F-ing taxes

Miscellaneous and Personal Stuff I Must Share
1

I like bridges and highways and public schools and medicare and welfare-to-qualified-recipients and much as the next guy (provided the next guy is a liberal)…

But I just found out today that I’m in the same income bracket as someone who makes $171,450 a year (and I am on the LOWEST end of that bracket)

Seriously?? Someone pulling in over 14K a MONTH is taxed at the same rate as me??

FML.

Besides maxing out my tax-deferred retirement accounts, are there any legit ways to reduce my taxable income so I can squeeze into a lower bracket?

Dammit.

2

If you are making just over $82K, NO, someone making $171K is not being taxed at the same rate as you.

If you’re at the very bottom of the $82K-$171K bracket, then only a smidge of your taxable income is being taxed at 28% (PDF: see page 89); all of your taxable income below the $82K mark is being taxed at an average rate of about 20%. The guy making $171K is seeing about half of his taxable income taxed at 28%; his overall average tax rate for all of his taxable income is 24%.

Get it? Your tax rate is 20%, his is 24%. Save your indignation for a rainy day.

3

Aha, so s/he is.

Note to self: do not become a CPA

4

Thanks, I actually understood it before you edited it to include the red-bold “no,” rhetorical “get it?” and comment about my indignation.

Let me know when you’re through snarking up your post so I can submit a final “thank you”

5

I appreciate your patience; I’ve done enough damage for one day, and now I await your gratitude. :smiley:

6

Interestingly, I would bet that many people who bitch about the high taxes they pay are in the same boat as the OP. In other words, they are not really aware of the specifics of how taxation works, and often think they are getting ripped off.

7

I didn’t say I was getting ripped off, I was just surprised to see that $82,000 - 171,000 was taxed at a rate of 28%.

“damn” I thought, “rather than give this any scrutiny I better go post something on the SDMB”

And I blew all my indignation for nothing :frowning:

8

I know, you instinctively expected the guy with twice your income to get hit significantly higher than you, while it’s shocking that the guy making X+1 (where X is the bracket threshold) dollars gets a significantly higher rate than the guy making (X-1) and 99 cents.

Just you wait 'til you get to where the Alternative Minimum Tax kicks in. THEN you’ll be raving.

9

FWIW, here’s the amount of tax and tax rate, both as a function of taxable income.

The tax rate curve has a couple of dimples in it, but overall it’s not a bad approximation of “continuously progressive.”

10

Well this turned out to be a good thing. You learned something and the anger went away. If you haven’t complained on the dope you might have been in a foul mood for a day or two.

SDMB- Fighting Ignorance since 1973 and now improving your mental health.

11

True, until I start pulling in $300K.

Then I’ll cite this:

And I’ll be all “I had my manservants Benson & Hedges run some numbers and discovered my tax rate is similar to a gentleman pulling in $350K! I consoled myself by lashing a gardener and polishing one of my Maybachs (not the white one, the off-white one)”

12

No complaints about paying taxes here but please stop telling me about these wonderfull deductions and credits I’m going to get.

“Oh, you have a child? They’re great cause they give you a big ol’ tax break for em.”
Reality: Mom & Dad combined make $130K/yr. Tax break for having a kid, $0.

“Oh, you paid over $10,000 for daycare this year? You should get most of that back on your taxes!”
Reality: Maximum childcare credit, $600.

“Oh, you put in new windows? The govm’t is giving energy tax credits on home improvements! It’s like getting free windows!”
Reality: New windows $4000. Tax credit $400.

13

The rest of the post has been addressed but yes, there are ways though they may not all be available to you.

The one I can think of that doesn’t “lose” you anything in the short term is to contribute to flex spending accounts if appropriate (the healthcare accounts for example). This way your out of pocket medical expenses are pretax (and I believe they reduce your exposure to FICA/Medicare also). Of course to take advantage of these you typically have to sign up at the beginning of the year, or upon having a life event.

  • Contribute to ROTH or non-deductible regular IRAs if you’re not already doing so and if you’re eligible. I’m assuming you can’t do a deductible IRA, or have maxed out the deductible part of course. While neither the Roth nor the nondeductible IRA reduces your income, at least any earnings on those won’t affect your short-term income.

Make donations of cash and goods. These of course are deductible and therefore reduce your taxable income. Dig for any mileage deductions (e.g. miles I drive running the GS cookie sale, I keep track of… it ain’t a lot of money but every penny helps). Mileage for medical visits is also deductible, if you’re unfortunate enough to have sufficient medical expenses to take the deduction (7% of your AGI I think).