Comments on: Tax Return Question? http://netclubusa.net/323/tax-return-question-2/ Be smart, do your taxes on time! Fri, 06 Jul 2012 04:39:35 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: TaxGuru http://netclubusa.net/323/tax-return-question-2/comment-page-1/#comment-4282 TaxGuru Mon, 26 Jul 2010 15:33:12 +0000 http://netclubusa.net/323/tax-return-question-2/#comment-4282 I think your fundamental question is whether she can save tax on all her income by contributing some to an IRA. The answer is no. If she is in the 25% bracket, that 25% rate only applies to her income above a certain level. If she is less than $1000 into the 25% bracket, then she will save 25% times the amount that falls into the 25% bracket, and 15% of the remainder that falls into the 15% bracket. The tax on the amount of taxable income that remains after the IRA contribution deduction will not be affected one way or the other. 1040 EZ instructions I think your fundamental question is whether she can save tax on all her income by contributing some to an IRA. The answer is no. If she is in the 25% bracket, that 25% rate only applies to her income above a certain level. If she is less than $1000 into the 25% bracket, then she will save 25% times the amount that falls into the 25% bracket, and 15% of the remainder that falls into the 15% bracket. The tax on the amount of taxable income that remains after the IRA contribution deduction will not be affected one way or the other.

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]]> By: Goofy law student http://netclubusa.net/323/tax-return-question-2/comment-page-1/#comment-4280 Goofy law student Mon, 26 Jul 2010 14:31:47 +0000 http://netclubusa.net/323/tax-return-question-2/#comment-4280 It depends on whether she is filing single, HOH, MFJ, or MFS, and itemizing or taking the standard deduction, and how many dependents she has. Assuming she's single, income about $25k puts her out of the range for receiving the Retirement Savings Contribution Credit. Assuming that she's single with no dependents, after taking the standard deduction and her own exemption (totaling $8200), her taxable income is $21800 (w/o IRA) or $20800 (w/ IRA) the tax at $21800 is $2909, tax at $20800 is $2,759. (From the tax tables). Therefore, her refund will be $150 more than if she did not make an IRA contribution. If you had included more information, I would be able to make a better conclusion, so this is based on a few assumptions. 1040 EZ instructions It depends on whether she is filing single, HOH, MFJ, or MFS, and itemizing or taking the standard deduction, and how many dependents she has. Assuming she’s single, income about $25k puts her out of the range for receiving the Retirement Savings Contribution Credit.

Assuming that she’s single with no dependents, after taking the standard deduction and her own exemption (totaling $8200), her taxable income is $21800 (w/o IRA) or $20800 (w/ IRA)

the tax at $21800 is $2909, tax at $20800 is $2,759. (From the tax tables). Therefore, her refund will be $150 more than if she did not make an IRA contribution.

If you had included more information, I would be able to make a better conclusion, so this is based on a few assumptions.

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]]> By: mentalben http://netclubusa.net/323/tax-return-question-2/comment-page-1/#comment-4277 mentalben Mon, 26 Jul 2010 13:29:37 +0000 http://netclubusa.net/323/tax-return-question-2/#comment-4277 Doing your homework for you, are we?? merlin Doing your homework for you, are we??

merlin

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]]> By: rockinpacker http://netclubusa.net/323/tax-return-question-2/comment-page-1/#comment-4274 rockinpacker Mon, 26 Jul 2010 12:30:43 +0000 http://netclubusa.net/323/tax-return-question-2/#comment-4274 im not going to do the muti. for you if shes now at AGI 29 Im betting she will get a little more back... merlin im not going to do the muti. for you if shes now at
AGI 29 Im betting she will get a little more back…

merlin

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