $35,883 in taxes?
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)) = $15,107.25
Similarly, for income of $74,201 the calculation is:
15107.50 + (28% x (74201 - 74200) = $15,107.78
Bob Sandler
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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