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How to calculate how much tax you owe in 1 minute

Welcome to Professor Savings.com

We teach finance basics.

Hi, I’m you’re host today Rayfil Wong

Today’s topic..

How to calculate how much tax you owe?

Basically, the more you make, the more you are taxes.

Let’s say Abbey here makes $100,000 from her salary as marketing chief for Puppyfood.com

She also made $5000 from interest in a savings account.

Total gross income

$100,000 plus $5000  equals $105,000

Abbey goes to her tax accountant professional and tries to understand the calculations.

Let’s go through an example

shall we..

Let’s say that standard deduction for single female deduction is $5000

so taxed $105,000 minus $5000 equals $100,000

Abbey’s tax professional finds out that single female filing in 2014 in her bracket pays 28%.

Since we are on marginal tax system we are taxed each dollar over a certain amount

so Abbey’s first $8000 income is taxed differently than her income in $8001 to $35,000.

This is just the basics,again consult your tax professional but understanding the concept will allow

you to create strategies that possibly can lower your income tax.

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