"I pay 30% of my income in taxes!"

Have you heard or seen this before?

Let's talk taxes!

Did you know in America there are 7 Tax Brackets?

Everyone hates the tax man, but is it as bad as your crazy uncle thinks?

Thread

The Tax Brackets

10% (0 - $19750)
12% ($19750 - $80250)
22% (80k - $171050)
24% (171k - $326,600)
32% (326k - $414700)
35% (414k - $622050)
37% (everything above that)

How to calculate your effective tax bracket

Let say you are married & make 85k

Up to 19750 - taxed at 10% ($1,975)
19750 - 80250 - taxed at 12% ($7,260)
80250 - 85000 - taxed at 22% ($1045)

Bringing your tax bill to $10,280

Effective Tax rate is 12.1% (tax bill / income)

Seems simple enough until you bring in Standard Deductions and Tax Credits

Standard deductions reduce the amount that your income is taxable

In this example 85k

Would get $24,400 standard deduction (Married Filling Jointly)

Taxable income is now $60,600

Tax Credit

These are dollar for dollar reductions in your tax bill

Think tax credit for child care, adoption fees, and solar panels to name a few

If you have enough deductions to reduce your tax bill past the standard deduction do that

Otherwise take the standard deduction

Quickly lets review the above example

85k income
24,400 standard deduction
60,600 taxable income

10% up to 19,750 = $1975
12% up to 60,600 = $4902

Total taxable income is now 6,877 on 85k household income

Or

8.1%

Yes Taxes Suck

However the next time someone says they pay 30% in taxes you will know what kinda cash they are making

or

That they are full of crap

Thanks for coming to my TED Talk

Taxes Suck Dividends Don’t

Federal Tax Rate for dividends

0% if income is 40k or lower (80k married)

15% if under 441k (496k married)

Pick up @DivCultivator eBook to learn how to build a dividend portfolio

10$ for the next 10

(Aff) https://gumroad.com/a/430077043/CSdwG

2 left at 10$

Then it’s back to 14$!