Marginal Tax Rate

Discussion in 'Microsoft Money' started by Doug, Jul 26, 2006.

  1. Doug

    Doug Guest

    On my home page I keep track of my Current Year Estimated Taxes. The window
    shows my Marginal Tax rate as 25%. However, my AGI is $141,000. According
    to tax laws the income category of $123,701 to $188,450 should be taxed at
    28%. Can I force Money to change that or what is happening here? Thansk.

    Doug
     
    Doug, Jul 26, 2006
    #1
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  2. Doug

    Sam Guest

    I could be wrong but I think you might not be understanding marginal
    tax rate and how the tax brackets work. Your AGI may be $141k which
    means you fall into the 28% tax bracket but you do not pay 28% tax on
    the full $141k. I am not an expert and I cannot remember the exact
    numbers (so these numbers and percentages are just examples) but an
    example would be that for the first $10k amount of your salary you pay
    15% tax, then for $10,001-$20k you might pay 20% tax and so on until
    you reach the end of your salary range. Calculate the sum of the
    product of these tax calculations to find out how much tax you actually
    owe then take that sum and compare to your agi then you will have your
    marginal tax rate which I think would always be lower than your
    highest tax bracket.

    As I said I am not a tax expert so be sure and double check what I have
    said here.

    Doug wrote:
    > On my home page I keep track of my Current Year Estimated Taxes. The window
    > shows my Marginal Tax rate as 25%. However, my AGI is $141,000. According
    > to tax laws the income category of $123,701 to $188,450 should be taxed at
    > 28%. Can I force Money to change that or what is happening here? Thansk.
    >
    > Doug
     
    Sam, Jul 26, 2006
    #2
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  3. Doug

    Doug Guest

    Thansk Sam. I was looking into this a little further and that tax rate may
    be based on Taxable Income not AGI. My taxable incoem falls into the 25%
    range. I'll do some more checking.

    Doug

    "Sam" wrote:

    > I could be wrong but I think you might not be understanding marginal
    > tax rate and how the tax brackets work. Your AGI may be $141k which
    > means you fall into the 28% tax bracket but you do not pay 28% tax on
    > the full $141k. I am not an expert and I cannot remember the exact
    > numbers (so these numbers and percentages are just examples) but an
    > example would be that for the first $10k amount of your salary you pay
    > 15% tax, then for $10,001-$20k you might pay 20% tax and so on until
    > you reach the end of your salary range. Calculate the sum of the
    > product of these tax calculations to find out how much tax you actually
    > owe then take that sum and compare to your agi then you will have your
    > marginal tax rate which I think would always be lower than your
    > highest tax bracket.
    >
    > As I said I am not a tax expert so be sure and double check what I have
    > said here.
    >
    > Doug wrote:
    > > On my home page I keep track of my Current Year Estimated Taxes. The window
    > > shows my Marginal Tax rate as 25%. However, my AGI is $141,000. According
    > > to tax laws the income category of $123,701 to $188,450 should be taxed at
    > > 28%. Can I force Money to change that or what is happening here? Thansk.
    > >
    > > Doug

    >
    >
     
    Doug, Jul 26, 2006
    #3
  4. In microsoft.public.money, Doug wrote:

    >On my home page I keep track of my Current Year Estimated Taxes. The window
    >shows my Marginal Tax rate as 25%. However, my AGI is $141,000. According
    >to tax laws the income category of $123,701 to $188,450 should be taxed at
    >28%. Can I force Money to change that or what is happening here? Thansk.



    Tools->Settings->TaxSettings
    click "Set your filing status and view tax rates by income bracket."

    In the Filing Status drop-down list, change your setting if
    appropriate.

    If you want different values, select Custom.
     
    Cal Learner-- MVP, Jul 26, 2006
    #4
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