I can’t seem to find a straightforward answer to my straightforward question, so here we are.
Suppose I am in the 12% income tax bracket if my Adjusted Gross Income is less than $60,000.
And If my AGI is $60,000 or more, that would bump me up to the 15% bracket.
Now, whoops, it looks like my AGI is $70,000.
If this were the case, am I paying 12% on $60,000 and 15% on $10,000?
Or, am I paying 15% on $70,000?
Thanks!
mmm
The basic idea of a tax bracket is that you pay the tax rate of that bracket only on the income in that bracket. So in your example, you pay the 15% rate only on the $10,000 exceeding the threshold of the lower bracket. Otherwise, it would frequently happen that an increase in gross income reduces your net income.
Ah, that is what I suspected/hoped for.
I know someone wise would step up.
Thanks
mmm
To be fair, I think this is a commonly misunderstood part of our tax scheme. I suspect it’s often weaponized in politics too. It’s the kind of thing they really should be teaching in school but don’t 
No AGI is BEFORE the standard deduction. Much of that $60,000 is taxed at 0%.
True.
But it’s not clear to me the OP meant AGI in its correct technical meaning or was (mis-) using it as shorthand for “the income amount I pay taxes on.”
OP: the correct buzzword for “the income amount I pay taxes on” is “taxable income” or TI.
here is the best website I’ve seen that gives you a basic idea of what slivers of income will be taxed at what percentages. Just input your regular and capital gains income.
Despite my tax return being 40+ pages long, this website calculated my tax within $2000.
Understood, thanks.
mmm
Yes, except even better than that.
Assuming a joint return-
You pay 10% of the first TAXABLE $23K
Then 12% from $23K to $94k
Then 22% over 94k (higher rates continue up to 37% starting at $731K.
There is no such thing as a raise putting you just into a higher tax bracket thus you earn less net.
That isafter the standard deduction amounts for 2024 being: $29,200 – Married Filing Jointly $14,600 – Single.
So a married couple pays 0 up to $29,200.
Thus your AGI of $70K as a MFJ= 0 up to $29K, then 10% for the next $23K, then 12% on the remainder.
Fairly concise … JFTR:
Since we’re talkin’ taxes…
I’ve been selling a lot of stuff on eBay, enough to warrant a 1099. Because of this I plan on having my taxes prepared this year.
When I go see my friendly tax preparer, what do I need to bring with me, eBay-wise?
Specifically, can I just provide the numbers alone ($200 spent on packaging in 2024, $600 spent on postage, etc.)?
Or, should I provide actual documentation for each expense (a stack of Amazon receipts, for example).
mmm
The major item is how much you paid for the items. Then costs. Postage and materials can be just a total.
If those are really illustrative numbers, just a sheet of paper with those handwritten on them should suffice.
A tax preparer doesn’t need your receipts, and it would cost you a lot if you just bring them a stack to go through, if they accept you at all.
Here’s Schedule C. Note how section 2 parses out a lot of the stuff by category. If you can prepare an Excel that summarizes the total in each category if applicable, it helps a lot. If some are a mystery to you, you can ask them. Line 27a/48 is a big catchall for eBay based businesses.
Then all the receipts you should keep yourself if you ever need them as evidence.
Very helpful info, thanks.
Another scenario that I would like to get your perspectives on:
Suppose that, as a youth, I was given multiple comic books every year. I’ve kept them in pristine condition and realize, as an adult, that they are worth a good amount of money.
So I sell them. I gross, say, $5,000.
My question: Is this 5k really considered income? That I have to pay taxes on?
Is there a (legal) loophole to get around this insanity?
mmm
It’s absolutely misunderstood by lots of people. This is why you hear people turning down a raise “because it will put them in a higher tax bracket”.
You made the decision to convert a gift into money. You could have burned the comics. You could have done all sorts of things. Instead, you made the decision to convert them into money.
Did you get $5,000? Yes. Is that $5,000 you didn’t have before? Yes. Then it’s taxable income. Nothing insane about it.
What happens if he instead trades me those comics for, say, some bottles of wine?
Fair enough.
Now, say, I just purchased these comics last year, paid $5,000 for them. But now I need the money, so I eBay them and receive $5,000.
Still considered income, I suppose. Still taxable, I’m sure.
mmm