Question on 2010 tax table!

[mefordis]

I am looking over the tax table for 2010 and I am wondering what it means when it says "Plus $1675..."

Does that mean you pay $1675 more in tax on top of the 15%?

Here is the tax table for 2010. Can anyone please help with this question?

Also, any advice for someone who just jumped a tax bracket? Ouch!

[Tax Rate Schedule Y-1, Internal Revenue Code section 1(a)]
10% on the income between $0 and $16,750
15% on the income between $16,750 and $68,000; plus $1,675
25% on the income between $68,000 and $137,300; plus $9,362.50
28% on the income between $137,300 and $209,250; plus $26,687.50
33% on the income between $209,250 and $373,650; plus $46,833.50
35% on the income over $373,650; plus $101,085.50

 

[BunsenH]

I am looking over the tax table for 2010 and I am wondering what it means when it says "Plus $1675..."

Does that mean you pay $1675 more in tax on top of the 15%?

Here is the tax table for 2010. Can anyone please help with this question?

Also, any advice for someone who just jumped a tax bracket? Ouch!

[Tax Rate Schedule Y-1, Internal Revenue Code section 1(a)]
10% on the income between $0 and $16,750
15% on the income between $16,750 and $68,000; plus $1,675
25% on the income between $68,000 and $137,300; plus $9,362.50
28% on the income between $137,300 and $209,250; plus $26,687.50
33% on the income between $209,250 and $373,650; plus $46,833.50
35% on the income over $373,650; plus $101,085.50

If your income is 30,000, you pay 15% on 13,250 (30,000-16,750) plus 1,675 (10% of 16,750). Your total tax is 3,662, or 12% of your income.

In other words, you pay 10% on the first 16,750, and 15% on income in the next bracket, and so on up the scale. (graduated tax)

 

[mefordis]

Thank you! Okay, to give you a real example, I think we will have made 230,570 in 2010. Our tax bracket is 33% now.

What would we be paying in taxes? This is a big jump from last year, which was just under 200k so I am wondering if we should max out our 529 and IRAs to get us down to the lower tax bracket.

We could also buy a new computer for my small business.

Thanks!

----

33% on the income between $209,250 and $373,650; plus $46,833.50

 

[Mrs.Toad]

Thank you! Okay, to give you a real example, I think we will have made 230,570 in 2010. Our tax bracket is 33% now.

What would we be paying in taxes? This is a big jump from last year, which was just under 200k so I am wondering if we should max out our 529 and IRAs to get us down to the lower tax bracket.

We could also buy a new computer for my small business.

Thanks!

----

33% on the income between $209,250 and $373,650; plus $46,833.50

The tax on 230,570 would be 53,869.10

(230,577 - 209,250) = 7,035.60

7,035.60 + 46,833.50 = 53,869.10

If you managed to get your income down to last year's level, say 200,000 even, your tax would be 44,243.50. Only you can decide if it's worth it to you to spend 30,500 to save 9,600. (Of course, if you can do it through retirement savings, it's not really spending, so...)

 

[mefordis]

The tax on 230,570 would be 53,869.10

(230,577 - 209,250) = 7,035.60

7,035.60 + 46,833.50 = 53,869.10

If you managed to get your income down to last year's level, say 200,000 even, your tax would be 44,243.50. Only you can decide if it's worth it to you to spend 30,500 to save 9,600. (Of course, if you can do it through retirement savings, it's not really spending, so...)

Thank you so much! I think I just need to get the most current pay stub to my accountant and see how much we have paid thus far. That will tell me how much we owe. Then we have deductions for the business (only 33k was made from the business) and our kids who we deduct. We usually get a 5 tax refund every year so I probably shouldn't count on that this year, right?

 

[HelenePA]

if you search for income tax calculator you might be able to plug everything in and get a answer.

ETA and dont forget all of the bush tax cuts have now expired. kids are only 500 not 1000 so I would not count on a large refund unless the lame ducks can get their stuff in order and put them back in asap.

 

[mefordis]

if you search for income tax calculator you might be able to plug everything in and get a answer.

ETA and dont forget all of the bush tax cuts have now expired. kids are only 500 not 1000 so I would not count on a large refund unless the lame ducks can get their stuff in order and put them back in asap.

OMG - I really hope they put them back in before Dec 31! I guess if he wants to get re elected he will.

 

[beaucoup]

Thank you! Okay, to give you a real example, I think we will have made 230,570 in 2010. Our tax bracket is 33% now.

Nice income!
What kind of work do you need to do to make that kind of money?

 

[mefordis]

Nice income! Wish we made that much.
What kind of work do you need to do to make that kind of money?

My husband and I are both in IT. But don't get the wrong picture. We live in a home built in 1960, our kids are in public school, drive a '98 Honda and a 2002 Toyota (but they are paid for!) and aren't left with all that much spending money. People on our block are getting their houses remodeled, etc. Not us.

Cost of living is very high here - prop taxes are 13k. We use every penny of it

 

[HelenePA]

OMG - I really hope they put them back in before Dec 31! I guess if he wants to get re elected he will.

I cant say much with out it getting political.. I am watching like a hawk to see if they are put back in place.. this is not a good year for them to let them expire for a LOT of people.

 

[beaucoup]

My husband and I are both in IT. But don't get the wrong picture. We live in a home built in 1960, our kids are in public school, drive a '98 Honda and a 2002 Toyota (but they are paid for!) and aren't left with all that much spending money. People on our block are getting their houses remodeled, etc. Not us.

Cost of living is very high here - prop taxes are 13k. We use every penny of it

Got it. I did notice you lived in NJ when I asked. Wonder if the incomes there are a little higher due to your areas cost of living. Still a nice number.

 

[Mrs.Toad]

Thank you so much! I think I just need to get the most current pay stub to my accountant and see how much we have paid thus far. That will tell me how much we owe. Then we have deductions for the business (only 33k was made from the business) and our kids who we deduct. We usually get a 5 tax refund every year so I probably shouldn't count on that this year, right?

That would depend entirely on how much money is being withheld from your paychecks and whether you make estimated payments towards your business income. You say you have an accountant. He/she knows your situation better than any of us do, and would be far better qualified to answer your questions than a bunch of people on a message board with only limited info.

 

[kiddo76]

if you search for income tax calculator you might be able to plug everything in and get a answer.

ETA and dont forget all of the bush tax cuts have now expired. kids are only 500 not 1000 so I would not count on a large refund unless the lame ducks can get their stuff in order and put them back in asap.

The tax cuts will not expire until 12/31/10, so whether the cuts are extended or not will not affect your 2010 tax return.

Whether you get a refund or not depends on how much you have had withheld vs. your total tax obligation for the year, so there's no way to know that based on just knowing your income.

 

[hentob]

Nice income!

Not really The OP is from NJ. So, on top of being forced to share her income with others, she has to pay horrific taxes.

 

[hentob]

My husband and I are both in IT. But don't get the wrong picture. We live in a home built in 1960, our kids are in public school, drive a '98 Honda and a 2002 Toyota (but they are paid for!) and aren't left with all that much spending money. People on our block are getting their houses remodeled, etc. Not us.

Cost of living is very high here - prop taxes are 13k. We use every penny of it

Sorry, I posted before I read yours

 

[wvjules]

Holy Crap! I just calculated my pay for the rest of the year and I will have missed the 25% bracked by less than $1000! I am greatful to be poor! lol

DBF, not so lucky and poor guy doesn't have a child to deduct either.

 

[kiddo76]

Holy Crap! I just calculated my pay for the rest of the year and I will have missed the 25% bracked by less than $1000! I am greatful to be poor! lol

DBF, not so lucky and poor guy doesn't have a child to deduct either.

But only the $1000 would be taxed at the higher rate, not your whole income.

 

[wvjules]

But only the $1000 would be taxed at the higher rate, not your whole income.

Oh, good to know!

*I are stoopid sometimes.

 

[kiddo76]

Oh, good to know!

*I are stoopid sometimes.

You're not stupid, it's a common mistake.

 

[crashbb]

You're not stupid, it's a common mistake.

Yup!

We often read (here and elsewhere) about people complaining about a bonus or raise and how they will make less money than before because they are bumped into a new tax bracket. They don't understand that only the "extra" money gets taxed at the new rate. They will be paying more in taxes, but there is no way that the extra money would cause their net income to go down (at least the tax brackets will not cause this).