Tax Bracket Question

[Townhallsavoy]

So I was sitting in Wells Fargo yesterday waiting for someone to help me with my XIAHONGLONGDONG issue, and I noticed a pamphlet.  It detailed new tax information for 2012 and 2013, and it was mainly focused on capital gains and investments, but it also had income tax information. 

Right now, my wife and I make $82,000 combined and file jointly.  This puts us in the 25% tax bracket for 2012.  In 2013, our bracket will be taxed at 28% on income.  The bracket below is at 15% and will remain 15%. 

So, quick math says that we will pull in $59,040 after taxes after the government takes 28% away.

If I took a $15,000 paycut, it would knock us to the lower tax bracket.  So while we would be making only $67,000 combined, we would still be banking nearly same amount with the 15% tax ($56950). 

Is that accurate? 

[Godfather]

So I was sitting in Wells Fargo yesterday waiting for someone to help me with my XIAHONGLONGDONG issue, and I noticed a pamphlet.  It detailed new tax information for 2012 and 2013, and it was mainly focused on capital gains and investments, but it also had income tax information. 

Right now, my wife and I make $82,000 combined and file jointly.  This puts us in the 25% tax bracket for 2012.  In 2013, our bracket will be taxed at 28% on income.  The bracket below is at 15% and will remain 15%. 

So, quick math says that we will pull in $59,040 after taxes after the government takes 28% away.

If I took a $15,000 paycut, it would knock us to the lower tax bracket.  So while we would be making only $67,000 combined, we would still be banking nearly same amount with the 15% tax ($56950). 

Is that accurate?

Using simple math, without deductions and such - Yep

[War Eagle!!!]

without deductions and such - Yep

This is the key component to why the simple math won't work. If you guys have deductions, your tax rate will effectively be lower than the 28%...

[barkndog]

Nope, doesn't work that way - more income will still bring more take home pay.  It's a progressive tax, this site has a good explanation.

our federal income tax brackets reflect marginal rates, not a rate that is applied to your entire income. Here’s a quick example based on current income tax rates…

For a married couple filing jointly in 2008, the 10% tax bracket covers income from $0 to $16,050. From $16,050 to $65,100 the tax rate is 15%. And from $65,100 to $131,450 the tax rate is 25%. A couple with a taxable income of $100k will be in the 25% tax bracket, but they won’t have to pay 25% in federal income taxes on the full amount. Rather, they’ll pay just 10% on the first $16,050, 15% on the next $49,050, and 25% on the last $34,900. This works out to $17,687.50, or an effective rate of just under 18%.

Edit:  So this means the more money you make, you still bring more home but at a smaller rate.  Your best bet is to find ways to minimize your taxable income - flexible spending accounts, 401k's, etc that comes out before taxes.

[Townhallsavoy]

Deductions like a marriage certificate, a student loan, a mortgage, and charity donations? 

We have those. 

What's the argument against a fair tax?

You know, getting older and learning about all of this adult shit is starting to piss me off. 

[Townhallsavoy]

Nope, doesn't work that way - more income will still bring more take home pay.  It's a progressive tax, this site has a good explanation.

That makes a lot more sense. 

[GH2001]

Deductions like a marriage certificate, a student loan, a mortgage, and charity donations? 

We have those. 

What's the argument against a fair tax?

You know, getting older and learning about all of this adult shit is starting to piss me off.

You are taxed on your AGI. With all of your deductions, you may very well go down to that next bracket.

[GH2001]

Deductions like a marriage certificate, a student loan, a mortgage, and charity donations? 

We have those. 

What's the argument against a fair tax?

You know, getting older and learning about all of this adult shit is starting to piss me off.

There is not a good argument against a fair tax, other than to fund entitlements and take from those who make money and give it to those who don't. And I am being dead serious. You've heard the term "wealth redistribution". Well, this is it. Yes, this stuff is very frustrating seeing it as you get older. Sometimes it takes living through it to understand it fully. Kudos to you for wading through it and trying to comprehend it objectively.

[Vandy Vol]

You are taxed on your AGI. With all of your deductions, you may very well go down to that next bracket.

You're taxed on your taxable income, actually.  Your AGI is your gross income minus certain reductions that are detailed in 26 U.S.C. § 62.  These reductions are mostly for businesses and certain professions.  Your taxable income is your AGI minus personal exemptions and itemized deductions/standard deduction.

[GH2001]

You're taxed on your taxable income, actually.  Your AGI is your gross income minus certain reductions that are detailed in 26 U.S.C. § 62.  These reductions are mostly for businesses and certain professions.  Your taxable income is your AGI minus personal exemptions and itemized deductions/standard deduction.

Correct. Point being, he isn't taxed on the Gross Income he mentioned. He will be taxed on much lower than that. I used AGI because I also have a business when what I should have said was taxable income.

[Kaos]

You're taxed on your taxable income, actually.  Your AGI is your gross income minus certain reductions that are detailed in 26 U.S.C. § 62.  These reductions are mostly for businesses and certain professions.  Your taxable income is your AGI minus personal exemptions and itemized deductions/standard deduction.

Don't listen to this guy.

[GH2001]

Don't listen to this guy.

In regards to taxes or teh gay butt sex? Because I hear he is quite the SME on teh gay butt sex.

[Snaggletiger]

In regards to taxes or teh gay butt sex? Because I hear he is quite the SME on teh gay butt sex.

Spaniards and Mexicans Expert?

[Vandy Vol]

In regards to taxes or teh gay butt sex? Because I hear he is quite the SME on teh gay butt sex.

I hear that gay butt sex shows up on Kaos's return as taxable income to him, along with everything else known to man.

[GH2001]

I hear that gay butt sex shows up on Kaos's return as taxable income to him, along with everything else known to man.

Incum? Well, he does dress up like a cat on purpose.