First trip to the USA - tipping

[Tomorrow]

15% tax on $37,499 leaves you with $31,874.15 yearly income.
25% tax on $37,500 leaves you with $28,125.00 yearly income.

That's a $3749.15 difference in a single dollar of income.

If there wasn't a benefit to reducing your taxable income no one would do it, it wouldn't be heard of.

Need I say more?

Like I said, you don't understand how tax brackets work.

If your taxable income is $37,999, you do not pay 15% tax on all of it.
If your taxable income is $37,500, you do not pay 25% tax on all of it.

I'm going to use the tax table I posted before (for 2016).

After all your deductions (including the standard deduction), you are left with a taxable income. If your taxable income is $37,649, you're at the top of the 15% bracket. Your taxable income from $0 - 9,275 is taxed at 10%. So your tax liability is:

($9,275 x 10%) + [($37,649 - 9,275) x 15%] = $5,183.60

If your taxable income is $37,651 (I know it's two dollars, but it puts you in the 25% bracket), your tax liability is:

($9,275 x 10%) + [($37,650 - 9,275) x 15%] + [($37,651 - 37,650) x 25%] = $5,184.00

Forty cents difference on two dollars of income.

Again, tax brackets are marginal. Read the links above.
[doublepost=1462479066][/doublepost]

I'd say I know quite a bit about tax brackets considering I was in the 25% working overtime and putting me into the 35% tax bracket so I'd have to make deductions and write-offs to get me back into 25%.

I just noticed what you said here - the 35% tax bracket is for people making well over $400k a year. The 25% bracket is for people making just over $91k or less. You really must know QUITE a bit about tax brackets in order to reduce your taxable income by that much and still avoid paying AMT.

 

[mildocjr]

Like I said, you don't understand how tax brackets work.

If your taxable income is $37,999, you do not pay 15% tax on all of it.
If your taxable income is $37,500, you do not pay 25% tax on all of it.

I'm going to use the tax table I posted before (for 2016).

After all your deductions (including the standard deduction), you are left with a taxable income. If your taxable income is $37,649, you're at the top of the 15% bracket. Your taxable income from $0 - 9,275 is taxed at 10%. So your tax liability is:

($9,275 x 10%) + [($37,649 - 9,275) x 15%] = $5,183.60

If your taxable income is $37,651 (I know it's two dollars, but it puts you in the 25% bracket), your tax liability is:

($9,275 x 10%) + [($37,650 - 9,275) x 15%] + [($37,651 - 37,650) x 25%] = $5,184.00

Forty cents difference on two dollars of income.

Again, tax brackets are marginal. Read the links above.
[doublepost=1462479066][/doublepost]

I just noticed what you said here - the 35% tax bracket is for people making well over $400k a year. The 25% bracket is for people making just over $91k or less. You really must know QUITE a bit about tax brackets in order to reduce your taxable income by that much and still avoid paying AMT.

You're still on this? Give it a rest.

 

[Tomorrow]

You're still on this? Give it a rest.

Look, you're the one who came into this thread broadcasting and demonstrating that you don't understand the issue, then punctuated your ignorance with, "Need I say more?" Such an ill-informed mic drop on your part and you're on MY case about not giving it a rest? No, I'm not the one in error here.

 

[mildocjr]

Look, you're the one who came into this thread broadcasting and demonstrating that you don't understand the issue, then punctuated your ignorance with, "Need I say more?" Such an ill-informed mic drop on your part and you're on MY case about not giving it a rest? No, I'm not the one in error here.

I'm ashamed, not for knowing, that because you and I have practically destroyed this post for the OP.

 

[rdowns]

I'm ashamed, not for knowing, that because you and I have practically destroyed this post for the OP.

You should be more ashamed about your ignorance of how marginal tax rates work.