My Taxable Income?

Question

In my economics class, i was assigned to receive a yearly income of $70,000.00. With that money im suppose to make decisions about my housing transportation insurance, food, etc. However I first need to figure out what tax bracket affects me. She said the tax deduction shouldnt be any more than 33%. Do you have an idead of my taxable income?

Answer 1

Try this link for starters.

Sounds like an interesting assignment.

Answer 2

Is your head spinning yet?

This question isn't as simple as you may think. Because your taxable income is the amount after you've taken out things like health insurance premiums, contributions to a traditional 401k or IRA (Roth 401ks and IRAs are different), and allowed expenses (if you itemize) or the standard deduction (if you don't.)

I know, it's a lot to process. But these are some valuable lessons you can use later. I'm actually very glad to see that there are such class assignments; one of my big pet peeves about my education is that we never really learned about a lot of the "practical" stuff.

The IRS web site is a good place to start; I see that others have given you the link.

For the purposes of illustration, I'll give you a real life example of my own personal experience. I got a new job at one point and was making almost exactly double my previous job. In fact, I was making the same amount given in your assignment. And after it was all said and done, I was only bringing home an extra ~$200/month.

Answer 3

Actually, you are doing the problem backwards. First, you determine which items are deductible and calculate your taxable income. That amount determines your tax bracket. There is no way to determine taxable income BEFORE deductions. Assuming your filing status is single and you have no dependents, your taxable income using the standard deduction would be $61,550 (using 2006 numbers). That is in the 25% marginal tax bracket. You would need to have at least $36,050 in itemized deductions to reach the 15% bracket.

If you have a different filing status and/or dependents, your tax bracket may by lower.

Answer 4

You have to decide if you are single, married, or head of household. Do you get the standard deduction, or do you itemize? How many dependents do you have? Answer these questions and then go to the IRS website. It will tell you how much each of the above items is worth. Then deduct those amounts from your $70K and you get your taxable income. Use the tax bracket from the IRS website and you then know how much tax to pay and how much money you have to spend.I

Answer 5

Depends on the state you're in.

Between :

$30,650 to $74,200

You're paying: $4,220.00 in taxes, or about 25%

of the amount over $30,650

Assuming you are filing as a single person.

Check out this page for all the tax rates:

http://www.savewealth.com/taxes/rates/2006/single/

Answer 6

my husband made $65943 last year our taxable income was $42443 I hope this helps.