My annual reminder to everyone about how tax brackets fucking work

[digitaldiscipline]

But first, a C&P of a useful snippet from Forbes, because it already says what I was afraid I was going to have to:

Rate	Single Filers	Married Joint Filers	Head of Household Filers
10%	$0 to $8,925	$0 to $17,850	$0 to $12,750
15%	$8,925 to $36,250	$17,850 to $72,500	$12,750 to $48,600
25%	$36,250 to $87,850	$72,500 to $146,400	$48,600 to $125,450
28%	$87,850 to $183,250	$146,400 to $223,050	$125,450 to $203,150
33%	$183,250 to $398,350	$223,050 to $398,350	$203,150 to $398,350
35%	$398,350 to $400,000	$398,350 to $450,000	$398,350 to $425,000
39.6%	$400,000 and up	$450,000 and up	$425,000 and up

Keep in mind that the tax rates listed in these tables are marginal rates. That means that you do not owe your rate on all of your income. For example, if you['re] single [and] earn $100,000 per year, you would not owe 28% on all of your income — you would not owe $28,000 to the federal government. You would owe 10% of $8,925, 15% of $27,325 (the difference between the top and the threshold of the second tax bracket), 25% of $51,600, and 28% of $12,150 (the difference between your income and the threshold of the third tax bracket).

(emphasis added is mostly but not entirely mine)

Let me reiterate - there is absolutely no situation where earning an extra $1 will result in you getting a smaller paycheck. If you make a million dollars, your million-and-first dollar still gives you an extra 60.4 cents of take-home pay. Even if we were to reinstate the historically-high post-WWII marginal rates, that last-earned dollar would still result in the wage-earner taking home more money, though it would be 50, 40, 20, or even 10 cents of that dollar, depending on which historical tax rate we're invoking for the conversation.

Comments

[lizkayl.livejournal.com]

True. But if you put the numbers of the higher earning spouse in first, if you're in separate tax brackets, it sure FEELS like he's halving my return!

[etcet.livejournal.com]

This isn't to do with your tax return (well, not directly); if you are married filing jointly, your combined income is what's taxed, at the thresholds delineated.... whether that's advantageous to you as a household is something to discuss with your tax preparer. I am single and can't claim my cats or parents as dependents, so that's how I always file. While it may be halving your personal return (as opposed to that of your entire household), it's only bumping up your effective (as opposed to marginal) tax rate slightly - my marginal tax rate on the last dollar earned was 25% last year, but my effective tax rate (that is, total taxes owed divided by total income) was something like 9%.

I will make use of the income-reduction items and tax credits to which I am entitled - the biggies for 2013 were mortgage interest and medical expenses, but I also gave to charity, did some unreimbursed business travel, and got robbed, all of which were among my itemized deductions.

Fortunately, I have a relatively simple tax situation - one w-2 gig, one mortgage, and very little earnings in the way of interest, so it's the matter of maybe an hour on on my tax prep site of choice, paperwork in hand, to complete my return. I mailed mine out on Tuesday, as a matter of fact.

I got audited on my 2012 return because I didn't get the 1099 to include income from a part-time contract job, so I ended up having to repay my initial return, plus what I owed, and a nominal penalty.

[hellsop.livejournal.com]

This kind of thing needs to be printed, reversed, on a baseball bat.

[curvemudgeon.livejournal.com]

But then it'll be backwards when they're looking in the mirror wondering why their face hurts.

[miamadness15.livejournal.com]

I wish everyone who screams and whines could read this. It is crystal clear!

[etcet.livejournal.com]

that's why it is a public post, and on my tumblr, too.