Quick Tax Question

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irishnick23
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Quick Tax Question

Post by irishnick23 » Tue Oct 03, 2017 8:30 pm

Just want to make sure my thinking is correct on this. I'm trying to predict my Federal Tax bracket. I believe the process is:

Gross Annual Income - Annual Pre tax retirement contributions - Annual pre tax benefit payments (health insurance, transit etc.) - Standard mfj deduction (we don't itemize) = Taxable Income (match to corresponding bracket)

Am I right here? I'm pretty sure I am, but it never hurts to double check!

livesoft
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Re: Quick Tax Question

Post by livesoft » Tue Oct 03, 2017 8:32 pm

Don't forget exemptions (you, spouse). There are calculators all over the internet that show the simplified calculation you are trying to do.
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irishnick23
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Re: Quick Tax Question

Post by irishnick23 » Tue Oct 03, 2017 8:36 pm

livesoft wrote:
Tue Oct 03, 2017 8:32 pm
Don't forget exemptions (you, spouse). There are calculators all over the internet that show the simplified calculation you are trying to do.
I knew I was forgetting something! Thanks.

I know the internet is full of calculators and I use them often. I also like to maintain my own spreadsheets to track our financial life so this is why I'm asking.

delamer
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Re: Quick Tax Question

Post by delamer » Tue Oct 03, 2017 8:38 pm

Also depends on whether income includes dividends and/or long-term capital gains, which may be taxed at less than your ordinary income bracket.

Try the TaxCaster app. You input your expected income by type, deductions, plus exemptions, and it spits out your taxable income, tax in dollars, and tax bracket.

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Peter Foley
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Re: Quick Tax Question

Post by Peter Foley » Tue Oct 03, 2017 8:40 pm

Note that Gross Annual Income is not an often used term.

In your particular case it would likely include earned income from wages and any interest or short term capital gains.

For a retiree that term might include IRA/401k/403b/457 withdrawals and Roth conversions.

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FiveK
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Re: Quick Tax Question

Post by FiveK » Wed Oct 04, 2017 1:32 am

irishnick23 wrote:
Tue Oct 03, 2017 8:30 pm
I'm trying to predict my Federal Tax bracket.
Note that identifying the "bracket" may not be as important as identifying the marginal rate.

You mentioned spreadsheets so you might want to look at the one referenced here: Tools and calculators - Personal_finance_toolbox - Bogleheads. It will show your marginal rate vs. common income and contribution types.

mouses
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Re: Quick Tax Question

Post by mouses » Wed Oct 04, 2017 5:36 am

If you do your own taxes (by hand), which sounds in your case like it might be particularly easy since you do not itemize, you can quickly predict what you will be dealing with the following year.

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Toons
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Re: Quick Tax Question

Post by Toons » Wed Oct 04, 2017 7:37 am

irishnick23 wrote:
Tue Oct 03, 2017 8:30 pm
Just want to make sure my thinking is correct on this. I'm trying to predict my Federal Tax bracket. I believe the process is:

Gross Annual Income - Annual Pre tax retirement contributions - Annual pre tax benefit payments (health insurance, transit etc.) - Standard mfj deduction (we don't itemize) = Taxable Income (match to corresponding bracket)

Am I right here? I'm pretty sure I am, but it never hurts to double check!
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JW-Retired
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Re: Quick Tax Question

Post by JW-Retired » Wed Oct 04, 2017 8:20 am

irishnick23 wrote:
Tue Oct 03, 2017 8:30 pm
I'm trying to predict my Federal Tax bracket. I believe the process is:

Gross Annual Income - Annual Pre tax retirement contributions - Annual pre tax benefit payments (health insurance, transit etc.) - Standard mfj deduction & exemptions* (we don't itemize) = Taxable Income (match to corresponding bracket) ..........*adding Livesoft addition.
IMO, this is just too simple..... plus where can you find your gross annual income starting point?

Reality is you begin your tax calculation with box 1 wages from your W-2 forms (which already has deductions for retirement plans and other stuff). Then there is a dozen lines where you can add other kinds of income to get a "total income" in line 22. Then another dozen lines subtract various "adjustments" to end up with your AGI on line 37. Only then do you get to deductions & exemptions and taxable income.
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FiveK
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Re: Quick Tax Question

Post by FiveK » Wed Oct 04, 2017 9:36 am

JW-Retired wrote:
Wed Oct 04, 2017 8:20 am
irishnick23 wrote:
Tue Oct 03, 2017 8:30 pm
I'm trying to predict my Federal Tax bracket. I believe the process is:

Gross Annual Income - Annual Pre tax retirement contributions - Annual pre tax benefit payments (health insurance, transit etc.) - Standard mfj deduction & exemptions* (we don't itemize) = Taxable Income (match to corresponding bracket) ..........*adding Livesoft addition.
IMO, this is just too simple..... plus where can you find your gross annual income starting point?
Ours were in the "YTD Gross" box of the paystub. Ok, it wasn't a stub, it was an electronic or printed page, but the info was there.

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abuss368
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Re: Quick Tax Question

Post by abuss368 » Wed Oct 04, 2017 9:08 pm

I would recommend that you review the previous years tax return to better understand everything from a reporting standpoint. This will assist with projecting your current year taxable income.
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